Extension News

Want to Start or Expand a Feedlot Operation? Consider These Factor First

10/3/2007

AMES, Iowa – Many farmers are contemplating adding or expanding a cattle feeding enterprise right now, but before building any fences, they should first consider a list of factors.

John Lawrence, director of the Iowa Beef Center and economist with Iowa State University (ISU) Extension, said farmers often grow a little at a time without taking into consideration all of the animal, environmental and financial factors. Those should be taken into account when looking at expanding, he said.

“What may work for a few cattle may not be the best for additional cattle,” said Lawrence, adding different regulations apply to certain sizes of operations.

Many farmers are now considering starting or growing an operation in order to bring in the next generation or to simply take advantage of the large supply of distillers grains from ethanol production, he said.

“With important investments such as this, it is important that they plan carefully and do not do something they will regret later,” Lawrence said.

The Iowa Beef Center recommends reviewing the following checklist before starting or expanding a cattle feeding enterprise.

These are general questions that often have site-specific and farm-specific answers. In many cases, more detailed assessment tools can help determine the answers or address any shortfalls. These are available at www.iowabeefcenter.org. For assistance with whole farm planning and budgeting, check out the ISU Extension Ag Decision Maker Web site, www.extension.iastate.edu/agdm/.

Human resource questions
Business management, as well as cattle management and labor skills, are essential for a successful cattle feeding enterprise. Discuss these questions with your family and employees.
• Why do you want to grow the feedlot? What are your objectives, and do family members and employees agree?
• Are you personally committed to feeding cattle long enough to justify an investment in facilities (i.e., for the next 10 years)? If not, is there a succession plan?
• Have you developed a management team? Include consultants in nutrition, animal health, marketing, engineering, financing, etc. Have you discussed your plan with them?
• Do you have a plan to “market” your idea to neighbors and community members? 
• Do you have, or can you hire, the labor to feed more cattle?
• Do you have, or can you acquire, the skills or expertise to successfully feed cattle, including:
       Marketing of fed cattle and purchasing of feeder cattle
       Risk management for cattle and feed inputs
       Cattle management (reading bunks, walking  pens, sorting cattle, treating cattle)
       Technology (computers, software, ultrasound, etc.)

Farm resource questions
Look at the feedlot enterprise in the context of the whole farm system. Are there synergies that can be captured by adding/growing a feedlot, or is it a stand-alone enterprise?
• Are the feeds (grain and forage) produced on your farm better marketed through cattle than crops in the long term?
• Have you taken inventory of local feed byproduct opportunities? This may include more than ethanol coproducts, such as grain screenings, seed corn refuse, etc.
• Is there enough land application area near the site for manure application? Is there enough land to capture the full value of the manure nutrients?
• Can existing machinery and buildings be used more efficiently? Will additional infrastructure and equipment need to be purchased?
• Do you have sufficient equity and borrowing capacity to add the pen space, cattle and feed inventory being considered without putting the farm business at risk?
• Do you have a long-range budget, cash-flow budget and repayment plan? How long is the period of repayment? What kind of return on your investment do you anticipate? Is this realistic?

Site selection questions
Some of the questions pertain to the farm, while others pertain to the specific location of the pens. Both are important.
• Is the site easily accessible for trucks hauling livestock and feeds (for example, the condition of road year-round, weight restrictions, etc.)? 
• Does the site have sufficient separation distance to avoid neighbor nuisance from dust, odors, flies and noise?
• Does the site already have, or can it economically obtain, sufficient:
        Electrical supply?
        Water supply (ponds, wells, rural water) for up to 20 gallons per-head per-day?
        Wind protection for winter conditions?
        Exposure to summer breezes?
• In regard to an open feedlot, does the site have:
        South-facing exposure for winter feeding?
        Slopes of 2-8 percent to provide good pen drainage?
        Drainage diversion of clean water uphill from the lot?
• Does the site have good separation from streams, ponds and lakes, or is there sufficient ground available (size about equal to that of the feedlot area) preferably below the site that can be used for runoff infiltration or as a holding basin?
• If the feeding operation is more than 1,000-head capacity, can requirements of a NPDES (National Pollutant Discharge Elimination System) permit be met? 
• Does the site allow pens and solids settling basins to be separated from wells by at least 400 feet (1,000 feet for public wells)?
• Does the site meet separation distances in http://www.iowadnr.com/afo/files/distreq.doc
• Is it possible to grow in the location in the future? Answer the questions above for a larger feedlot capacity.

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Contacts :
John Lawrence, Iowa Beef Center, (515) 294-6290, jdlaw@iastate.edu
Dan Loy, Animal Science, (515)294-1058, dloy@iastate.edu
Nancy Foster,  Iowa Beef Center, (515) 294-9124, nfoster@iastate.edu