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FEEDING STRATEGIES, AND THE OUTLOOK FOR
BEEF FEEDLOTS IN
NEW ZEALAND.
A thesis
presented in partial fulfilment of the requirements for the degree
of
Master of Agricultural Science in Farm Management
at Massey University.
R.S. Gillingham 1976
ABSTRACT
An investment value model is fitted to data from the market for store cattle and a price expectations model developed for use by a
prospective purchaser of steers. The model uses liveweight as the within- sctles variable
and responds to the major between- sales variables which are lound to be ruling beef price, market mood, and climatic considerations.
A computer model of the feeding and growth of a steer is constructed and used in conjunction with least-cost rations derived from a proxy
schedule of feeds tuf f cos ts arid qualities to identify feeding strategies which maximize the present nett discounted value of candidctLe steers.
The conditions under which a prospective feedlot operator planning to make use of the optimal feeding strategy can expect the market price of candidate steers to fall below their
nett present discounted value are found to include a product price advantage for the feedlot.
ACKNOWLEDGEMENTS
This study was carried out under the
supervision of Dr. A. Wright and Dr. A.C. Lewjs, with financial support arranged by Prof. A.R.
, Prampton and Prof. R.W. Cartwright . The
~ncouragement and assistance given by each is gratefully acknowledged.
The collection of d1ta from the Feilding market was carried out by Mr.
J .
Mccaw and forthis, and for the privilege of sharing the benefi ts of his vast experience of livestock m1rketing, I am greatly in his <lebt.
To the many who assisted mt:> with informu.tion and advice in the vctried aspects covered in th~s
thesis, and to Mrs. Hale for her patience in typing the thesis, I record my gr ateful thanks.
No responsibility for any inconsistencies in the thesis attaches to thos~ mentioned above.
CHAPTER ONE
1 • 1 •
1 • 2 •
1. J.
1 • lj..
CHAPTER TWO
2. 1 •
?.2.
2.~.1 .
2.2.2. 2. J.
2. 3. 1. 2. 3. 2. 2. 3. J.
~. 3.4.
2.4.
2.4.1. 2.4.2.
. TABLE OF CONTENTS
Acknowledgements List of Tables List of Pigures
INTRODUCTION AND OUTLINE OF' STUDY
The recent history of the beef cattle ind us try.
The development of interest in feedlots in New Zealand.
Aims, method, ctnd scop0 of the study. Chupler outline.
PREDICI'ING PRICES FOR S10RE CATTLE
S trci tlfica ti on of Ute beef cat Lle
Page
iii ix xi
1
4 6 10
industry. 11
Selling channel s. 14
Slaughter prices and selling methods 14 Mar·L'-. '-:.... for store cattle. 14 The prices discovered at auction. 17
Related studies. 17
Bidding behaviour. 20
The procedure at livestoci-- auctions. 24 The derivation of the upper limit. 26 An investment value model. 31
Model behaviour. 32
The Model fitted to data. 42
v
CHAPTER TWO
2. 5.
2.5.1. 2.5.2. 2.6.
CHAPTER THREE
3.1.
3.2.
3.2.1.
(Continued)
Further development and validation of the model.
The generation of price predictions. General.
The prediction generator.
The analysis of prices for store cattle - a summary.
FEEDING AND GROWTH OF A STEER THE GROWTHMODEL
General.
Model construction. Voluntary intake
(Ration Characteristics)
3.2.1.1. ~he intake model with energy as the control variable.
3. 3.
3.2.2.
3.2.J.
3. 3.1.
3.3.2.
CHAPTER FOUR
4 •. 1 • 1 •
4. 1.2.
4. 3.
Voluntary intake
(Animal Characteristics) Nutritional relationships.
Model operation and validation. Establishment and operation. Validation.
CANDIDATE FEEDSTUFFS AND RATION FORMULATION
The costs of feedstuffs• .
Non-marketed feeds. Marketed feeds.
Quality of candidate feedstuffs. Ration formulation.
Page
52 57
57 57
61
63 66
66
74
77 83
87 87 91
98 98 106 108 110
CHAPTER FOUR 4.3.1. 4.3.2.
CHAPTER FIVE 5. 1 •
5. 2.
5. 3.
5.4.
).1.1.
5.2.1.
s.2. 2. 5 ... . 3. 5.2.4. 5.2.5.
5.2.6.
c:;.2.8.
) .2.9.
5.2.10.
CHAPTER SIX 6. 1 •
6.2.
(Continued)
The constraints.
Least cost rdtions.
THE EVALUATION OF FEEDING STRATEGIES General.
The method of solution.
Interpretation of resu1ts - sensitivity analysis. Animal efficiency.
Initial Condition.
Feedstuff availability. Minimum protein assumption.
Initi2l livewcight Beef price predictor. Decision rule.
Optimal strategics - the selection of rations.
Optimal strategies - the duration of feeding and the slaughter weight. 'l'he Er.'fect of .feedlot: costs.
The values of candidate steers - use in purchase decisions. A summary of the results of Chapter Five.
DETERMINATION OF FEEDLOT VIABILITY General.
Feedl ot feasibi l i ty wi th known output price.
vi Page
110 112
11 7
118
123
123 125 125
128 129 1 31 1 31
1 35
140 141
148
1 52
153
154
CHAPTER SIX
6. 3.
6.4.
6. 5.
CHAP'l'ER SEVEN
7. 1 • 7.2.
'/. 2. 1 • 7.2. 2. 7.2. 3. 7.2.4.
7.2. ~.
7. 3.
7. 3. 1. 7. 3.2. 7. 3.3. 7. 3.4. 7. 4.
APPENDICES
A. 1. A. 2.
(Continued)
The coexistence of competing
·investment value models.
A general apprai sal of potential feedlot viability.
A summary of the results of Chapter Six.
SUMMARY AND CONCLUSIONS
Page
159
162
165
Summary of the thesis. 166
The methodology - an evaluation. 169 The price expectations model. 169
The growthmodel. 170
Least cost ration formulation. 171 Selection of feeding strategies. 173 Appraisal of feedlot viability. 174 Future prospects for feedlots. 175 The schedule of ration costs. 175
The product. 176
Strategies of store cattle purchase. 178 Specific technical assumptions. 180 The future of the feedlot
technology - conclusions.
Data collection.
Parameter estimation for the inves tme..Yl t value model.
183
185
193
APPENDICES B. 1.
B.2.
c .
BIBLIOGRAPHY
(Continued)
The growthmodel
- representative output Least-cc ,t rations
- representative output
The search for optimal feeding strategies.
viii
Page
201
204
206
211
Table
I
II
III
IV
LIST OF TABLES
Beef cattle population, Export prices, Beef production, and domestic beef consumption: 1957- 73
Classifi cation of investment
model s:- cri tical values for P/C. Feeder steer prices 1954 and 1956
- Chicago.
The f it of the model to the data. V Effect of yield on si lage costs
(winter cereals ) VI
VII
VIII
Effect of yield on cost of mixed silage. Schedule of silage costs, wastage, and nett cost of silage dry matter.
Unit costs of marketed feedstuffs. IX Proxy schedule of cost and quality for
candidate feedstuffs.
x
Ration constraints.XI ~he present values of selected candidate s teers, wi th different initial condit ion grading and liveweight s, and two l evels
Page
2
36
38 45
103 103
105 107
108 11 0
of assumed efficiency. 124
XII
XIII XIV
Selected pr esent value from optimal strategies; Paired values from the hig.i.l and low crude protein assumption;
three levels of feed availabili ty. Effect of decision rul e upon value. Selected Least Cost Rations
- Constituent Feedstuffs.
127 132
138
Table
xv
XVI
XVII
A . I.
A. II.
Effect of feedlot costs upon optimal strategies.
The value for candidate steers as
criteria for purchasing decisions, with an assumed feedlot beef price predictor
x
Page
145
of 100 cents/kg carcase. 149
The breakeven beef prices for feedlot operation with varying levels of ruling
beef price and non- feed feedlot costs. 163
Breed and Condition Distribution (1974)
Apparent Values for the Parameter g, adjusted by breed and condition.
198
200
LIST OF FIGURES
Figure
1 • Three classes of investment situation. 2. The prices of steers - two sales at
Feilcl ing.
3. The sale weights fitted to 1974 data. 4. Comparison of actual with predicted
prices.
5. Comparison of actual prices with model predictions.
6a. Price prediction bands for a steer of 450kg liveweight.
6b.
7. 8. 9. 10.
11 •
1 2 •
1 3.
14.
Predicted prices for a standard steer in the month of April.
Some intake functions.
Growthmodel - flow diagram.
The growthmodel - sample curves. The growthmodel - sample curves.
The growthmodel - comparison with curves fitted to data.
Least-cost rations: Unit costs at varying energy concentration levels under various assumptions of feedstuf f availability and minimum crude protein levels.
Present value curves (Beef price predictor of 80 cents/kg).
Present value curves (Beef price predictor of 100 cents/kg).
P::tge
35
40 44
46
47
58
60 68 89 92 93
94
11 3
120
121
Figure
1 5. Present value curves (Beef price predictor of 60 cents/kg).
16. The full feedlot model - relationship
xii
Page
122
of present value with initi al l iveweight . 130 17. Flow diagram - treatment of costs in
present value computation.
18. The full feedlot model - the effect of non-feed costs upon value of
candidate steers.
19. Intersection of price l ines with value curves.
A. ·1 .
c .
1 •Feilding market. Total cattle entered at each weekly sale 1974- 75.
The feedlot response surf ace - diagrammatic.
144
1 51
1 56
192
208
