BS in Agricultural Business
James J. Ahern
Alexandre Family EcoDairy Farms (AFEF) is a family dairy farm, producing organic milk in northern California. In the last decade, AFEF has been expanding in value added natural food enterprises, including pastured free-range eggs, pastured pork and grass-fed beef.
This study focuses on the analysis of an organic grass-fed ground beef from dairy-beef cross steers coming from AFEF. The grass fed beef enterprise was analyzed by adopting a UC Davis cost and returns study, modifying it to AFEF production limitations and conditions. Through partial budgeting analysis, opportunity costs were discovered leading to breakeven prices for the final grass fed ground beef product.
AFEF should begin the grass-fed beef enterprise as described in this analysis. Ground beef can safely be priced between the mean, $7.36, and one standard deviation above the mean, $8.55, given past experience by AFEF in value added health food enterprises. At these prices, the realized profit per steer is $1,094 and $1,616 respectively. When opportunity costs of raising less replacement heifers are analyzed, ($319/head), the income is $775 and $1,297 respectively. With this grass-fed beef enterprise, AFEF will be able to retain dairy bull calves and make a profit doing so.