Understanding the total costs of raising boer or meat goats.

Total Cost of Raising meat goats

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by Jack Mauldin

Overview

Understanding the Total Cost of doing any type of business has become very popular during the last 5 to 10 years as companies have had to rethink how they do work in this competitive world. Many departments had moved to personal computers thinking it was much cheaper than using the larger computers only to find the hardware and software costs were only Ľ to 1/5 of the total cost. This article will discuss how you can evaluate the total cost of raising goats. This can be done to see what your real profit is and how you may increase your profits. It can also show you how to understand how much real money you are losing and how to minimize the amount or move into a profitable business.

This is a methodology not facts about the average costs of raising goats. What this article will not show:

How much it generally costs to raise goats
Identify if it is more profitable to raise goats vs. cattle or some other animal

Methodology

The methodology for identifying the total cost of doing any business is the same. The major steps are:

Identify the major categories of costs incurred in the business

Identify the cost types within each category

Collect or estimate the costs for each cost type within each category

Develop a statistical graph of the total costs for identifying the larger cost areas

Define which cost areas you have a better opportunity for reduction

Develop an action plan to reduce those costs

Revisit your total cost case at a later time to evaluate changes and progress

Identify Major Costs Categories

The major cost categories for raising goats are:

Costs of animals
Costs for feed supplements
Costs for land and shelter
Costs for health
Cost for labor
Costs for transportation
Costs for administration
Costs for selling
Costs for misc.

Identify the Cost Types within Category

Costs of Animals

Cost of Does. The overall cost of the does you purchase should be identified. Lets take an example of your planning to buy a doe for $1000, expect to keep her five years and then estimate you can sell her for $400 at the end of five years. You would subtract the $400 from the $1000 leaving $600. This divided over five years would be a cost of $120 for this year. If you believed you could buy her for $1000 and sell her next year at the same price after having kidded, you would have no cost associated with the year.
Cost of Bucks. This is the same as for does with one exception. If you plan to offer stud services, this should be calculated into the cost of the buck, thus reducing the overall cost.
Cost of breeding fees. If you take your doe to have it bred with an outside buck, you must identify this cost.

Costs of Feeding ( for year)

Hay

Grain
Minerals
Vitamins

Cost for Land, shelters and protection

This assumes land already owned would have the same value later and will not be added here.

Yearly taxes on land used by goats. This is a real cost

Lease costs

Shelter costs. This cost should be evaluated similar to the animals. Look at the cost of adding shelter and estimate the value it will have later. Spread the cost over whatever period is appropriate
Cost of fertilizing and any treatments done to pasture for goats
Fencing cost. Similar to shelter. Evaluate value added to land and subtract for actual cost, then spread over appropriate period.
Cost of Guard animals. This is the cost of animal spread of appropriate years plus yearly cost for maintaining animal such as dog food, medical, etc.

Costs associated with health

Cost for vaccines
Cost for medicine such as worming, antibiotics, iodine, etc
Cost for vet
Costs for health certificates
Cost for medical supplies. This should include hoof trimers, needles, etc.

Cost for Labor

You probably do not want to calculate the cost of your time, but you may consider looking at it an consider if you could do the work more efficiently.

Cost of hired labor

Cost of Transportation

Include motels and meals where costs are associated with travel related to goat business. Use a cost per mile for estimates. (e.g. .27 per mile without trailer, .50 per mile with trailer)

Travel to sales
Travel to shows
Travel to feed stores
Travel to other farms
Travel to symposiums
Trailers and goat haulers. This should be spread over appropriate years.

Cost for Administration

Association fees
Registration fees
Subscriptions to magazines and newspapers
Software for goat business. Spread this out over an appropriate period
Stamps and envelops

Costs for Selling

Auction fees

Advertisements

Signs

Business cards

Cost for Misc.

Feed buckets. Spread cost
Hay racks. Spread cost
Tattoo equipment. Spread cost
Show supplies
Etc.

Collect or Estimate Costs per Category

You could set up to collect this information over a year period but estimating for the first year is a better way to start. Estimate first and then collect to validate the accuracy of it. Put the estimates into a spreadsheet and create subtotals for each category.

Develop Statistical Graphics

Take the spreadsheet and create a pie chart to show how the different category costs compare.

Define Which Categories are Better for Cost Reduction

Look at the largest cost categories and consider how much control you have over it. For example, you have very little control over land taxes. However, cost of feeding may be something to consider alternatives.

Develop Action Plan

Develop a plan for reducing costs of the identified category areas. Make sure you have set a goal for the reduction. If you do not have a goal to shoot for, you will have difficulty in seeing if you are progressing or not.

Revisit Total Cost Case

Next year at the same time revisit your cost estimates and the actual costs collected. This starts the process all over again to determine if there are areas for reducing costs.

Summary

wpe20.jpg (21311 bytes) The exercise of identifying the Total Cost of Raising Goats can be very eye-opening. It draws your attention to the big picture of raising goats. If you are a hobbyist, it may have no value to you, but if you are looking for a profit, it can't hurt. I hope this has been benificial information for you. Please Email us with your questions or comments. As always, thanks for visiting our web site.

Jack Mauldin's Boer Goat Home Page

01/08/05