Site Selection is Crucial to an Intensive Livestock Operation's Profitability

Source: Saskatchewan Agriculture and Food

Site selection is a key component to keep in mind when assessing profitability for an intensive livestock operation (ILO) project, according to Saskatchewan Agriculture and Food (SAF) Agri-Business Development Intern Tanner Bradley.

"Groups considering ILOs are usually tempted first to go out and buy the land, and then they start the planning phase, but what SAF is trying to emphasize with them is the importance and impact that site selection will have on the profitability of that feedlot. By ensuring that you do the proper planning beforehand, we will help ensure that there are no unpleasant surprises as you get to the construction phase and then the operations phase."

The site chosen will have a direct impact on both initial capital costs and variable costs once the ILO becomes operational, says Bradley.

"The feeding industry is a low-margin business; therefore, minimizing all costs is important for an ILO to remain viable. Careful planning needs to take place before the land is purchased or construction begins."

First of all, the selected site must meet requirements for the ILO permitting process. Mitigating the risk of ground water contamination is a major component of the ILO approval process. Certain soil types increase the contamination risk. Less desirable soil conditions will result in increased site engineering and construction costs. There may also be limitations on the potential capacity of the ILO which could affect possible expansion plans. Topographic maps will provide good preliminary site information, and can be accessed free-of-charge through the Saskatchewan Agriculture and Food Agriculture Operations Branch.

Water access in another issue to consider, Bradley points out.

"There must be sufficient water to meet the requirements of the ILO. Piping in water from another location is another added cost that could be avoided. The Saskatchewan Watershed Authority should be contacted to get initial information on the site."

In addition, site selection will also have a direct impact on the variable costs-the reoccurring costs-of an operation. For example, locating the site near a primary highway rather than a secondary highway will reduce transportation costs. Being located on a primary highway means larger loads can be sent and received.

"The result is a lower per unit cost for transportation. Each rural municipality (RM) has different rules on the weight restrictions on their roads; therefore the RM should be consulted.

"Another factor that will affect an ILO is the manure removal costs. Having a land base on which to spread the manure within close proximity to the ILO is important to minimize manure removal costs. It is also important to be able apply the manure on the land which is the greatest benefit to the shareholders."

Careful planning prior to "putting the shovel in the ground" will increase the profitability potential of an ILO, Bradley points out. The examples discussed here are just some of the factors that must be considered prior to selecting an appropriate site for an ILO development. There are many organizations that should be consulted.

"Initial contact with your local SAF livestock development specialist can help streamline the process during the initial planning phase. Most initial information can be provided to the proponent for little or no cost, and the information is readily available. By working closely with your livestock development specialist, this information can be gathered and analysed in a few weeks."

The resulting analysis can help to ensure lower per-unit costs once the ILO is operational, and will minimize unwanted surprises during the construction phase.

For more information, contact:

Tanner Bradley
Agri-Business Development Intern
Saskatchewan Agriculture and Food
(306) 953-2772