January 25, 2015 Miller Lowlin e Angus Ranch. U.S. Beef Production Flowchart.

January 25, 2015

Miller Lowlin

e Angus Ranch

U.S. Beef Production Flowchart

The cow/calf producer is the foundation of the beef industry. Cows are expected to maintain themselves and produce and raise a calf while only being fed grass and hay (forage). Cow efficiency, fertility, and maternal traits are the most important within this stage.

The stocker/backgrounder is grass-based, but if animals are destined for a feedlot, this is the stage where their digestive systems are transitioned to utilize grain. This is the first stage that grain efficiency starts to become important.

If animals are to be finished (fattened) on grass, they go directly from the pasture to the processor for slaughter. The majority of cattle in the US are destined for the feedlot.

Feedlots give the industry a way to churn out massive amounts of beef and keep the product consistent. Animals are crowded into pens (which limits both the land needed to produce the beef and the animals ability to move, which limits the use of muscle, increasing the tenderness of the final product) and fed massive amounts of grain and other things that they are not naturally designed to consume and digest. Because of the crowding and being fed foodstuffs that their digestive systems are not intended to have, antibiotics are added to the feed to prevent animals from getting sick.

The flowchart demonstrates the different routes the beef can take after the processor. Note that some operations combine stages, such as some cow/calf operations keep their

calves and background or finish them on grass themselves. Some cow/calf operations background their own calves and have their own feedlots.

Processors are usually a third party, but it is becoming more common that beef goes from the same operation it was born on to a processor and then to a customer that was procured by the cow/calf producer. The movement has been dubbed “Farm to Fork” or “Farm to Table” and is an attempt for people to become more knowledgeable of how and where their food is produced.

U.S. Beef Production Flowchart:Discussion

Revolutionize the American Beef Industry

Miller Lowline Angus Ranch (MLAR) cattle are

poised to revolutionize the American beef industry.

Dairy vs. Beef Cattle

The main difference between dairy and beef cattle is their purpose. Dairy cattle are

selectively bred to produce more milk; beef cattle are bred to produce more

meat.

Dairy vs. Beef Cattle: DiscussionThere are some “dual” breeds that are used for both meat and milk

production, but it is not as common in America, since farming has become more industrialized. It is more efficient for cattle to go one way or the other; some dual breeds have split even their names to differentiate the genetics (i.e. Shorthorn vs. Milking Shorthorn).

The black and white cattle, the most often recognized by the public, are Holstein, the most common breed for dairy production in the US. Other common dairy breeds are Jersey (tan with black on nose; very gentle, doe-eyed cows) and Guernsey (coat pattern like Holstein, except instead of black they are “red” [brown]).

Some common beef cattle breeds within the US are Angus (the only black cattle, any other breed that is black has Angus influence*), Hereford (medium to dark red with white face, belly, legs, and tail switch), Charolais (solid white), Simmental (dark brown [not red] to cream [yellow], with white markings), and Limousin (light red). There are around 275 breeds of beef cattle around the world1.

The American Angus Association has done such a superb job of marketing that the public is now convinced that black cattle are the only “good” beef, or at least are “premium.” The Certified Angus Beef has acquired an impressive market share. As a result of the American Angus Association’s marketing, black cattle command a higher market price at the livestock auction. Cattle that are any other color, or have white markings, sell for less.

Black coats have become so desired that breeds of other colors now have black versions (Black Simmental, Black Limousin, Black Hereford, etc.). All of these have Angus genetics added to their breed to produce the black coat.

Dairy vs. Beef Cattle Visual

(Full Size) Angus Show Cow

Working (full size) Angus Cow(“The Perfect”)Holstein Cow

Holstein Show Cow

Dairy vs. Beef Cattle Visual: Discussion

These pictures illustrate not only the differences in dairy and beef cattle, but the differences between “show cattle” and “working cattle.” Show cattle are highly supplemented (fed grain) to give them more [body] condition.

The Angus show cow and calf pictured were the Grand Champion Owned Cow-calf Pair at the 2013 Junior Angus Show (Note that Junior means the person showing [and in this case owning], not the cow).

The working cows pictured are typical of producing Angus cows in the US. These cows are not fed grain, they are required to maintain themselves (and raise a baby, either in their belly or make milk to nurse it) on grass or hay only. Notice the difference in the body condition of the working cow versus the show cow (ribs and hips pronounced).

The ProblemFood production must double by the year 2050 to feed the growing population.1

In an article published by American Cattlemen magazine: “Over the course of thirty years we have increased the mature size of our cows over 300 pounds

3... over 5 million cows in the U.S. have a mature weight of over 1500 pounds. These larger cows are costing our cow/calf production systems up to $250 million dollars annually.”2

BUT

How will the American beef industry hope to meet the demand to double production by 2050?

Through years of selective breeding for higher wean weights and animals calves that wean at higher weights and are efficient on grain, and keeping females from these

genetics, cows are larger and have higher energy requirements to maintain themselves and even more to raise a calf.

Production Truth

Producing cows are

NOT fed grainThey eat grass and hay

They are grassfed

Production Truth: Discussion

American producers have selectively bred for grain efficiency and high weaning weights. Calves that efficiently convert grain are desirable in a feedlot.

After keeping females from these breedings, they have larger cows that have higher energy requirements. The cows must consume exponentially larger amounts of grass and hay (a lower-energy feed than grain) to maintain themselves.

These females require more feed (expense), but do not produce calves that are any larger (more income).

The Solution

MLAR cows require half the feed of average cows, yet produce the

same income.

This does not take 30 - 50 years of breeding. The efficiency is accomplished in the first breeding—with no sacrifice in quality—

through use of MLAR’s potent and proven** genetics.

** The are not projections, EPDs (Expected Progeny Differences), or based only on genetic testing. MLAR bulls already have progeny and their contribution is more than potential. MLAR uses EPDs, genetic test results, and other tools to assist in breeding decisions; but ultimately, the offspring produced give the most accurate results of a bull’s success and contribution.

The FocusMLAR focuses on the true profit-driver of a cow/calf operation: the cow and how many pounds of

calf she weans off in relation (as a percentage) to her body weight on a per acre basis.*

Beef is a byproduct—and income stream—of the operation and gives a means of measuring the advancement toward the goal.

Our concentration is not to wean off the largest calf. Calves that wean off at large weights are going to mature at larger weights. Larger mature-weight animals require more feed (expense),

which defeats our purpose. We are breeding to double the number of cows so that we can ultimately produce (at least) twice as much beef as when we began, without the need for more

land or feed.

After we have efficient cows, then we will start breeding for larger weaning weights (for calves to go to beef, not be be kept as producing cows).

Most anyone can grow beef.

MLAR’s goal is to grow more high-quality beef more efficiently and more profitably.

*Efficiency is a matter of not only how many pounds a cow weans off in relation to her body weight but also how much feed she requires to accomplish that percentage.

The Focus: DiscussionFeed requirements are figured as a percentage of a cow’s body

weight. It is commonly estimated that a cow requires 3-5% of her body weight in dry matter (dried grass, hay) each day to simply maintain herself; requirements are higher when she is supporting a calf.

MLAR cattle are more efficient, reducing the daily feed requirements to as low as 2%. Example: An 1,100 pound cow would normally require 33-55 pounds of feed per day; An MLAR cow can maintain on 20 pounds per day. If feed is assumed to cost $0.05/lb ($100/ton), the feed expense for an average cow would be $1.65-$2.75/day or $602.25-$1003.75/year, whereas the MLAR cow feed expense could be as low as $1/day or $365/year. (This is a real-life example, MLAR measured this performance in their cows).

MLAR cattle are generally less than 1,100 pounds, averaging less than 1,000. Even with being smaller, the cows still wean off calves that are comparable to the calf weaned by the average full size cow.

The number of MLAR cows a property could sustain may be greater than 2:1 (MLAR cows:full size cow). MLAR uses 2:1 as a base to make sure the land is not depleted (overgrazed). As carrying capacity of a property increases—proper grazing management produces more grass—the ratio can be increased.

40% - 63% feed savings per cow

Demand

“The market for grass-fed beef has grown about 25% annually for 10 years, and doesn’t show signs of slowing.”1

Each year for the past five years, MLAR receives calls inquiring whether we have ½-Lowline females for sale. The call in 2014 was from a gentleman that wanted 200 head of heifers or cows. In years prior the want-to-be buyers were wanting semi loads (each truck holds about 50 head). Note that the calls were coming in before the cattle market started breaking price records.

While MLAR focuses on the cows, the income-generating product for producers is the calves the cows produce.

An advantage of the grassfed genetics, besides making the cow more efficient, is that the animals intended for slaughter will also be more efficient on grass.

Besides the efficiency, MLAR genetics produce meat characteristics that are unique, desirable, and discernible (more information in later slides). The efficiency means the animal is ready to slaughter sooner (less expense to produce), and the meat characteristics make the product higher quality (higher price per unit can be obtained).

Demand: Discussion

The PlanIn order to revolutionize the American beef industry, MLAR must scale up. The first stage is:1) Purchase different land, full size cattle, and some more machinery; 2) Relocate the current MLAR cattle and ranch assets.

Over the course of 5-6 years (depending on land availability), MLAR will convert the herd of full size cows to ½-Lowline cows, double the cow numbers and double production. All cows will be producing 2 years after the herd is doubled (year 7 or 8).

The second stage begins when the people within the industry (and word spreads within the industry, people talk; also could do marketing) recognize the difference in the MLAR cattle, see their quality and profitability, and want to utilize the genetics. This provides the opportunity to sell large quantities of semen and embryos (super-high profit margins) and/or breeding stock (bulls and heifers/bred heifers*).

*A cow/calf operation that sells breeding stock to other producers is known as a “seedstock producer.” Successful seedstock producers’ can sell animals for much more per animal than animals going for slaughter.

In 2013 and 2014, of the local producers (of full size cattle) Jeramie and Randi spoke with and the televised auctions they watched, the lowest price of a breeding bull was $5,000. With current calf prices, the selling of bred heifers does not make sense. It should be understood though that the possibility and potential exist.

There is definitely a market for MLAR bred heifers, and the demand will grow as producers seek more efficient and profitable means of production.

Why ½-Lowline Cows

Marketability and Market Size

Utility

Practicality

Why ½-Lowline Cows: DiscussionThe most dramatic improvement of feed efficiency is accomplished in the

first cross (Lowline crossed with full size cow). The ½-Lowline is still large enough to be desirable in the conventional American beef industry.

The ½-Lowline cows are able to be bred to—readily available—full size bulls, further increasing profit margin per cow. (MLAR breeds all heifers to fullblood Lowline bulls. This helps reduce the risk of calving problems, providing more sellable calves from heifers and increasing cow longevity. Cows that do not have a difficult first birth statistically breed back [become pregnant again] on time and produce three more calves in their lifetime than cows that experience calving problems during their first delivery.) Calves produced from full size bulls will wean off at higher weights—a higher percentage of the cow’s body weight—without increasing the cow’s input requirements.

These factors make the ½-Lowline cows more practical. They are able to be used in the conventional beef industry, increasing the number of people that want to buy them, making them easily sellable. Being able to breed them with bulls that can be easily attained increases their ease-of-use and utility, since they will produce even larger calves (higher weaning weights, higher mature weights, more beef per animal, processors like that).

Sustainable

Economical

Environmental

Social

Sustainable, Responsible

The expanded ranch will be a model of sustainability. MLAR defines sustainability as: Production of food for human consumption through the utilization of natural, renewable resources in a way that does not diminish the resources’ abilities to regenerate. A sustainable operation must also produce enough income to pay for it’s own expenses, debt load (if any), and make a return on the capital invested. Sustainable beef production is socially, environmentally, and economically responsible.

Sustainable: Discussion

Sales Outlets

Multiple Outlets

Fast Receivables

Effortless Sales

Sales Outlets: DiscussionThere are multiple sales outlets for MLAR cattle (live and processed). The fastest method to convert MLAR cattle to cash

(income) is to take them to a local livestock auction. Cattle are sold at a regularly-held sale, where buyers attend. A check is normally available to be picked up that afternoon. There are other methods of selling live animals, and MLAR has connections to do so without having the expense of advertising. Going through private parties can take more time to receive payment, but a higher price can sometimes be obtained through private sales.

Even greater income can be attained by processing the beef and selling through a distributor or directly to consumers. Working with a distributor that has an established customer base, such as Schwan’s, would be a great option that would reduce or eliminate advertising expenses and gets around some of the negative perceptions of frozen beef. Another option is to sell directly to consumers. Establishing a customer base would take time, but the payoff in the future could result in much greater profitability.

Superior Livestock – Live cattle are sold via video auction to buyers across the US. Auctions are scheduled at particular times of the year (by season), with sometimes having multiple auctions per season. www.superiorlivestock.com

Local livestock auction – Local livestock auctions have regular buyers of live cattle. Auctions are held weekly, twice weekly, and some specialty auctions (i.e. bred cow sales, feeder sales).

Schwan’s Frozen Foods – 3-billion dollar a year mmanufacturer and marketer of fine frozen foods through home delivery, retail grocery, and food-service channels, according to Steven Chacon, a semi-retired consultant for the food industry and adviser to Schwan’s on sales, marketing, and strategy. See later slide regarding the expanded opportunity for Baby Angus Beef.

MLAR has a contact in east Texas that has invited us to bring our grass-finished beef. to their CO-OP for them to purchase it. The CO-OP supplies the region’s WholeFoods with grassfed beef. MLAR does not plan on finishing animals at this time. Land carrying capacity limits the number of animals MLAR can sustain; and a cow producing a calf is a more profitable and poses less time risk (finishing cattle requires that they be held for at least another nine months after weaning). Buying cattle to finish is not practical as current prices to purchase calves does not leave any profit margin; and the calves available for sale do not possess genetics that make them efficient to finish on grass (must hold 14-26 months to finish those cattle).

Jeff Canterbury, of Tallgrass Farms in Illinois, has an extensive network of buyers and has stated that he has “been able to place everything that has come [his] way.” He has a subscription service that supplies customers with beef.

Marketing

POWERful Cows!

Marketing: Discussion

Should MLAR market and advertise, it has existing advantages it can utilize.

The American Angus Association has done such a great job of giving the public the perception that Angus is premium. The simple mention of “Angus” provides a premium, as does a black coat on an animal.

The public is also now conscious of how their food is produced. They want it “natural” (free of hormones and antibiotics) and “humanely raised.” They picture cattle grazing on a pasture (how MLAR raises them), not crowded into a pen being fed things that the public cannot identify (which includes ground up pieces of other animals). “Natural,” “humanely raised,” etc. command a premium; grassfed also commands a premium.

Interestingly the names of the MLAR animals can be great for marketing. Names like “Power,” “[Miracle] Dust,” “Jangles.” They can be great for memorable slogans: “Put Power in your beef!” Currently MLAR uses: POWERful Cows!

Expanded Opportunities

Baby Angus Beefand

GeneticsThese are two separate enterprises that can be easily started after the basic expansion is started. These enterprises stem from the main cow/calf enterprise and require no additional capital infusion.

Baby Angus Beef

“Taste like Veal without the stigma attached to it.” --Steve Chacon, Schwan’s Foods Company

*

* Baby beef is slaughtered between six and 12 months of age, after it is weaned.

Baby Angus Beef: DiscussionThis is not a new idea; other people are doing it. Some other ranchers have figured out that they

can be more profitable using a business model where calves are taken to the processor after weaning, rather than being sold at the auction or finished out. MLAR genetics allow more efficient production of this premium product, giving MLAR the opportunity to capitalize on an existing market for even greater profits in the long term.

With the calf market being so high at this time, it is actually more profitable to sell the calves at auction. However, using a small number of animals in the first few years to develop a customer base for baby beef from MLAR, will provide a more profitable enterprise in later years, when/if the cattle market declines.

Another option would be to develop a relationship with Schwan’s and utilize their established customer base and distribution network. Their customers already expect to pay a premium price for a premium product; they also accept that the product is frozen.

Marketing in recent years has given the public a perception that frozen beef is somehow inferior to “fresh” beef. In reality, formal and informal studies have proven proper freezing techniques (flash/blast freezing) of beef does not change the texture or flavor. Butchering grassfed beef at different times of year produces different tastes, as the forage changes the flavor of the beef, depending on the season. Slaughtering the animals in a short period of time maintains consistency of flavor, and freezing provides a supply that can be sold over a greater period of time.

Another advantage of Baby Angus Beef is that more of the meat is premium quality. Whereas only about 30% of a finished animal results in the premium cuts—with the remainder being lower-quality cuts and burger—a much higher percentage of the carcass of baby beef is of premium quality. The meat commands a much higher price per pound, so the average price per pound received for the whole carcass is greater than finished beef. This, coupled with the reduction in time that the animal must be held, makes the baby beef an attractive enterprise.

Critically acclaimed beef!

Critically Acclaimed Beef!

Desired

Unique

Distinct

Critically acclaimed beef: Discussion

In September 2014 MLAR shipped frozen tenderloin and a brisket to a world-renown food marketing executive in Laguna Beach, California. He gathered a food reporter, the best chefs in the region, acclaimed foodies, and even a world-class vintage wine seller collection… altogether for a tasting.

The beef was from a 15-month-old fullblood Lowline bull who’s dam is Miracle, the dam of MLAR Miracle Dust, and sired by a son of Fairwyn’s Power. The bull had been processed and frozen in February 2014.

Chef’s ReviewCOMMENTS OF CHEF JOSH MASONTHE WINE GALLERY LAGUNA BEACH, CA

“The story behind this beef - the special bloodlines…and being pastured for the animal’s entire life - made me very interested when I heard about it.

When I got my hands on it, it was clearly premium protein. I liked seeing substantially more marbling than is usual for grass-fed. I liked it even more when I got the two cuts in the pan and in the grinder.

The lovely tenderloin seared and grilled evenly with no extra effort or attention required. And the portion we ground needed no help from added fat. Both cuts had a classic, beefy aroma, both raw and during cooking. The flavor was excellent - rich, complex, and quite distinct. Both cuts delivered many more discernible, well blended layers of flavor than ordinary fine beef. Some fresh grassiness complimented notes of roasted nuts and mushrooms. Just the right amount of blood highlighted the well rounded umami.

This beef would show well in the case and at the table. It cooks with a fine, crusty sear. And it has a lovely bite. It would enhance stews, braises and stir-frys, and would be a no-brainer Chef’s Special for steaks and burgers.”

This commentary not only gives credence to the claims MLAR makes of it’s carcass traits, but also reenforces MLAR’s claims in the “fresh vs. frozen” argument. The beef reviewed was frozen in February 2014 and this chef did not prepare it until September 2014. It was shipped in an insulated container with dry ice, via UPS 2-day. It was then placed in a refrigerator overnight and prepared the next evening. Properly handled, frozen meat that is thawed does not change consistency or flavor.

Marbling has now been shown to be a genetic trait and actually develops before outside fat. MLAR cattle have attractive marbling, but are lean (less outer fat, less waste).

Foodie Writer ReviewThe following is a quote pulled from the food publication which was written by Food Writer, Jennifer Ericksen of the

Laguna Beach Indy Reporter. It’s noteworthy that Laguna Beach is a haven for 4 and 5 star restaurant's in California.

“What was most important to me about this meat was that it was no only grass-fed but also pasture-raised.

I frankly have had uneven experience with grass-fed beef in the past as something being too tough or stringy and sometimes too “gamey” in a bad way. But this beef had perfect texture and flavor. It was tender without being mushy, and still retained enough structure to give it a great mouth feel. And it had just enough “terroir” to make the taste earthy and interesting without becoming funky.

It surpassed my expectations based on past experience with grass-fed beef.

It’s great to know there is beef out there that is at once ethical and exceptional in taste and texture. It’s a win-win!”

- Jennifer Ericksen

The meat characteristics mentioned are not only attributable to being grassfed, they are genetically influenced.

Advantages of Baby Angus Beef Enterprise

Unique Product

Steady Demand

Greater Profitability

Increased Cashflow

The baby beef enterprise would give MLAR more diversity and flexibility to capitalize on the opportunities the market provides. When calf prices decline, meat in the store (and what consumers pay) does not follow suit. The profit margins on a baby beef enterprise grow as the calf prices decline, and insulating MLAR from profit loss incurred if it only sells calves at the auction.

A baby beef enterprise will also give MLAR a built-in market for it’s ¾-Lowline calves (the first calf a female has will be a ¾-Lowline). Because the current industry infrastructure is set up for larger animals, these calves do not bring as high a price at auction (has been accounted for in the pro forma).

Not only would a baby beef enterprise give MLAR diversity and outlet for calves it produces in FY4 – FY8, it has the added benefit of being an incentive for other producers to purchase MLAR cattle and genetics, as they would have an outlet for the animals produced. MLAR could not only profit from the sale of the semen and breeding stock, it could also profit from the sale of the baby beef and other producers would be supplying the calves!

Advantages of Baby Angus Beef Enterprise: Discussion

Genetics

Semen

Embryos

Breeding Animals

Because current calf prices are so high, holding heifers until they are yearlings or bred heifers is not as profitable as selling them at weaning. The same applies to developing bulls for sale as breeding stock. It is currently more profitable to castrate and sell the bulls as weanling steers, unless an animal is to be kept within the MLAR herd for breeding or to sell semen from.

Profit margins on semen sales is excellent. MLAR uses $4/straw as cost per straw of semen produced. A straw sells for $15-$25. One straw of semen is used to breed a cow one time (if she does not get pregnant that time, another straw is required or a bull in the pasture).

Building a successful genetics enterprise requires super-high-quality genetics and proof (animals on the ground doing what you claim the genetics will do), a reputation, and possibly some advertising. MLAR already has the proof but needs it on a larger scale (the expansion will accomplish this). The reputation takes years to develop; MLAR already has a good reputation (MLAR is surprisingly well-known for being a small operation). Word spreads rather quickly, especially through key people (i.e. a Genex sales representative artificially inseminates many, many animals each year and recommends which semen to use). Any marketing/advertising expense would return greater profit.

Genetics: Discussion

Advantages of Genetics Enterprise

As mentioned on the Baby Angus Beef slide, more semen and heifers could be sold if buyers were guaranteed they could sell the calves produced from the matings (MLAR could buy the calves and have an outlet to get rid of those calves at a profit). Sales of MLAR heifers would also benefit from the buying of the offspring they produce.

Other Enterprises/Income Streams

Hunting

Timber

Other enterprises maximize utilization of the land, provide more income/cashflow (return on capital), and benefit other enterprises of the business. Examples of other enterprises:

HuntingHunting – People pay to come hunt on the property.

Hunting is a multi-billion dollar industry, with hunting of wild deer alone contributing $1B to the state of Missouri’s economy1.

This enterprise is not only an additional income stream, it assists with wildlife management by promoting healthy wildlife populations.

Jeramie is very familiar with hunting and wildlife management. In the mid-late nineties, he worked as a hunting guide and has been a deer and elk hunter for years. For many years his brother—who travels through the United States to hunt—has planted food plots, monitored deer with cameras, and selectively harvested deer to increase the habitat and promote healthy deer and wildlife populations on the land.*

No hunting income has been assumed on the pro forma within this presentation.

* The land that Frank, Jeramie’s brother, manages is a portion of Jeramie’s father’s 130-acre dairy.

TimberTimber is an enterprise that provides an income/cashflow from a renewable resource of the

land. A person or entity pays the landowner to harvest select trees that meet certain requirements of type and size. The landowner does not perform the labor of harvesting (does not incur expense for cutting, moving, or marketing the product).

This enterprise not only provides more income/cashflow (ROI), it benefits other enterprises of the business. It enhances the wildlife habitat (hunting enterprise) and increases the grass growth on the forest floor—by opening the forest canopy so more sunlight reaches the forest floor—providing greater quality grazing for cattle.

Timber can be harvested, providing the ranch with cash, but also increasing the grass produced on the forest floor, which increases the cattle carrying capacity. (Is included on pro forma; assumed $125,000 in FY2 and $25,000 in FY3).

About The Farmers:Jeramie was born/raised on a Dairy

The sign for Jeramie’s parent’s 130-acre dairy. The name JA BAR FRAN is for their oldest three children: Jeramie, Barbie, and Francis (Frank). Jer is the oldest of 5 children.

His parents still own and operate the dairy. He is shown carrying our oldest son, Nick, through his parents’ barn in 2008. Jer began artificially inseminating cows when he was 14 years old.

Artificial Insemination (AI):

The only thing artificial about AI is the delivery of the semen to the cow’s uterus.

Semen is ejaculated from a bull, collected, and then placed into small plastic straws (about the size of an ink well in a ballpoint pen). It is frozen in liquid nitrogen until ready to be used. A few minutes before insemination, the semen is brought to a specific temperature, then a technician manipulates a special implement into position through the cow’s vagina and deposits the semen in the uterus so that it can inseminate the egg that the female produces. This requires very specific timing and very specific technique (if the implement is not handled correctly, it can easily puncture the reproductive tract and render the cow useless for production). Jeramie has an exceptionally high rate of success (pregnancy) with AI.

Artificial Insemination

Jeramie Started Miller Lowline Angus Ranch (MLAR) in 2003

He purchased 40 full size cows, three ½-Lowline cows, and a full size Angus bull.

He ran the herd by himself, worked 50+ hours per week at his job, and commuted 2 hours per day.

Picture taken March 2007

For comparison, the tan (we call it “mouse”) cows in the picture weighed between 1,500 and 1,700 pounds. The black cow facing away, in the center of the picture, was a ½-Lowline (“916,” ALR registration #XF6 was one of the first ½-Lowline cows produced in the United States). Notice how wide she was, compared to the others; she was 6-8 inches shorter than the full size cows. She weighed about 1,200 pounds. Her calf, Chunk, is laying to the right of her; Chunk was the first heifer retained by MLAR.

Lowline Angus History

Lowline Angus cattle were developed in Australia in a 15-year closed research project that was attempting to get more beef per acre; prior to being closed, the herd had been selectively bred from Champion Aberdeen Angus Cattle from all over the world. The project was successful and the herd was set to be destroyed, but was dispersed through auction after interest was expressed in purchasing the cattle. The full article on their history can be found on the American Lowline Registry (ALR)site.

Two embryos were first imported into the US (one resulted in BR New Vision, sire of Fairwyn’s Power). Neil Effertz was the first to import a live female (S192 pictured above); and he was a co-founder of the ALR. Jeramie (MLAR) is member #299.

There are different designations for Lowline cattle: fullblood, purebred, 50%, 25%. Fullblood cattle must be DNA parentage tested to guarantee that they result from only animals that were in the Australian research project. Purebred is any animal that is 7/8 or more Lowline; and other designations are self-explanatory.

S192 – purchased by MLAR in Dec 2008, but was tragically killed in an accident before delivery.

Lowline (first called “Lowline Angus,” then later shortened as the breed became more known) originated from the Aberdeen Angus, the same cattle the American Angus originated from. Lowlines resulted from very selective breeding of the original cattle; and are closer in both generation, phenotype, and quality to the Aberdeen Angus than the American Angus. The Lowlines possess the traits that the American public perceives “Angus” to have. Lowlines are “true” Angus.

Fairwyn’s Power

Fairwyn’s Power (reg # FM2293)pictured on November 15, 2009. He is the only registered fullblood Lowline Angus bull that was sired by BR New Vision1.

Power makes phenomenal females.

Mature: 46 inches, 1,300 pounds “in his working clothes” (out breeding cows). He is only fed grass and hay.

HD50K2 In 1% for dry matter intake.

IGenity: High heifer pregnancy rate.

Print of an ideal Aberdeen Angus bull. The same print hangs in the American Angus Association headquarters, in Saint Joseph, Missouri.

3 yr 5 mo 7 yr 5 mo

10 yr 10 mo on

January 7, 2015

1 One of the first two embryos imported into the US from Australia. 2 Pfizer’s HD50K is a genetic test specifically for Angus (specifically American Angus). The test is expensive, so only the best animals are tested. Power is the only Lowline bull ever tested with the HD50K; Pfizer now refuses test any animal that is not registered with the American Angus Association

Full Size Angus vs. Lowline Visual

Extremes: On the right #9, American Angus crossbred cow, weighed over 1,800 pounds; on the left Harvick, a purebred Lowline Angus weighed about 800 pounds. Working (full size) Angus Cow

MLAR Working Cows with Calves

Full Size Angus vs. Lowline Visual

• This slide illustrates not only the differences in sizes of the MLAR cattle and full size cows, it shows the efficiency of the MLAR cows.

• The two cows in the bottom pictures (Chunk a ¾-Lowline cow on the left, Treasure a ½-Lowline cow on the right; both cows are daughters of Fairwyn’s Power [bull on next slide]) demonstrate the body condition that MLAR cows maintain (the hips are not sticking out, no ribs can be seen, muscling and fat on the hind legs is plump), even after delivering calves and nursing them. Chunk’s calf is pictured at 6 weeks old; Treasure’s calf is 5-1/2 months in the picture. Also notable, this was Treasure’s first calf; Treasure was still growing! She not only had to grow herself, but her calf as well. Treasure’s dam was a 1,600-pound crossbred (Angus, Charolais, Simmental, other) cow. Treasure will mature at a little over 1,000 pounds. This reduction in size is accomplished in the first breeding (Power X full size cow).

MLAR Fullblood HerdIn order to get percentage (1/2) Lowline cattle, MLAR must maintain a small herd of fullblood Lowline cattle. These are the cattle with genetics that MLAR has developed and proven over the years, and selectively breeds to further improve.

MLAR will continue to maintain the fullblood Lowline herd after the expansion, but the plan does not place an emphasis in greatly increasing the number of fullblood animals.

The value of these animals is immeasurable when their potential contribution is taken into account. For the purpose of the pro forma, their value has been minimized, using conservative figures of what average breeding animals will sell for on the open market.

Jeramie and RandiA week after meeting at a livestock feed store in early 2007, they were set up on a lunch date where Jer told Randi about Lowline Angus and his cattle. That evening Randi went and saw the cattle…and went every evening after that.

For Randi’s birthday, Jeramie didn’t take her out to eat or throw a party. His invite: “You want to come down to the corrals and see the cows?” Best birthday invite ever!

Their free time was not spent at the movies or other entertainment; their free time was spent at the dining table, working on a plan to make raising beef cattle our livelihood.

Shortly after this picture was taken (July 2007), Randi got a bright pink bucket just so that Jer could carry a “pretty pink bucket” out in the field. It’s called the “Magic Bucket” because it’s magic how it will make the cows come. With the magic bucket, Power will load into a trailer in an open field; then again, he might do that without the bucket! “Road trip!”

Married June 2008They were married in the cow pasture; and the reception was in a friend’s barn. The wedding cake was a barn and pastures, complete with cows (103 degrees, the cake melted). Guests enjoyed MLAR baby beef for the meal.

The cattle are not just a passion for Jeramie and Randi. Their lives revolve around the cattle. Every decision in their lives takes the cattle into consideration: having children, travelling, [personal] purchases, TV programming, when to run errands and what order, any decision large or small. When Randi was pregnant, she was not going to “give birth” or “have a baby,” they referred to it as she was going to “calve.” After discovering she was pregnant, she consulted the cattle gestation chart to see when she was due (note: cattle gestate for a different “9 months” than humans). Their first son was dubbed “The John Deere Baby” by the hospital staff.

MLAR Becomes More Than Just a Commercial Cow/Calf Operation

Changes to the operation after Jeramie and Randi met:

Marketed and sold baby beef directly to consumers in ¼, ½, and whole (instead of individual cuts).

Began keeping female calves to breed and use as producing cows in the MLAR herd. Kept a calf as a bull and later sold him for breeding. Peanut was the first ½-Lowline bull MLAR ever sold for breeding.

Began drawing semen from bulls and artificially inseminating more of the cows; previously Jeramie had A.I.’d the ½-Lowline cows and everything else was bred by the full size bull. (Power was not reliably breeding full size cows until 2009, when he was 5 years old).

Purchased purebred and fullblood female Lowlines.

Designed and published ranch website (www.mlar.us).

Jeramie’s and Randi’s resumes are in the package sent with the investment package.

Natural Grass Fed

MLAR cattle are not fed grain*. The animals are strictly raised on forage (pasture and hay) and given basic minerals that are lacking in the area (trace mineral and cobalt).

No vaccinations are given on a regular basis and any animal administered antibiotics (because it is sick and needs antibiotics to save its life) is not sold as “natural.” MLAR has always qualified for the “All Natural” program; and most years would be certifiable “organic.” (Certification is not cost-effective).

It should be noted that all MLAR animals pictured are not supplemented or given high-energy feed. What you see is how nature made them.

* The 4-H steers were only bred and weaned by MLAR (forage and mother’s milk). They were not fed grain until after the 4-H members bought them, as that is the way that 4-H and FFA teaches the kids to feed their animals.

MLAR Beau Jangles

3 years 8 mo on January 7, 2015

MLAR Beau Jangles (reg #FM16452) is sired by Beau Lad, a Lowline National Champion Bull; his dam is S208. She is the dam of Captain Jack, a bull that ¾ interest sold for $75K.

Jangles’s IGenity (genetic testing) puts him in the top 15%, 13%, and 14% for average daily gain, tenderness, and maternal calving ease, respectively, among the commercial cattle that have been tested. He scores an 8 in tenderness, with averages being 5.30, 5.96, and 3.75 respectively among the commercial, Angus, and Lowline cattle that have been tested (only the best cattle are tested).

He has already proven to make awesome females, producing a very desirable phenotype; and the carcass qualities make the beef he produces very palatable and desirable.

5 months on September 24, 2011

Lilly PrincessFullblood bred heifers sired by Jangles. Due to

calve Spring 2015. Pictured on Jan 7, 2015.

MLAR Miracle Dust

9 mo on January 7, 2015

7 mo on October 22, 2014

4 months on July 28, 2014

5 weeks 5 days on April 29, 2014

Dust is a 2014 bull calf that has loads of potential to become MLAR’s next herdsire. His sire, RL Telluride Image 9,** was the 2013 Wyoming State Fair Grand Champion Bull; his dam is She’s A Miracle. Registration and IGenity will be completed.

Dust is early maturing, very masculine, deep muscled, and growthy. He will be bred to a select group of females in 2015 for calves in 2016.

**MLAR owned and sold RL Telluride Image 9 (“Telluride”), but retained 10% ownership and rights to draw semen from him, The buyer, Sylvan Dale Guest Ranch, in Loveland, Colorado, has full possession of the bull. Besides Dust, MLAR retained a 2014 fullblood heifer sired by Telluride.

Accomplishments of MLAR 2007-2008

2008 Retained ½-Lowline female and

bull (Peanut). He was later sold to be herdsire in another herd. Sired by Power, his dam was a 1,600-pound cow. He matured about 1,200 pounds.

2007 Baby beef sold directly to

consumers as freezer beef.(now known as farm to fork)

First heifer (¾-Lowline) retained.

Chunk pictured 7-8-07 at 4 months old. Born 3-2-07.


2009 Steer born in 2008

gained over 3 lb/day on grass.

2010 Sold high-percentage Lowline

(3/4 and purebred) steers to girls for 4-H market beef projects.

2010 calf pictured was the ¾-Lowline steer. The purebred is shown on the next slide.


2011 4-H market steer (Tango) won

class and placed 7th overall (out of 200+ steers) at Delta County Fair.

High selling open percentage heifer at Get Back To Grass Sale in Athens, Texas.

2012 Topped local livestock auction with

percentage calves produced from our bulls.*

Tango on 10-3-2010

Tango on 8-13-2011

*The sale yard owner expected them to sell well, but even he was surprised at what buyers bid them up to.


2013 High selling fullblood cow/calf at

Lowline sale in Sioux Falls, South Dakota.

Sold breeding stock to a ranch in Montana.*

MLAR acquired 2013 Wyoming State Fair Grand Champion Bull, fullblood Lowline, RL Telluride Image 9.

2014 Weanling heifers sold to a man that

came to originally buy steers and was so impressed with the heifers, he bought them for breeding instead of steers for beef.

Two heifers sold in 2014.

A cow/calf pair, bred heifer, and weanling heifers.

The Investment Opportunity

MLAR is seeking an equity investment for expansion of the business.

The expansion is accomplished by purchasing a property and cows, along with some machinery. Those cows are bred with existing MLAR cattle, which produces super-efficient offspring. Females are retained and put into the MLAR herd.

Through this process, the purchased cows are systematically replaced with MLAR cattle; and the cowherd is doubled without the expense of more land or feed.

The capital requirements and pro forma of the expansion change, depending on the property being analyzed for the expansion.

The pro forma within this presentation is based off a property located on Flippin Road, in Climax Springs, Missouri.

The project cost for the expansion, if Flippin Road is purchased, is $3.8M. An equity investment of $1.9M will be leveraged to purchase the land, cattle, machinery, and as operating capital.

Now Is the Time

Conversion to MLAR cattle is smart any time, regardless of conditions, but NOW is ideal.High calf prices allow the ranch to maintain a cashflow (and ROI) while converting the herd and doubling its number.

If the expansion starts in 2015, it is predicted that when/if calf prices drop, MLAR will already be at double production.

NOW Is the Time

Flippin Road Property Description

Nestled in the valley of the Little Niangua River basin, the Clear Creek River Ranch invites you to enjoy this 1077 acre ranch and hunting estate.

If you love to hunt and fish, the lodging accommodations waiting for the avid trophy deer and turkey hunter should not leave you disappointed.

This ranch will provide lush pasture, hay fields, big woods, 8 stocked ponds and 1.50 miles of river frontage and capacity to support a private 50 acre dammed lake from the year round creek as it meanders through the ranch and feeds into the flowing Little Niangua.

The home will satisfy your day's end of successful hunting or working the ranch cattle with the hired hands. A warm fire place, a dinner from the farm kitchen, hard wood floors and a view from the front porch as you relax and watch as your cattle and deer graze as the sun sets behind the Ozark hills.

If it's cattle or horses you're raising, look no further for their best interest. The ranch's 10+ pastures are fenced, cross fenced and gated for easy rotational grazing and 2 separate barns provide shelter as needed with ample water supplied in each pasture.

The shop, for this ranch and retreat leave little to be desired. Insulated and heated with 2 lifts, 2 roll up doors, oil pit and kitchen and bath facilities are an awesome addition and consideration for the serious hunters or the hard working hands of the ranch.

Flippin Pictures

Bringing a Female Into Production

As heifers are retained, they take up capacity (pasture). To make room, cows are sold. For every two heifers kept, one full size cow is sold. This decreases cashflow, as the cash from the two heifers is not received because they are not sold the first year and the second year they are bred (do not produce a calf to sell); and the cashflow from the sale of the cow is less than what the heifers would have sold for.

In the pro forma, the sale of the cow is not considered on the P&L as income; it is allocated to sale of intermediate assets on the cashflow statement and balance sheet.

In practice, allocations will be determined for optimal tax benefit.

Assumptions and ScenariosThere are a variety of scenarios that can be contemplated, producing different pro forma for each scenario.

The following slides contain pro forma all using the Flippin Rd with different assumptions and scenarios, to provide an idea of what the investment could do.

MLAR believes that having diversity and flexibility will allow the business to have minimal risk while capitalizing on opportunities that present and be profitable through market shifts.

Assumptions for Basic Cow/Calf$1.9M cash investment for equity stake in Miller Lowline Angus Ranch LLC (Cash Flow Statement: New Investment Received).

Property: 1,077 acres for $1,763/acre = $1,899,000

Improvements (fences) $100,000

Machinery: $125,000

350 purchased cattle (more than what MLAR already has) @ $3,000/head = $1,050,000

Calves sold: ½-Lowline calves 500 pounds @ $2.65 lb. = $1,325 each and ¾-Lowline calves 380 pounds @ $2.92/lb. = $1,110 each

Bred cows sold: $2,000 each

Loan information

Real Estate: $1,330,000 @ 4% for 30 years

Cattle: $392,000 @ 8.5% for 7 years

Machinery: $87,500 @ 8.5% for 6 years

Points, closing costs, broker fees, etc. on P&L as Professional Fees.

Payments

Monthly:

Real estate (P&I only): $6,350

Machinery: $1,556

Annually:

Cattle: $77,467

Cowherd increases from 350 to 700 producing cows.

Conservative estimates for income. Current market prices are higher.

P&LMLAR P&L

FY 1 FY 2 FY 3 FY 4 FY 5 FY 6 FY 7 FY 8 FY 9 FY 10 FY 11 FY 12Sales Commercial Cow/Calf $471,700 $332,575 $258,375 $314,275 $311,325 $331,200 $645,580 $894,390 $886,220 $927,500 $927,500 $927,500 Fullblood Lowline $0 $1,000 $1,000 $1,000 $2,000 $3,000 $3,000 $4,000 $4,000 $5,000 $5,000 $5,000 Timber $125,000 $25,000Total Sales $471,700 $458,575 $284,375 $315,275 $313,325 $334,200 $648,580 $898,390 $890,220 $932,500 $932,500 $932,500

ExpensesDepreciation 38,502 38,502 38,502 38,502 38,502 35,002 35,002 19,930 19,930 19,930 6,000 6,000Bale twine 38,100 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000Baby Beef Expenses 0 0 0 1,565 32,865 32,865 40,064 48,202 60,096 0 0 0Cattle Health 1,790 2,080 2,355 2,670 3,065 3,500 3,500 3,500 3,500 3,500 3,500 3,500Cattle Semen and Breeding 25,725 26,252 31,166 35,376 40,237 46,218 53,020 53,069 53,446 53,703 53,959 54,106Fuel, Lube, and Electricity 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000Other 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000Labor and payroll taxes 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000Professional Fees 104,875 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000Insurance 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000Property taxes 2,693 2,693 2,693 2,693 2,693 2,693 2,693 2,693 2,693 2,693 2,693 2,693Repairs and Maintenance 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000Lowline Herd Expenses 445 527 590 757 988 1,162 1,570 1,619 1,996 2,253 2,509 2,656Total Operating Expenses 313,130 176,527 181,716 187,806 224,362 227,278 241,279 234,394 246,665 186,826 173,152 173,299

Profit Before Interest and Taxes 158,570 282,048 102,659 127,469 88,963 106,922 407,301 663,996 643,555 745,674 759,348 759,201EBITDA 197,072 320,550 141,161 165,971 127,465 141,924 442,303 683,926 663,485 765,604 765,348 765,201 Interest Expense 111,963 105,661 98,978 91,890 84,373 76,402 68,435 60,574 58,462 56,232 53,875 51,386 Taxes Incurred* 0 0 0 0 0 0 0 0 0 0 0 0

Net Profit $46,607 $176,387 $3,681 $35,579 $4,590 $30,520 $338,866 $603,422 $585,093 $689,442 $705,473 $707,815Net Profit/Sales 9.88% 38.46% 1.29% 11.29% 1.46% 9.13% 52.25% 67.17% 65.72% 73.93% 75.65% 75.91%EBITDA/Investment 10.37% 16.87% 7.43% 8.74% 6.71% 7.47% 23.28% 36.00% 34.92% 40.29% 40.28% 40.27%

Cash FlowMLAR Cash Flow FY 1 FY 2 FY 3 FY 4 FY 5 FY 6 FY 7 FY 8 FY 9 FY 10 FY 11 FY 12Cash Received

Cash from OperationsCash Sales $471,700 $458,575 $284,375 $315,275 $313,325 $334,200 $648,580 $898,390 $890,220 $932,500 $932,500 $932,500 Subtotal Cash from Operations $471,700 $458,575 $284,375 $315,275 $313,325 $334,200 $648,580 $898,390 $890,220 $932,500 $932,500 $932,500

Additional Cash ReceivedSales Tax, VAT, HST/GST ReceivedNew Current BorrowingNew Other Liabilities (interest-free)New Long-term Liabilities 1,977,500 Sales of Intermediate Assets 10,000 100,000 100,000 130,000 150,000 210,000 0 0 0 0 0 0New Investment Received 1,900,000 0 0 0 0 0 0 0 0 0 0 0Subtotal Cash Received 4,359,200 558,575 384,375 445,275 463,325 544,200 648,580 898,390 890,220 932,500 932,500 932,500

ExpendituresExpenditures from OperationsCash Spending 274,628 138,025 143,214 149,304 185,860 192,276 206,277 214,464 226,735 166,896 167,152 167,299 Bill Payments 215,720 215,720 215,720 215,720 215,720 215,720 198,320 98,004 98,004 98,004 98,004 98,004 Subtotal Spent on Operations 490,348 353,745 358,934 365,024 401,580 407,996 404,597 312,468 324,739 264,900 265,156 265,303

Additional Cash SpentSales Tax, VAT, HST/GST Paid OutPrincipal Repayment of Current Borrowing 0 Other Liabilities Principal Repayment 60,000 Long-term Liabilities Principal Repayment 0 0 Purchase Other Current Assets 0 0 0 0 0 0 0 0 0 0 0Purchase Other Intermediate Assets 1,050,000 0 0 0 0 0 0 0 0 0 0 0 Purchase Long-term Assets* 2,125,000 0 0 0 0 0 0 0 0 0 DividendsSubtotal Cash Spent 3,725,348 353,745 358,934 365,024 401,580 407,996 404,597 312,468 324,739 264,900 265,156 265,303

Net Cash Flow $633,852 $204,830 $25,441 $80,251 $61,745 $136,204 $243,983 $585,922 $565,481 $667,600 $667,344 $667,197 Cash Balance $633,852 $838,682 $864,123 $944,374 $1,006,119 $1,142,323 $1,386,306 $1,972,228 $2,537,709 $3,205,309 $3,872,653 $4,539,850 Cash ROI 33.36% 10.78% 1.34% 4.22% 3.25% 7.17% 12.84% 30.84% 29.76% 35.14% 35.12% 35.12%

Balance SheetMLAR Balance Sheet

FY 1 FY 2 FY 3 FY 4 FY 5 FY 6 FY 7 FY 8 FY 9 FY 10 FY 11 FY 12Assets

Current AssetsCash $633,852 $838,682 $864,123 $944,374 $1,006,119 $1,142,323 $1,386,306 $1,972,228 $2,537,709 $3,205,309 $3,872,653 $4,539,850Other Current AssetsTotal Current Assets 633,852 838,682 864,123 944,374 1,006,119 1,142,323 1,386,306 1,972,228 2,537,709 3,205,309 3,872,653 4,539,850

Long-term AssetsLong-term Assets* 2,377,000 2,550,000 2,719,000 2,904,000 3,121,000 3,355,500 3,417,500 3,481,000 3,544,500 3,609,500 3,655,500 3,739,000Intermediate Assets 1,038,000 888,000 738,000 454,000 216,000 7,000 9,000 9,000 11,000 11,000 12,000 12,000Accumulated Dep 38,502 77,004 115,506 154,008 192,510 227,512 262,514 282,444 302,374 322,304 328,304 334,304Total Long-term and Intermediate Assets 3,376,498 3,360,996 3,341,494 3,203,992 3,144,490 3,134,988 3,163,986 3,207,556 3,253,126 3,298,196 3,339,196 3,416,696Total Assets 4,010,350 4,199,678 4,205,617 4,148,366 4,150,609 4,277,311 4,550,292 5,179,784 5,790,835 6,503,505 7,211,849 7,956,546

Liabilities and Capital

Current LiabilitiesCurrent borrowingOther Current Liab 215,720 215,720 215,720 215,720 215,720 198,320 98,004 98,004 98,004 98,004 98,004 98,004Subtotal Current Liab

Long-term Liabilities 1,873,139 1,762,475 1,645,128 1,520,694 1,388,742 1,248,820 1,118,332 1,080,898 1,041,352 999,575 955,442 908,819Total Liabilities 2,088,859 1,978,195 1,860,848 1,736,414 1,604,462 1,447,140 1,216,336 1,178,902 1,139,356 1,097,579 1,053,446 1,006,823

Paid-in Capital 1,900,000Retained Earnings 2,110,350 4,199,678 4,205,617 4,148,366 4,150,609 4,277,311 4,550,292 5,179,784 5,790,835 6,503,505 7,211,849 7,956,546Earnings 46,607 176,387 3,681 35,579 4,590 30,520 338,866 603,422 585,093 689,442 705,473 707,815Total Capital 4,010,350 4,199,678 4,205,617 4,148,366 4,150,609 4,277,311 4,550,292 5,179,784 5,790,835 6,503,505 7,211,849 7,956,546Total Liab and Capital 1,921,491 2,221,483 2,344,769 2,411,952 2,546,147 2,830,171 3,333,956 4,000,882 4,651,479 5,405,926 6,158,403 6,949,723

Net Worth $1,921,491 $2,221,483 $2,344,769 $2,411,952 $2,546,147 $2,830,171 $3,333,956 $4,000,882 $4,651,479 $5,405,926 $6,158,403 $6,949,723net worth/investment 101.13% 123.41% 123.41% 126.94% 134.01% 148.96% 175.47% 210.57% 244.81% 284.52% 324.13% 365.77%

Year-End Inventories and

Depreciation ScheduleYear-End Inventories FY 1 FY 2 FY 3 FY 4 FY 5 FY 6 FY 7 FY 8 FY 9 FY 10 FY 11 FY 12Commercial Cows 345 295 245 180 105 0 0 0 0 0 0 0% Lowline Cows 11 116 16 121 226 354 508 700 700 700 700 700Bred Heifers 0 5 105 105 128 154 192 0 0 0 0 0Total Calves Born 356 416 261 301 331 354 508 700 700 700 700 700Heifers Retained 5 105 105 128 154 192 0 0 0 0 0 0Weanling Calves Sold 356 251 195 233 147 162 380 546 700 700 700 700Commercial Cows Sold 5 50 50 65 75 105 0 0 0 0 0 0

Depreciation Schedule Start valueSalvage value Term FY 1 FY 2 FY 3 FY 4 FY 5 FY 6 FY 7 FY 8 FY 9 FY 10 FY 11 FY 12

horses 1,000 0 7 143 143 143 143 143 143 143 0 0 0 0 0Cattle equipment 50,000 10,000 20 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 0 0Tractor 50,000 5,000 10 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 0 02006 Dodge Ram 18,000 500 5 3,500 3,500 3,500 3,500 3,500 0 0 0 0 0 0 0Montana tractor 13,000 500 10 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 0 0Round bale trailer 3,000 500 10 250 250 250 250 250 250 250 250 250 250 0 0Lowline cattle 122,500 18,000 7 14,929 14,929 14,929 14,929 14,929 14,929 14,929 0 0 0 0 0Buildings & Fixtures 200,000 50,000 25 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000Swather 40,000 500 10 3,950 3,950 3,950 3,950 3,950 3,950 3,950 3,950 3,950 3,950 0 0Large baler 15,000 500 10 1,450 1,450 1,450 1,450 1,450 1,450 1,450 1,450 1,450 1,450 0 0Rake 5,500 200 10 530 530 530 530 530 530 530 530 530 530 0 0

38,502 38,502 38,502 38,502 38,502 35,002 35,002 19,930 19,930 19,930 6,000 6,000

Basic Cow/CalfSummary FY 1 FY 2 FY 3 FY 4 FY 5 FY 6 FY 7 FY 8 FY 9 FY 10 FY 11 FY 12Net Profit $46,607 $176,387 $3,681 $35,579 $4,590 $30,520 $338,866 $603,422 $585,093 $689,442 $705,473 $707,815EBITDA/Investment 10.37% 16.87% 7.43% 8.74% 6.71% 7.47% 23.28% 36.00% 34.92% 40.29% 40.28% 40.27%Net Cash Flow $633,852 $204,830 $25,441 $80,251 $61,745 $136,204 $243,983 $585,922 $565,481 $667,600 $667,344 $667,197Cash ROI 33.36% 10.78% 1.34% 4.22% 3.25% 7.17% 12.84% 30.84% 29.76% 35.14% 35.12% 35.12%Total Assets $4,010,350 $4,199,678 $4,205,617 $4,148,366 $4,150,609 $4,277,311 $4,550,292 $5,179,784 $5,790,835 $6,503,505 $7,211,849 $7,956,546Net Worth $1,921,491 $2,221,483 $2,344,769 $2,411,952 $2,546,147 $2,830,171 $3,333,956 $4,000,882 $4,651,479 $5,405,926 $6,158,403 $6,949,723net worth/investment 101.13% 123.41% 123.41% 126.94% 134.01% 148.96% 175.47% 210.57% 244.81% 284.52% 324.13% 365.77%

Basic Cow/Calf CrashSummary FY 1 FY 2 FY 3 FY 4 FY 5 FY 6 FY 7 FY 8 FY 9 FY 10 FY 11 FY 12Net Profit $46,607 $176,387 $3,681 $35,579 $4,590 $30,520 $182,726 $386,702 $371,033 $461,942 $477,973 $480,315EBITDA/Investment 10.37% 16.87% 7.43% 8.74% 6.71% 7.47% 15.06% 24.59% 23.65% 28.32% 28.31% 28.30%Net Cash Flow $633,852 $204,830 $25,441 $80,251 $61,745 $136,204 $87,843 $369,202 $351,421 $440,100 $439,844 $439,697Cash ROI 33.36% 10.78% 1.34% 4.22% 3.25% 7.17% 4.62% 19.43% 18.50% 23.16% 23.15% 23.14%Total Assets $4,010,350 $4,199,678 $4,205,617 $4,148,366 $4,150,609 $4,277,311 $4,394,152 $4,806,924 $5,203,915 $5,689,085 $6,169,929 $6,687,126Net Worth $1,921,491 $2,221,483 $2,344,769 $2,411,952 $2,546,147 $2,830,171 $3,177,816 $3,628,022 $4,064,559 $4,591,506 $5,116,483 $5,680,303net worth/investment 101.13% 123.41% 123.41% 126.94% 134.01% 148.96% 167.25% 190.95% 213.92% 241.66% 269.29% 298.96%

Cow/Calf, Beef, and GeneticsSummary FY 1 FY 2 FY 3 FY 4 FY 5 FY 6 FY 7 FY 8 FY 9 FY 10 FY 11 FY 12Net Profit $62,838 $185,116 $21,305 $1,259 $19,121 $32,889 $343,527 $604,165 $667,911 $671,931 $689,859 $694,072EBITDA/Investment 11.23% 17.33% 8.36% 6.93% 7.47% 7.59% 23.52% 36.04% 39.28% 39.37% 39.46% 39.55%Net Cash Flow $650,083 $213,559 $43,065 $45,931 $76,276 $138,573 $248,644 $586,665 $648,299 $650,089 $651,730 $653,454Cash ROI 34.21% 11.24% 2.27% 2.42% 4.01% 7.29% 13.09% 30.88% 34.12% 34.22% 34.30% 34.39%Total Assets $4,025,581 $4,223,638 $4,247,201 $4,152,630 $4,166,404 $4,295,475 $4,572,117 $5,200,352 $5,891,221 $6,584,380 $7,282,110 $8,008,064Net Worth $1,936,722 $2,245,443 $2,386,353 $2,416,216 $2,561,942 $2,848,335 $3,355,781 $4,021,450 $4,751,865 $5,486,801 $6,228,664 $7,001,241net worth/investment 101.93% 125.60% 125.60% 127.17% 134.84% 149.91% 176.62% 211.66% 250.10% 288.78% 327.82% 368.49%

Cow/Calf, Beef, and Genetics CrashSummary FY 1 FY 2 FY 3 FY 4 FY 5 FY 6 FY 7 FY 8 FY 9 FY 10 FY 11 FY 12Net Profit $62,838 $185,116 $21,305 $1,259 $19,121 $32,889 $230,427 $439,390 $505,411 $509,431 $527,359 $531,572EBITDA/Investment 11.23% 17.33% 8.36% 6.93% 7.47% 7.59% 17.57% 27.36% 30.73% 30.82% 30.91% 31.00%Net Cash Flow $650,083 $213,559 $43,065 $45,931 $76,276 $138,573 $135,544 $421,890 $485,799 $487,589 $489,230 $490,954Cash ROI 34.21% 11.24% 2.27% 2.42% 4.01% 7.29% 7.13% 22.20% 25.57% 25.66% 25.75% 25.84%Total Assets $4,025,581 $4,223,638 $4,247,201 $4,152,630 $4,166,404 $4,295,475 $4,459,017 $4,922,477 $5,450,846 $5,981,505 $6,516,735 $7,080,189Net Worth $1,936,722 $2,245,443 $2,386,353 $2,416,216 $2,561,942 $2,848,335 $3,242,681 $3,743,575 $4,311,490 $4,883,926 $5,463,289 $6,073,366net worth/investment 101.93% 125.60% 125.60% 127.17% 134.84% 149.91% 170.67% 197.03% 226.92% 257.05% 287.54% 319.65%

Comparison Summaries

Assume calf prices decrease to $2/lb. for ½-Lowline and $2.25/lb. for ¾-Lowline in FY 7.

Assume calf prices decrease to $2/lb. for ½-Lowline and $2.25/lb. for ¾-Lowline in FY 7.

Comparison percentages

EBITDA/Investment FY 1 FY 2 FY 3 FY 4 FY 5 FY 6 FY 7 FY 8 FY 9 FY 10 FY 11 FY 12

Basic Cow/Calf 10.37% 16.87% 7.43% 8.74% 6.71% 7.47% 23.28% 36.00% 34.92% 40.29% 40.28% 40.27%Cow/Calf, Beef, and Genetics 11.23% 17.33% 8.36% 6.93% 7.47% 7.59% 23.52% 36.04% 39.28% 39.37% 39.46% 39.55%Basic Cow/Calf Crash 10.37% 16.87% 7.43% 8.74% 6.71% 7.47% 15.06% 24.59% 23.65% 28.32% 28.31% 28.30%Cow/Calf, Beef, and Genetics Crash 11.23% 17.33% 8.36% 6.93% 7.47% 7.59% 17.57% 27.36% 30.73% 30.82% 30.91% 31.00%

Cash ROI FY 1 FY 2 FY 3 FY 4 FY 5 FY 6 FY 7 FY 8 FY 9 FY 10 FY 11 FY 12


net worth/investment FY 1 FY 2 FY 3 FY 4 FY 5 FY 6 FY 7 FY 8 FY 9 FY 10 FY 11 FY 12


Comparison dollars

EBITDA/Investment FY 1 FY 2 FY 3 FY 4 FY 5 FY 6 FY 7 FY 8 FY 9 FY 10 FY 11 FY 12


Cash ROI FY 1 FY 2 FY 3 FY 4 FY 5 FY 6 FY 7 FY 8 FY 9 FY 10 FY 11 FY 12


net worth/investment FY 1 FY 2 FY 3 FY 4 FY 5 FY 6 FY 7 FY 8 FY 9 FY 10 FY 11 FY 12


Net Worth Year-Over-Year FY 1 FY 2 FY 3 FY 4 FY 5 FY 6 FY 7 FY 8 FY 9 FY 10 FY 11 FY 12


Terms Used in This PresentationBull – Male bovine with intact testicles.Calf – Baby bovine, male or female, under one year old. Carrying Capacity – how many cattle a property will sustain without having to buy feed elsewhere and

bring it in (buy hay, etc. and truck it). Stated by acres. Example: If a property is 900 acres, and it takes 3 acres to sustain a cow for the year, the property has a carrying capacity of 300 cows*.

[Body] Condition – A term of the amount of fat cover a cow has. Is scored in a range from 1-9, with 1 being extremely thin and emaciated, 10 having fat rolls. A visual of each score can be found here.

Cow – Female bovine that has had at least one calf.Dam – MotherGrass – forage, to include legumes such as alfalfa.Heifer – Female bovine that has never given birth. [A] Pair – A cow and her nursing calf together.Processed – The animal is slaughtered and cut into pieces (steaks, roasts, burger, etc.).Ranch – The business, consisting of animals, machinery and other assets. In this context, does not refer to

the land specifically.Retained – Kept to be developed for production (for the purpose of this presentation, the retained animals

would be put into production in the MLAR herd).Sire - FatherSteer – Male bovine that is castrated.Weanling – Baby bovine that has been weaned from its mother.

* The state-average carrying capacity for a property in Missouri is 3.5 acres per cow. There is great variation within the state, with less acreage generally being required in the south, more in the north. For the purposes of this project, MLAR uses about 3 acres to estimate carrying capacity for property in southern Missouri. The state average is based off conventional cattle and conventional (continuous) grazing. MLAR’s management typically reduces the acreage needed per conventional cow, but changes and improvements are not instantaneous, takes two or more years to be able to increase carrying capacity.

January 25, 2015 Miller Lowlin e Angus Ranch. U.S. Beef Production Flowchart.

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Transcript of January 25, 2015 Miller Lowlin e Angus Ranch. U.S. Beef Production Flowchart.