The comparative advantage of the Michigan beef industry's feedlot secto

The comparative position of the Michigan fed cattle industry is determined. The comparison of net returns to raising fed cattle on farm produced feeds to those earned on a similar land base growing a corn-soybean-wheat rotation is used to determine the value added by feeding crops grown to fed cattle as part of the farm operation. This comparison showed that fed cattle production in Michigan, practiced under most production and marketing strategies, can add value to farm raised crops. Comparing net returns to fed beef cattle production in Michigan with those in Kansas provides insight into the future locational evolution of fed cattle production in the U.S. Under most production and marketing strategies considered, net return to fed cattle production in Michigan was found to be higher than in Kansas. Therefore, if the U.S. fed cattle industry is in equilibrium, the Michigan industry has strong potential for growth. Although, depending on the opportunity cost of capital invested in feedlots in the Central and Southern Plains, the U.S. industry may not be in equilibrium and the profitability of feeding cattle in Michigan may diminish as feeder cattle prices are bid up and fed cattle prices are bid down. If this is the case, as is hypothesized by observing the rapidly growing fed cattle industry in the Central and Southern Plains states, the industry will continue to shift to this region. As a precursor to determining comparative advantage, net return to Michigan fed cattle production for different size farms and under various production and marketing strategies including varying purchase and sale weights of cattle, seasonal versus year round marketing, and the feeding of different diets is determined. Net returns to fed beef production in Michigan were found to be highly dependent on production and, particularly marketing, strategies employed on the farm although positive net returns were found under all strategies and for each size feedlot. The net return to feeding calves was, in general, higher than that for feeding yearlings. Net return was higher when calves and yearlings were purchased at lighter weights and when yearlings were sold at a heavier weight. More concentrated diets, in general, resulted in higher net returns than less concentrated diets. Net return was higher with seasonal versus year round marketing for feedlots with 1200 head or more capacity. Favorable seasonal price trends under seasonal marketing outweighed higher production costs resulting from the lower annual level of capacity utilization. Economies of size were nearly exhausted by the 3000 head capacity feedlot size.