Cow Calf Risk Analysis Tool (CCRAT) is a web based decision support tool for cow calf producers to use to evaluate pricing and insurance alternatives available for a cow-calf enterprise. CCRAT performs 1000 simulations of net returns to the cow-calf enterprise, based on data supplied by the users. There are four variables in the simulation that are stochastic: Weaning Percent, Steer Calf Weight, Market Steer Price and Basis. All four of these variables are simulated based on a triangle distribution. For Weaning Percent, Steer Calf Weight and Market Steer Price the user is asked to supply the Minimum, Expected and Maximum values to establish the triangle distributions. Users enter their expected Basis and the minimum and maximum values are calculated based on the historical variability of basis at several auction markets for the weight of the steer calf entered. Users are able to enter any basis value that best represents their location. However, the variability will be consistent with the auction markets used to validate the model.
The Input Forms
Each of the variables for the decision tool is listed below with a short description of the type of data to be entered.
Cows: the number of head of cows to calve.
(CCRAT is primarily designed for comparing returns for weaned calves. However it can also be used to consider a retained ownership decision that results in a heavier feeder calf to sell. Just enter the number of calves to retain.)
Weaning Percent: this number can be entered as either a decimal or a percent i.e. .85 will be treated the same as 85.
(If retaining ownership, enter the expected percent of calves to sell after accounting for death loss, for example 96, 99, 100)
Basis: Must be between -30 and 40 $/CWT. Basis = Your expected cash sale price - Feeder Cattle Futures for when you expect to sell. (The actual basis value for the simulation will be determined using a triangle distribution with the min and max value being set at a fixed distance from the given basis. This fixed difference is based on historical basis values from the auction markets used for the model and has been subdivided into different weight categories to provide a more accurate variance).
Steer Selling Weight: The weight category is determined by your expected weight. For basis risk weight categories are <500, 500-599, 600-700, 700-800, >800. For determining LRP coverage prices and premiums there are just two weight categories. <600 or 600-900, but basis is still varied based on the weight categories given earlier.
Costs: should be entered in dollars per head. Do not include cost such as a premium for an insurance option as these will be factored in at a later time.
(For retained ownership, be sure to include the cost or value of the calf at the start of the retained ownership period as part of the costs.)
Market Steer Price: Must be entered as $/CWT. To enforce this, no value less than $10 will be accepted.
Futures Price: $/CWT. To enforce this, no value less than $10 will be accepted.
Number of Futures Contracts: Enter an integer value: 1, 2, 3, etc. Each contract represents 50,000 lbs or 500 CWT of production.
Put Option Strike: $/CWT. To enforce this, no value less than $10 will be accepted.
Put Option Premium: Should be entered as a positive value. Numbers less than 0 are not accepted.
Number of Put Option Contracts: Enter an integer value: 1, 2, 3, etc. Each contract represents 50,000 lbs or 500 CWT of production.
LRP Coverage Price: $/CWT as listed on RMA's site. The amount of coverage will be adjusted automatically for the different categories (Steers and Heifers, weight 1 and 2). This adjustment is as follows.
Steers weight 1 coverage = entered coverage price x 110%.
Steers weight 2 coverage = entered coverage price x 100%.
Heifers weight 1 coverage = entered coverage price x 100%.
Heifers weight 2 coverage = entered coverage price x 90%.
These adjustments are made to account for the automatic adjustments the LRP itself makes to market coverage levels. (See the LRP Fact sheet for more information).
LRP Steer Premium: Cost per CWT as listed on RMA's site. The heifer premium is then calculated automatically and the correct value appears in the LRP heifer premium field.
LRP Heifer Premium: This value is calculated from the entered steer premium. The calculation is as follows. Heifer weight 1 premium = entered steer premium / 110%. Heifer weight 2 premium = entered steer premium x 90%.
Number of Steers Insured: This value is calculated automatically based on the number of cows expected to calve, your expected weaning rate, and a 50/50 chance of the calf being a steer vs. a heifer. This value may be adjusted manually if you don't want to insure all your steers, or if you had a different steer to heifer ratio.
Number of Heifers Insured: This value is calculated automatically based on the number of cows expected to calve, your expected weaning rate, and a 50/50 chance of the calf being a heifer vs. a steer. A 15% cull calf rate is also assumed. If however your weaning percent is too low, the cull calf rate is ignored. This value may be adjusted manually if you don't want to insure all your heifers, if you had a different heifer to steer ratio, or if you want to keep more or fewer calves as replacement heifers.
AGR-Lite Approved Gross Revenue: This value can be determined from RMA's website and is based on your past years actual gross revenue. This value must be a positive number.
AGR-Lite Coverage Level: The AGR insurance model currently allows for two coverage levels, 65 or 75% of your approved gross income.
AGR-Lite Payment Rate: The AGR insurance model currently has two payment rates, 75 or 90% of the indemnity owed.
AGR-Premium: This value should be your total premium as listed on RMA's site. It should not be entered as cost per head.
The Output Forms
The results of the simulation on net returns are displayed in two charts and a table. A cumulative probability distribution is show for each pricing or insurance alternative. This graph is zoomable; just click and drag to select the area you want to zoom in on. To zoom back out, just click and drag the mouse towards the top of the screen. On the CDF graph, you can click the checkboxes to show or hide that particular line graph. To see the value of the graph at a given point hover the mouse over that point for a few seconds and a tooltip will appear showing the value. The minimum and maximum cutoff values for the Stoplight chart and table can be changed by simply typing in new values. The table and chart will both then be updated in real time. Both graphs can be customized by right clicking on them. Options such as the background color, the x and y axis titles, the chart titles, and the legend can all be set. These changes are not saved however between calculations, so each time they must be reset. The tables and graphs are all printable. When you click the print button a single page showing only the current display i.e. the current graph or table, will be printed out. For best results set the page layout to landscape. Alternatively you can print out the entire web page by clicking the print button in your internet browser.