UVE STOCK. 



109 



The Feeding Margin of Stockers 



The Feeding Margin. 



In feeding cattle, the difference be- 

 tween cost price per 100 lbs. and the 

 selling price per 100 lbs. is known as 

 the margin. A margin is therefore 

 necessary to break even, or to make 

 a profit because av current prices of 

 feed, the cost" to produce a pound of 

 meat on a feeder exceeds the price of 

 the meat on the markets in generaL 

 So, as a rule, one should feed only 

 when the price of the combined finish- 

 ed product of the animal is sufficient- 

 ly greater than the initial price, to 

 pay the marke; price for food consmn- 

 ed, cost of feeding, and Interest on 

 capital iuvestea. 



An Example. 



Speaking of the necessity of a mar- 

 gin: a sieer may sell for 6 l-2c per lb. 

 To produce one himdred pounds of 

 meat would require about 700 lbs. of 

 com, forty poimds cottonseed or lin- 

 seed meal, and four hundred pounds 

 of alfalfa hay. With com at 50c. per 

 bushel, cotton seed meal at $28, and 

 alfalfa hay at $16 per ton, this would 

 cost about 10c. per lb. In order to 

 break even on the proposition the 

 operator will not feed imless he can 

 get the feeders at enough less than 

 6 l-2c. per pound to put through the 

 cost of fattening either upon the man 

 who sells the feeder or back upon the 

 producer. 



Suppose this steer when finished 

 weighs 1,360 lbs., and at the beginning 

 of the feeding period 1,110 lbs. He 

 therefore gained 250 lbs. at a cost of 

 ?25. The steer sells for 1,350 times 

 6 1-2 cents, or $S7.75. To break even 

 on the animal it must be bought 

 for $87.75, minus $25 the cost 

 of fattening, or for $62.76. As 

 the animal weighs 1,110 lbs. the 

 the cost price $5.70 or 80c above buying 

 price, is what is known as the margin. 

 To make a profit a larger margia is 

 necessary. 



The Influence on Margin. 



The marginal rate depends upon the 

 cost of the feeds and their effective- 

 ness in producing gains. If feeds are 

 equally productive, the higher the 

 cost, the greater the margin neces- 

 sary; if equally costly the more ef- 

 fective the feed the narrower the mar- 

 gin. 



The primary cost znaBt also aSect 



the margin. The cost of gains remain- 

 ing the same, the higher the Initial 

 cost of the feeder, the narrower the 

 margin. For instance, a feeder weigh- 

 ing 1,000 lbs. at the beginning, and at 

 the end of the fattening period 1,260 

 lbs. At 10c. per lb. the gain costs %^. 

 If the feeder cost $4.50 per cwt. he 

 should bring $70 at a weight of 1,260 

 to break even, or $6 per cwt. The 

 margin necessary would be $1.10 per 

 cwt., or the difference between the 

 buying and seUing price, meaning that 

 the value of every pound of your 4 l-2c 

 beef must be increased to 5.6c. in or- 

 der to break even. Were the steer 

 bought at $5 per cwt., the operator 

 would break even at a selling figure 

 of $6, or on a margin of $1. If $6 were 

 paid, the operator would break even 

 at $6.30 or on a margin of 80c This 

 wUl explain why buyers more than 

 break even by paying high prices for 

 feeders, provided there is a good mar- 

 ket for finished beeves. 



Buying Weights and the Effects. 



The buying weight also affects the 

 margin. If t!he buying cost, the 

 amount gained, and the cost of gain 

 remain the same, the heavier the feed- 

 er, the narrower the necessary mar- 

 gin. This argues well in favor of the 

 heavier feeder, but is counterbalanced, 

 because the older and heavier an 

 animal becomes, the more feed it takes 

 to produce one i»oimd of gain. A wide;- 

 margin is necessary in winter than in 

 summer, because the cost of produc- 

 ing gains Is the greater in winter. 

 Young cattle make more economical 

 use of their ration than mature cattle. 

 Hence ihey can feed on a narrower 

 margin- 

 Good and Poor Feeders. 



If th^ buying price of good and poor 

 feeders .were the same, the better qual- 

 ity of cattle would offer the wider mar- 

 gin. In recent years, however, good 

 feeders have advanced more rapidly 

 in price than choice steers; at times 

 a better margin is offered for feeding 

 steers of less quality, because the 

 price of poor feeders may be compara- 

 tively lower than the difference in 

 quality would warrant. Again, the 

 necessary margin increases pro^r- 

 tionately, as the length of the feeding 

 period increases. As cattle increase 

 in fatness, the cost of gain increas«a. 



