Overview of APHIS’ Indemnity Calculators

Stephen L. Ott, PhdLivestock Appraisal-Indemnity-Compensation Specialist

Available Appraisal Calculators (Spreadsheets)

BeefBreeding, Unweaned

Calves, Feeder-Stockers, Feedlot

DairyCalves, Heifer

Replacements, Milk Cows

Whitetail DeerFawns, Bucks, Does

PoultryBroilers (meat &

breeders), Turkeys (meat & breeders), and Table Egg Layers

SwineBreeders, Market Pigs

& Hogs

Steps in Determining Value via Sales Comparison Approach

Assess Asset QualityRole of VS field personnel

Gather Sale Prices of Comparable AssetsRole of AICS Field Personnel if doing own appraisalUse publicly reported auction prices

Preferably USDA-AMS reported prices

Steps in Determining Value via Sales Comparison Approach

Adjust Value For Quality Differences Appraisal calculators perform this functionConsequently, their appraisal values should

be viewed as market based values

An Animal Located at Its Premise Will Have ____ Value When Compared to

Its Upcoming Auction Barn Selling Price

A. LessB. SameC. More

33% 33%33%

Premise Valuation AdjustmentAuction Sale Prices: prices paid by buyersSeller pays commission, yardage fees, check-off fundsAlso animals must be transported to the auction barn

Premise Valuation AdjustmentConsequently, the net value received by an owner for selling an animal equals the selling price minus various marketing and transportation costsThis net value to the owner is what the calculators attempt to estimate

If a Ranch’s Business is Producing Beef for Direct Sale to Consumers, Then Animal Value Should Based

Upon Its ____ Form

A. LiveB. Carcass or Meat

50%50%

Form Matters

Calculators are for current condition of the animal at time of depopulation, i.e. liveSome producers will argue they should receive their planned future selling priceunweaned calves valued as weaned

calvesbeef steers valued at their direct sale

meat valuecervids as the value charged for hunting

them

Form MattersThis higher value desired is associated with a change in future conditionLighter to HeavierUnweaned to WeanedLive to Harvested

Change in form has a costWhen additional costs are accounted current market

value is obtainedThis extra value could also be thought as revenue and APHIS doesn’t pay for lost revenue

Beef Calculator

Beef Calculator

Originally Developed by Dr. Darrel Peel, Beef Marketing Specialist, Oklahoma State UniversityFor Commercial HerdsBreeding Values are function of national

slaughter value for 500 lb cutter grade carcass with fixed regional adjustments

Feeder Values based upon Oklahoma market prices with fixed regional adjustments

Complete Revision for 2014Also for Commercial Herds

Breeding FemalesBoth Breeding Cows and Cow-Calf PairsBased upon regression analysis of USDA-AMS Oklahoma auction pricesOnly Oklahoma auctions included quality and

black hide parameters in their price reporting

Breeding Cows Regression Equation

Value ($/head) is a function of slaughter value (weight x cull cow price), age, 400 lb feeder price, pregnancy statue (1st, 2nd, 3rd trimester), if high quality, if black hide

Cow-Calf Pair Regression Equation

Value ($/pair) is a functionslaughter value (cow weight x cull price), age, calf value (calf weight x calf price), if high quality, if black hide

Breeding FemalesAdditional adjustments (from other data sources): if open for breeding cow, if pregnant for cow-calf pairs, if breed registered, regional differences

Breeding FemalesUser Data Entry: cow weight and age, calf weight (if applicable), pregnancy status, if high quality, if black hide, if breed registered, region

Being Breed Registered Impacts Commercial Cow Value

A. Very littleB. < 5%C. 5-10%D. > 10%

Very little

< 5%5-10%

> 10%

67%

0%0%

33%

Breeding Bulls & Cull CowPrices based upon USDA:AMS’ National Weekly Direct Cow and Bull ReportCull cow grades: premium white, breaker (commercial), boner (utility), cutter (canner)Bulls, single meat gradeRegional AdjustmentUser Data Entry: weight, cull cow grade, region

Feeders & StockersPrices from Oklahoma auction marketsSteers: Medium & Large, No. 1; 300 – 1000 lbsHeifers: Medium & Large, No. 1; 300 – 950 lbs

Price for 950-1000 lbs is imputedBulls: Medium & Large, No. 1; 400 – 750 lbs

Feeders & StockersAdjustmentsRegional Differences from Peel’s feeder cattle

calculatorHolstein Steers: 75% of Beef Steer pricesNo adjustment for black hide, already top quality

User Data Entry: weight, sex, region, if Holstein

Feeders & Stockers: Unweaned Calves

Useful if need to split pairs, value cow as breeding female and calf as unweaned calfA slide factor from analysis of light weight calves at Dodge City, KS auction is used to adjust feeder pricesAdjustments for regional differencesNo adjustment for quality or black hideUser Data Entry: calf weight and sex, region of country

Fats or FeedlotNational value for animals 1000 - 2000 lbsPrices from AMS’ National Weekly Direct Slaughter Cattle Report—Formulated and Forward Contract Cattle type: beef steers, beef heifers, dairy steers & heifersGrade: choice & selectPrices adjusted downward if carcass weight is greater than 900 lbsData Entry: number head in each cattle type, weight, and grade categories

Dairy Calculators

Milk Cow CalculatorHas been in use for several yearsFive major revisions, plus

minor adjustmentsLast major revision: May,

2013Earlier version reviewed by Dr. David Anderson, Professor and Extension Economist, Texas A&M University

Appraisal Value of a Dairy Cow

Appraisal value is based upon expected value of future dairy production plus current cull valueIt is determined through a combination of sales comparison and income appraisal methodologies

Total Expected Milk Production

Expected remaining lactationsBased upon published analysis of Dairy Herd

Improvement (DHI) dataTotal Expected Milk Production (lbs / cow)

= expected remaining lactations x DHI average milk production (lbs / cow) for both Holsteins & Jerseys

Value of Expected Calf Production

Expected number of calves a function of expected number of remaining lactationsAdjusted for stillborns and death loss

at calvingExpected Value ($ / cow)

= expected calves x calf price (avg. of male & female)

Calf prices from Dairy Replacement Calculator

Milk Production Premium

Total milk production premium ($/cow) = Springer price (Holstein & Jerseys) – avg. cull value (Holstein & Jerseys) – value of expected calves to be born

Per pound milk production premium = total milk production premium ÷ total expected milk production of DHI avg. Holstein or Jersey

Individual Cow Appraisal Value

Appraisal Value ($/head) = + Value of expected milk productionPer pound milk production premium x 305

ME milk production x expected remaining lactations

+ Value of expected calf production expected births x newborn survival rate x

calf price+ Salvage (cull) valueCurrent weight x cull cow price

Cull cow price is function of both weight (discount for being light) and quality grade

AdjustmentsOther breeds use their own weight, but use Holstein per pound milk production premium and calf valueMilk production is adjusted to reflect the impact butterfat content has on milk priceIncrease calf value if have a positive Predicted Transmitting Ability Net Merit score (Merit $)Generally for breed registered cows

Two Regions: East and West of Mississippi River

Price Inputs

Springer Holstein HeiferMost common of dairy cow prices19 Auctions across the countryAssume prices are for Holsteins unless stated

otherwiseCull cow price ($/cwt)From USDA-AMS’ National Weekly Direct

Cow and Bull Report of carcasses 500 lbs and up

User Input Parameters

The Milk Cow Calculator is very user data intensive11 user entered parameters

Good News: the calculator has default values for every input parameterSome default values are a function of breed

and lactation

Milk Production Parameters

Lactation305 ME production (lbs)305 ME Milk Butterfat (%)Days-in-milk Alternatively: Have calculator determine 305 ME based on:Daily Milk Production (lbs)Herd Milk Production Avg. (lbs / cow)Milk Butterfat (%) Days-in-milkLactation

Cull Cow ParametersCurrent weight (lbs): Cull price is reduced for cows having

carcass less than 500 lbsDefault cull weights are function of

breed and lactationQuality grades: premium white, commercial (aka breaker), utility (aka boner), or cutter/cannerDefault values: 1st lactation: commercial; 2nd lactation: utility; 3rd lactation and greater: cutter

Pregnancy StatusProbability will be pregnant by 280 days-in-milkIf open too many days-in-milk, then

pregnancy probability begins to decline

Value less than 100% reduces number of expected future lactations

Default 100% if < 180 DIM, then declines to 0% by 280 DIM

0% probability implies the cow will be culled at end of current lactation

Breed Registered Parameters

If registered, initial value is increased by $50Value of improved genetics

is reflected in milk production and value of calves sold

Net Merit $ ValuePositive value increases calf

valueDefault value is $0

Dairy Replacement Calculator

Price InputsHolstein springers, Holstein short-breds, Holstein bull

& heifer calves, beef feeder pricesAppraisal values are linear Interpolation between above valuesWith increases for being weaned and bred

Breed Adjustment based upon relative appraisal value of 1st lactation, 0 DIM cowsEast and West Regions

Poultry

PoultryValue Determined Using Income and Cost-of-Production Appraisal MethodologiesBased upon industry cost and productivity data supplied by Agri-Stats, a benchmarking companyWholesale meat – egg prices from USDA:AMS10% of gross margin is allocated back to bird value

Poultry

Tables of Values are GeneratedDay-of-age for meat birdsWeek-of-age for breeders

Broilers: Meat & BreedersTurkeys: Meat & BreedersTable Egg LayersUser Data Requirement: bird type, number of head, age

Swine Calculators

Piglets & FeedersPrices10 -12 lb early weaned pigs

Assume 11 lb 40 lb feeder pigsUSDA-AMS’ National Direct Feeder Pig Report

Value: linear interpolation between 11 lb piglet and 40 lb feederAssumed Quality: No. 1 & 2Discount if No. 3 or 4

User Data Entry: number of animals in each weight - quality category

Grower-Finishers & Slaughter HogsGrower-Finisher ValuePrice: USDA-AMS’ Weekly Direct Swine Report National Negotiated Live (slaughter) priceBase weight: 240 lbsLinear interpolation between

40 lb & 240 lb valuesSlaughter Hog ValueWeight x Slaughter Price

Discount if No. 3 or 4 QualityUser Data Entry: number of head in each weight – quality category

Breeding FemalesIncome ApproachSow value function of expected number of weaned

piglets produced and their valueCost based upon Iowa State University Extension

farrowing budgetPositive gross margin generates a premium for

breeding gilts10% of gross margin is allocated back to gilt valueAlso value of weaned gilts

Use value of weaned gilts to determine value of sows in multiplier herds

Breeding Females

Values GenerateCommercial Herds: Gilt – 9th ParityMultiplier Herds: Gilt – 6th Parity

Price InputsEarly Weaned PigletsSow Slaughter PricesCorn & Soybean Meal Prices

User Data Entry: number of females in each herd type – parity combination

Final ThoughtCalculators Are a Work-in-ProgressChanges Due To:Data AvailabilityAlternative – Better

Approaches to Determining Value

Seedstock AnimalsFeedback from Users

Stephen L. OttAppraisal-Indemnity-Compensation Specialist

970-494-7239 (office)970-2178692 (cell)

Stephen.L.Ott@aphis.usda.gov