beef cow-calf profitability, crec, 7-13-04 steve metzger farm business management carrington...

Beef Cow-Calf Profitability,

CREC, 7-13-04

Steve Metzger

Farm Business Management

Carrington Research Extension Center

Carrington, ND

Beef Cow Profitability

What does it really cost to operate a beef cow-calf unit? Per Cow? Per cwt.?

What differences are there between high profit and low profit beef cow-calf herds?

How can a producer project profitability based on given costs and levels of production?

Information for this presentation was gathered from farms and ranches participating in the

Carrington Area Farm Business Management Program from 1994-

2003.

Region 3 data for 1995-1999 was also used for comparison charts &

graphs.

Region 3Farm Business

Management Programs

Bismarck (Eastern)CarringtonJamestownCasselton (Western)NapoleonWahpeton (Western)

Crop Acres Including Forage Crops Have Grown to 2,625 plus

505 of pasture.

0200400600800

10001200140016001800

1995 1996 1997 1998 1999 2000 2001 2002 2003

Own Cash Rent Crop Share

Follow the Money, Carrington,Follow the Money, Carrington,Cash Farm Income $464,760Cash Farm Income $464,760

HRSW17%

Barley11%

Canola4%

Oil Sunf.7%

Soybeans15%

Conf Sunf3%

Durum1%

Flax3%

Corn4%

Other Crops6%

Direct/CC6%

Oth.Govt4%

Insurance3%

Beef Calves2%

Backgrd.5%

Finishing1%

Cull Lvstk2%

Other Lv.3%

CRP1%

Other Misc3% HRSW

BarleyCanolaOil Sunf.SoybeansConf SunfDurumFlaxCornOther CropsDirect/CCOth.GovtInsuranceBeef CalvesBackgrd.FinishingCull LvstkOther Lv.CRPOther Misc

Where is the Money Spent ? Where is the Money Spent ? Carrington Area, $367,819 Carrington Area, $367,819

Land Rent16%

Feedr Pur3%

Fertilizer11%

Chemical11%

Interest7%Repairs

7%

Fuel & Oil6%

Seed11%

Feed2%

Custom5%

Crop Ins5%

Labor3%

Crop M/M1%

Farm Ins2%

Utilities1%

Leases1%

Lvst Misc1%

RE Taxes1%

Vet1%

Misc6% Land Rent

Feedr PurFertilizerChemicalInterestRepairsFuel & OilSeedFeedCustomCrop InsLaborCrop M/MFarm InsUtilitiesLeasesLvst MiscRE TaxesVetMisc

Number of Farms per Year

0

5

10

15

20

25

30

'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 Avg.

No. Farms

Number of Cows per Herd

70

80

90

100

110

120

130

140

150

'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 Avg.

No. Cows

Culling Percentage

10

11

12

13

14

15

16

17

18

19

20

'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 Avg.

Culling %

Calving Percentage

90

91

92

93

94

95

96

97

98

99

100

'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 Avg.

Calving %

Calf Death Loss Percentage

0

1

2

3

4

5

6

7

8

9

10

'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 Avg.

Calf Death Loss %

Weaning Percentage

85

86

87

88

89

90

91

92

93

94

95

'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 Avg.

Weaning %

Weaning Weights per Calf

470

480

490

500

510

520

530

540

550

560

570

'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 Avg.

Avg. Weaning Wt.

Pounds Produced per Cow

470

480

490

500

510

520

530

540

550

560

570

'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 Avg.

Pounds per Cow

Weaning Weights vs. Pounds Weaned per Exposed Female

050

100150200250300350400450500550600

'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 Avg.

Avg. Weaning Wt.

Lbs. Weaned/ExposedFemale

Weaning Weights vs. Pounds Weaned per Exposed Female

450460470480490500510520530540550560570

'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 Avg.

Average Weaning Weight

Lbs. Weaned/Exposed Female

Total Feed Costs/Cow

$0

$50

$100

$150

$200

$250

'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 Avg.

Feed Cost

Veterinary & Supplies/Cow

$0

$5

$10

$15

$20

$25

$30

'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 Avg.

Supplies

Vet

Total Direct Costs/Cow

$240

$250

$260

$270

$280

$290

'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 Avg.

Direct Costs

Overhead Cost Breakdown/Cow

$0

$10

$20

$30

$40

$50

$60

$70

$80

'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 Avg.

Deprec.

Interest

Other

Direct & Overhead Costs/Cow

$0

$50

$100

$150

$200

$250

$300

$350

$400

'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 Avg.

Overhead

Direct

“Net Inventory Change”

The change in real dollars of value in the beef herd due to such things as lesser cull sale values, uninsured death loss and other items.

Usually measured per head or per cwt. of production.

Determining Net Inventory Change per Cow

Assume a herd of 10 cows per year with a real investment of $800 per head or $8,000 total.One cow is culled for $500 or a loss of $300 of real invested dollars. $300 divided by the annual average of 10 cows equals a Net Inventory Change of $30.00 per cow.This is applied to all breeding stock including cows, bulls and replacements after they enter the herd.

Net Inventory Change/Cow

30.16

43.07

17.48

47.4946.44

70.73

64.58

45.87 32.47

47.92

27.57

$0

$10

$20

$30

$40

$50

$60

$70

$80

'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 Avg.

Net Inventory $

Direct, Overhead & Net Inventory Change Costs/Cow

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 Avg.

Net Inv.

Overhead

Direct

Direct, Overhead & Net Inventory Change Costs/Cwt.

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 Avg.

Net Inv.Change

Dir.& Overhead

Gross Income & Expenses(Direct & Overhead)/Cow

250

300

350

400

450

500

550

600

94 95 96 97 98 99 '00 '01 '02 '03 Avg.

Income Expense

Income with Net Inventory Change & Expenses/Cow

0

100

200

300

400

500

600

94 95 96 97 98 99 '00 '01 '02 '03 Avg.

Income Expense

Gross Income & Net Inventory Change plus Expenses/Cow

250

300

350

400

450

500

550

600

94 95 96 97 98 99 '00 '01 '02 '03 Avg.

Income Expense

Gross Income & Expenses/Cwt. without Inventory Change

40

50

60

70

80

90

100

110

94 95 96 97 98 99 '00 '01 '02 '03 Avg.

Income Expense

Income, Inventory Change & Expenses/Cwt.

40

50

60

70

80

90

100

110

94 95 96 97 98 99 '00 '01 '02 '03 Avg.

Income Expense

Beef Cow-Calf, Net Return after Inventory Change

Beef Cow/Calf 1993 156.15 1994 53.09 1995 -51.00 1996 -82.46 1997 - 4.65 1998 -9.73 1999 61.27 2000 89.98 2001 71.18 2002 106.07 2003 156.47

-100-80-60-40-20

020406080

100120140160

'93'94'95'96'97'98'99'00'01'02'03Av

Net Return per Cow

53.0939.02

106.07

156.47

71.18

89.98

61.27

-9.73-4.65-51

-82.46

-100-80-60-40-20

020406080

100120140160

'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 Avg.

Net Return per Cow

Operator Labor & Management Charge per Cow

43.95

54.41

48.76

46.44

49.93

39.36

38.2

38.75

40.53

38.02

45.09

0

10

20

30

40

50

60

'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 Avg.

Charge per Cow

Net Return per Cow with Operator Labor Charge

-140-120-100

-80-60-40-20

020406080

100120140160

'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 Avg.

Operator Labor Avg. $43.95Net Return per Cow

Net Return per Cwt.

12.3818.01

14.3420.03

28.54

7.46

-10.03

-16.19

-1.94-0.9310.41

-20

-15

-10

-5

0

5

10

15

20

25

30

'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 Avg.

Net Return per Cwt.

Net ReturnBeef Cow/Calf, Region 3

Beef Cow/Calf1993 165.61

1994 47.67 1995 -40.46 1996 -50.16 1997 20.21 1998 8.52 1999 92.51 2000 114.80 2001 101.30 2002 62.82 2003 117.38 -60

-40-20

020

4060

80100120

140160

180

'93 '94'95 '96'97 '98'99'00 '01'02 '03

Net Return per Head, Beef Backgrounding, Cgtn. Area

Backgrounding/Hd 1993 64.24 1994 24.96 1995 11.23 1996 5.09 1997 68.92 1998 40.30 1999 43.59 2000 23.24 2001 6.30 2002 1.45 2003 -16.89

-20

-10

0

10

20

30

40

50

60

70

'93'94 '95'96'97 '98'99'00 '01'02'03

Comparing High and Low Profit Beef Cow Herds in East-Central, ND

Herd data from 1995-1999

57 to 81 herds per year, total of 326

6,030 to 8,578 cows per year

Total of 35,252 cows in the five years.

20% High Profit Group, 6,384 head.

20% Low Profit Group, 6,556 head.

Weaning Wts. And Pounds Weaned per Exposed Female Based on Profitability Levels

400

420

440

460

480

500

520

540

560Average

Low Profit

High Profit

Value Produced and Costs (without Inventory Change) Based on

Profitability Levels

290

300

310

320

330

340

350

360

370

Value Costs

Average

Low Profit

High Profit

Inventory Change Based on Profitability Levels

0

10

20

30

40

50

60

70

80

90

Value

Average

Low Profit

High Profit

Net Return per Cow Based on Profitability Levels, 1995-1999

-140

-120

-100

-80

-60

-40

-20

0

20

40

60

Value

Average

Low Profit

High Profit

Comparison of High Profit to Low Profit Herds, 1995-1999

Decrease in total expenses $50.89

Decrease in Net Inventory Chg. $62.60

Increase in value of production $60.13

Total annual average economic

advantage per cow in the high

profit herds over the low profit. $173.62

Goals for High Profit Beef Cow-Calf Producers

Pregnancy rate of 99+%Culling rate of 12%-14%Calving rate of 97% to 98%Weaning rate of 94+%Calf death loss of less than 5%Average Weaning Weight 580 lbs. minimumPounds Weaned per Exposed 540 lbs. minimumDirect and Overhead costs $305-$325 maximumFeed cost of $200 to $210 per cow.Net Inventory Change of -$35 or less.

For More Information:

Steve Metzger 701-652-2951

smetzger@ndsuext.nodak.edu