Old Mule Farm

To: Michael Giberson, BECO 4310-012

From: Kepler Pinto

Date: February 11, 2016

Re: Old Mule Farm

_____________________________________________________________________

In order to net a profit, Donna and Jim Green must focus on a cow size of 1200 pounds.  Old Mule’s cow-calf operation has started to decline; therefore, the Green’s must act promptly in order to continue operating the farm and earn a profit.

Although the Greens have improved their performance, they are not able to cover their costs as the calf prices have fallen. Furthermore, the Old Mule farm faces competition from more than 750,000 competitors in the United States. The cows on the farm wean one calf per year. These weaned calves sold for $108 per hundred pounds. Some of the males calves (those that aren’t castrated) are used for further breeding.

However, a significant amount was spent to maintain the Cow-calf operation. Most of which was spent on feeding the cows. In 2008, the supply for the cow-calf operation exceeded demand; therefore, resulting in a lower prices for the calves.

According to the documentary seen by the Green’s, a calf is weaned by its mother when it is approximately 50% of her mature day. This one of the two best methods to measure the appropriate cow size. According to Exhibit 4 in the reading, Cows in the weight category of 1200 and 1300 pounds wean at close to 50%. The other important factor in determine the right cow size is the amount Old Mule will spend on maintaining these cows. According to Exhibit 6, it is more efficient to maintain a cow size of 1200 pounds.  Some may argue that cows weighing lesser than 1200 pounds are less expensive to maintain; however, they require additional time to mature as they require a higher percent of the cow’s weight before they can be weaned.

Therefore, the drivers for expense in the cow-calf operation was size of the cow and the driver for revenue was the calves’ weight percentage of the cow upon the time of weaning.

Exhibit 4: Calf weaning weights as a percent of cow weights

Exhibit 6: Annual supplement and mineral cost per cow in US $