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 livestock 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.
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 grazing cycle to the next. Feed requirements for summer grazing systems are minimal. Each column includes interest on one-half the variable costs plus the cost of the purchase animal for the length of time the animal is being grazed. Producers who do not rely on borrowed funds should consider the interest charge as an opportunity cost of their own capital.