Economic Based Decision Support to Promote Sustainable Livestock Enterprises

Project Overview

Project Type: Graduate Student
Funds awarded in 2010: $10,000.00
Projected End Date: 12/31/2012
Grant Recipient: Purdue University
Region: North Central
State: Indiana
Graduate Student:
Faculty Advisor:
Joan Fulton
Purdue University

Information Products


  • Animals: bovine, goats, sheep, poultry
  • Animal Products: dairy


  • Education and Training: decision support system, extension
  • Farm Business Management: budgets/cost and returns, feasibility study, new enterprise development, risk management, whole farm planning
  • Sustainable Communities: analysis of personal/family life, new business opportunities


    Individuals motivated to become involved in agriculture may find that a small scale livestock enterprise can fit within their resource constraints. Enterprise budgets yielded profits of -$116.11, -$158.69, $6.37, $82.99, and -$2.38 per unit for cow-calf, dairy steer, sheep, goat, and turkey operations respectively. The negative profit projections from this analysis provide evidence that small scale livestock operations often do not make sense when using profitability as the sole entry criteria. A Comparative Decision Support matrix provides additional comparison information for individuals making small scale livestock entry decisions.


    Livestock enterprises have the potential to be profitable for the producer and contribute to the welfare and sustainability of the surrounding rural community. In many cases small scale livestock operations are attractive to producers because they have a small amount of land or financial capital to invest, they want to add the livestock operation to an existing farm operation as a form of diversity, they have other employment and the livestock operation is a part time effort, or they simply want to get involved in agriculture because of alternative motives such as to provide their children responsibility or to improve their quality of life.

    Species from large ruminants, small ruminants, poultry, swine, and exotic classifications were evaluated for this study. The number of enterprises chosen reflect the timeframe of the project. Subsequently cow-calf, dairy steers, sheep, goats, and turkeys were chosen. The rationale of choosing this subset of enterprises comes from the predicted need for a diverse set of species that are readily available in the North Central region and that can complement different resource endowments. The objective of the project was to provide results that are easily employed and apply to the broadest number of individuals.

    This set of enterprises takes advantage of specific opportunities inherent in each species. Sheep and cow-calf enterprises were chosen for their success on marginal lands and their key differences in size, cost, expertise, and needed equipment. Finishing dairy steers is an enterprise that has not had a large amount of research and is a growing opportunity particularly in the North Central region. With a number of traditionally strong dairy states (Wisconsin, Michigan, and Minnesota) in the North Central region an abundance of dairy steers is expected in the future. Further, Indiana has experienced recent growth in dairy; therefore, it is expected that the number of dairy steers available in the region will continue to grow, perhaps even at an increasing rate. Goats are included because of their potential success in ethnic markets, brush control attributes, and price premium per pound capabilities compared to other red meat. Turkeys can be raised on small acreage and are becoming an important addition to the growing Farmer’s Market trend.

    The outcomes from this project include a set of tools to assist individuals when choosing a livestock enterprise that complements their resources rather than purely focusing on profitability as a decision criteria (although profitability is included in this study). The decision support matrix is an important tool that is structured to reflect the opportunities available in the North Central region. When decision makers are able to make better investment decisions there is a greater chance they will be successful, which in turn has a positive long term impact on the quality of life of the participants and the economies of the rural communities where they live.

    Literature Review

    SARE funded a project to assist farmers with enterprise diversification. The conclusion from that project was that there is a need for additional study to produce business planning curriculum that fit into the busy lifestyles of farmers or individuals looking to start an enterprise (Jost, 2003). The project reported on here compliments Jost’s enterprise diversification project by providing budgets and an easy-to-use decision support matrix that will help individuals apply the methods suggested by Jost. Another project funded by SARE attempted to assist individuals in planning small farms for pleasure and profit; however, the final report indicated that materials (which had to be purchased) were not adopted by farmers and that budgets needed to be updated (Macher, 2005). Current materials, that are easy to use and readily available, are a significant output from this project. The project reported on here benefits from Kollock’s (2006) project to increase the demand for small scale agricultural products and Muntz’s (2007) project that helps individuals begin small scale poultry operations. There are many budgets for enterprises available, which were used in this study from Iowa State, Michigan State and the University of Minnesota. The objective of this project was to tailor broad budgets to a small scale enterprise specifically in the North Central region which makes them more relevant to the population that is being served.

    Project objectives:

    The objectives and performance targets laid out by the project proposal are discussed and the resulting activities and timeframe followed to complete the objectives are discussed in this section.

    Several short term expected outcomes were identified in this proposal for this project. These reflect the method of collecting information to develop outputs for the realization of the proposed intermediate/long term outcomes.

    The first expected outcome was to create a framework for a productive orientation call with farmer participants. In order to attain this outcome, the research team sought Institutional Review Board (IRB) approval at Purdue University. This approval process entailed generating the framework for the entirety of the human subject participation in this research. This framework consisted of recruitment email text, orientation call script and questions, farm visit script and questions, and description of human subject privacy and compensation. The IRB proposal was approved June 2011.

    The second expected outcome was to gain base knowledge of livestock enterprises through an orientation call with farmer participants. During this portion of the project, farmer participants were identified and recruited in accordance with the process identified in the IRB proposal. After the farmer participants were identified, an orientation call was conducted with each participant to provide an overview of the research and expectations of farm visits. Additionally, an overview of the participants’ livestock operation was discussed to tailor farm visits accordingly. These calls were completed during September 2011.

    Another expected outcome was to have productive field visits. Field visits entailed completion of the survey from the IRB proposal as well as a tour of the livestock enterprise facility. The first visit took place on 9/29/11 in Minnesota at a turkey operation by Anna Lee Allcorn and Dr. Joan Fulton. The Indiana sheep operation was visited by Anna Lee Allcorn and Dr. Nicole Olynk on 10/7/11. A Kansas cow-calf operation was visited by Anna Lee Allcorn and Dr. Olynk on 10/28/11. Finally, an Indiana goat operation was visited on 11/30/11 by Anna Lee Allcorn and Dr. Olynk. Each visit lasted approximately three hours and the participants were compensated $150 for their time. These visits provided the information needed to complete the next expected outcome of gaining in-depth knowledge of livestock enterprises.

    The final short term expected outcomes were to clarify any questions after the field visits and to verify usability and accuracy of the tools created as a result of the project. Follow-up communication was conducted on an as-needed basis with each of the participants. Ten secondary farmer participants (those who did not have a farm visit, but were asked to verify usability of tools) were identified and provided valuable feedback on enterprise budgets. Additionally, the project was presented to a group of thirty Purdue agribusiness students and faculty to get their insights and feedback on the economic framework and decision tool design. From these outcomes enterprise budgets and decision assistance tools were designed.

    Intermediate goals established in the project proposal are designed to utilize the information and outputs of the short term expected outcomes.

    The first intermediate expected outcome was for this project to be useful for individuals when planning for their venture. Enterprise budgets were the output by which this outcome was evaluated. As discussed in the short term outcomes, farmer participants reviewed the enterprise budgets for accuracy and usability, additionally Purdue Extension faculty reviewed these outputs. The Materials and Methods section of this report gives a more in-depth methodology of enterprise budget creation.

    The second intermediate expected outcome was to provide insight for decisions based on what resources are needed along with what resources the individual already has. This information is reflected in the investment portion of the enterprise budgets as well as in the qualitative section of the Comparative Decision Support matrix. This expected outcome was originally proposed to be in a separate Land, Labor, and Capital Needs Summary. However, when the project evolved to have a more sophisticated decision support matrix it was determined that the Land, Labor, and Capital Needs Summary should be merged with the matrix and budgets.

    Assisting individuals in choosing the best livestock enterprise, thus increasing enterprise success was also among the intermediate expected outcomes of the project. The Comparative Decision Support (CDS) matrix was created to assist the user determine the livestock enterprise that complemented their lifestyle. A secondary tool (CDS2) was designed to provide more in depth, personalized analysis for the user. Further information on the methodology used to create this tool can be found in the Materials and Methods section of this report.

    In addition to creating tools, this project had expected outcomes of sharing the tools with the public and creating Extension awareness of the tools. This was done in four ways rather than the two original projected avenues. First, the tools are interactive and thus a website was designed to make them readily available to the public. This website went live during the month of March, and is being updated as publications are completed. Second, this website houses not only the tools but also informational videos containing useful information and interpretation. Third, six Extension publications were written and will be available from the website to provide further information for individuals and Extension educators. These Extension publications are in the final stages of the extensive internal expert review process. Drafts are available currently on the website, and will be distributed more broadly as soon as the final edits are approved. This set of publications along with a flyer marketing the online component of the research will be emailed to all Indiana Extension educators when the Extension publications are finalized. Fourth, two presentations discussing this project’s outputs were made on the Purdue campus reaching approximately seventy individuals (presentation dates: 2/8/12 and 3/8/12). These presentations employed Turning Point Audience Response Systems to highlight the interactive nature of the tool package.

    The proposal also had expected outcomes to report the findings of the research and present publishable material through Anna Lee Allcorn’s masters thesis. She successfully defended her thesis on 3/2/12. In addition to a successful thesis document and defense, this research has been accepted for an oral presentation at the 6th Annual National Small Farms Conference in September 2012.

    The final expected outcome of this project is to share information on the SARE Project database which will be completed with the submission of this report.

    Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture or SARE.