Determining the Required Resources for My Marketing Choice. Dr. Curt Lacy Extension Economist-Livestock. Introduction and Overview. Value-added ventures are only successful IF the added value is MORE THAN the added cost
Dr. Curt Lacy
Determine if an enterprise is profitable
Determine which enterprise(s) contribute the highest return to fixed resources
Plan use of limited resources:
Amount of labor needed
Type and amount of equipment needed
Amount of operating capital needed
Production practices to use
Substitution of inputs
Determine cash or share lease arrangementsIt all begins with enterprise budgets
Doc is a GA cattlemen that has seen and read about the growth in demand for grass-fed beef and decides he can make a lot of money doing this. He has a 30 cow herd on 50 acres of pasture. He figures he can sell 30 grass-finished steers at 1,000 pounds for $3/pound. By his math he figures that is $3,000 per steer or $90,000 per year. Since it usually costs him about $500 per cow per year ($15,000/year) that should net him a profit of $75,000 per year.
Is there anything wrong with his Math??
If revenue is NOT greater than variable costs,
you cannot make it up on volume
Example Beef Budget