Risk analysis of the economic viability of feedlot aberdeen angus steers fed with different proportions of concentrate

Abstract

ABSTRACT:The economic viability of feedlot Aberdeen Angus steers fed with diets composed of different concentrate levels (CL) in dry matter (25, 40, 55 or 70%) was estimated using Monte Carlo simulation combined with Spearman rank correlation, considering nine random input variables, as well as stochastic dominance (DOM) and sensitivity (SENS) analyses. For the financial indicator simulation, net present value (NPV), cash flow with indicators of performance, and the probability distribution of all cost and income items (from 2003 to 2014) were used. Latin hypercube sampling and a Mersenne Twister random number generator was employed for the simulation, which included 2000 interactions. The expected mean values ± standard deviation for NPV (USD/animal) were 44.94 ± 68.01, 44.50 ± 69.25, 15.39 ± 69.22 and 54.20 ± 71.58 for the diets containing 25, 40, 55 and 70% CL, respectively. The probability of NPV ≥ 0 was 76.8, 76.0, 57.9 and 78.1%, respectively, from the smallest to largest CL. The DOM analysis showed that 25 and 40% CL have similar probability curves, the 70% level dominated the remaining and all CL dominated 55%. According to SENS analysis, the items that most influenced the NPV were, in decreasing order, finished and feeder cattle price, initial and final weights, concentrate and roughage price, concentrate intake, minimum rate of attractiveness and roughage intake. Based on the simulation results, the 70% CL showed a higher NPV and greater likelihood of economic viability. The probabilistic simulation technique is an interesting tool for decision-making in investment projects with beef cattle feedlot, therefore, further studies in this line of research is recommended.

Economic analysis of the risk of replacing corn grains (Zea mays) with pearl millet grains (Pennisetum glaucum) in the diet of feedlot cattle

“…Prices of unfinished and finished cattle and final weight were the most important items. This finding was in line with other probabilistic sensitivity analyses of feedlot cattle (PACHECO et al, 2014a(PACHECO et al, , 2014b(PACHECO et al, , 2014c(PACHECO et al, , 2017ROSA et al, 2017;SILVA et al, 2017).…”

“…SILVA et al, (2017) stated that, from an economic point of view, studies involving stochastic simulation in livestock production systems are limited, specially with respect to the refinement of methods aimed to improve the quality of simulations results. ROSA et al, (2017) draw attention to the fact that feedlot beef cattle require high volume of financial resources at the beginning of the investment project implementation, which justifies the use of simulation techniques to help in decision making on the part of investors.…”

Economic viability of a crop-livestock integration system

“…The coefficients of finished steer price, steer price and silage price were 1.42, -1.18 and 0.76, respectively. The great impact of finished steer price and steer price on economic performance corroborated other findings (RoSa et al, 2017). The identification of these sources of risk helps in the design of preventive strategies, such as the use of forward contracts for finished cattle (CARRER et al, 2013).…”

Economic impacts of space allowance per animal on beef cattle feedlot

“…Most of the studies addressing the economic viability of feedlot-finished cattle focused on the roles of diet composition (MISSIO et al, 2009;PACHECO et al, 2014a;ROSA et al, 2017) and slaughter weight (PACHECO et al, 2014b(PACHECO et al, , 2015FABRICIO et al, 2017), probably because the purchases of cattle and feed represent approximately 87% of TOC. Studies about the effects of space allowance are scarce.…”

“…Although the three pen space allowances were considered economically satisfactory, higher NPV per animal is preferable. Previous studies showed that the NPV for confined cattle in Brazil varied from R$ 43.20 to R$ 594.00, depending on the levels of concentrate in the diet and slaughter weights (PACHECO et al, 2015;BARBIERI et al, 2016;ROSA et al, 2017).…”