Stochastic simulation of the economic viability of feedlot steers fed with different proportions of concentrate

Abstract

ABSTRACT:The economic viability of feedlot zebu bulls, slaughtered at 450 kg after 90 days of feeding with diets consisting of different proportions of concentrate in dry matter (40, 60 or 80%), was estimated using Monte Carlo simulations, with or without the inclusion of Spearman rank correlations among random input variables, stochastic dominance (DOM) and sensitivity analysis (SENS). The roughage used was chopped sugar cane. Cash flow with indicators of performance, and probability distributions of all items of cost and revenue (from 2003 to 2014), were used to stimulate net present value (NPV), the financial indicator. Latin hypercube sampling and a Mersenne Twister random number generator were employed for the simulation with 2000 interactions. The risk was found to be more accurately estimated when correlations between random input variables were included (probability of NPV ≥ 0 ± standard deviation was 35 ± 166.05% and 31 ± 139.75% for the simulation without and with correlation, respectively). Considering this result, DOM and SENS were only carried out including these correlations. The expected value for NPV was similar between the different levels of concentrate (average USD -62/animal and NPV ≥ 0 of 33%) according to DOM analysis of simulations including correlations. From the SENS analysis, the final weight, finished cattle price, feeder cattle price and initial weight were the items with the greatest influence on NPV, regardless of the level of concentrate used, followed by intake and the cost-related items of diet and minimum rate of attractiveness. Based on the results obtained by simulation, the direct benefit of feedlot could be classified as high risk, suggesting the increased use of Monte Carlo simulation for decision-making.

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).…”

“…Specifically, about feedlot beef cattle, ROSA et al, SILVA et al, (2017) have used Monte Carlo simulation to assess the economic viability of using different concentrate levels in the diets. Conversely, PACHECO et al, (2014aPACHECO et al, ( , 2017 and FABRICIO et al, (2017) have used this technique to assess different slaughter weights, and Pacheco et al (2014b) to assess different categories of calves.…”

Economic impacts of space allowance per animal on beef cattle feedlot

“…The economic success of cattle confinement is related to the profitability of the activity, which is directly dependent on the income. Once the slaughter weight strongly affects the economic results of feedlot finished cattle, as previously demonstrated in sensitivity analyses by Silva et al (2017), and that cattle performance and, consequently, the carcass weight, increased as space allowance increased (MACITELLI, 2015), it is expected that, besides improving animal welfare (MACITELLI, 2015), larger pens would also provide better economic results for the producers, and this was confirmed by the results of our study.…”

<b>Body size and its effects on productive efficiency of cows with predominant Nellore genetic composition

“…Light cows were 4.6 and 15.2% more productive than moderate and heavy cows, respectively. This fact is of paramount importance, as it determines the efficiency of production systems, where herds with more animals in the same area provide a dilution of the fixed costs, thereby increasing profitability (Silva et al, 2017;Vaz, Lobato, & Restle, 2014).…”

“…This fact likely leads to higher variable costs (Fabricio et al, 2017), which are key factors for production. On the other hand, the fixed costs of a system have the greatest influence on the economic outcome (Silva et al, 2017); therefore, in cow-calf production systems, they should be diluted as much as possible so that better economic results can be attained (Ávila, Pacheco, & Pascoal, 2016).…”