Drylot Backgrounding of Beef, MF-600 Rodney Jones Extension Agricultural Economist Livestock Production Economics Production Level Costs per unit and net returns in livestock production are highly dependent on production levels. The following estimated budget includes two different production levels. Production levels vary for a number of reasons including live-stock quality or genetics, weather, input levels, and management. The two production levels included in this estimated budget reflect production variability due to weather and management as opposed to the quality of the livestock since livestock values are held constant. Budgeting at multiple production levels can help producers examine the financial risk of a livestock enterprise that is directly related to production risk.
Performance varies due to differences in average daily gain and feed conversions.
The values assumed are included in Table 1 and are deviations from long-term averages. Variable and Fixed Costs Variable costs are costs that vary in the short run and can differ on a per head basis from one feeding cycle to the next. The feed requirements used in this budget include additional roughage and grain to allow for waste. Feeding conditions will vary throughout the feeding period, which will alter projected weight gain. If poor feeding conditions are encountered, weight gains will be less than those projected.