Production and Economic Factors Associated with Beef Cow-Calf
Production in East-Central North Dakota

 

Steve Metzger

Carrington Area Farm Business Management Program

Carrington Research Extension Center

 

I

ntroduction

As economic demands on the beef cow-calf producer continue to increase there is a real need for producers to fully understand their costs of production and the potential for increasing their profit margin.  Producers who know and understand all their costs will be in a better position to benefit from all phases of the beef cattle cycle.  Producers need to understand how their costs and their production numbers fit into the broader picture and how they fit into the competitive beef cow-calf business.

 

Procedure

Data for this study was compiled through the Carrington Area Farm Business Management Program in conjunction with the North Dakota Farm Business Management Education Program.  The Carrington program is one of 14 programs in the North Dakota program and is one of 6 programs, which furnishes data for what is known as Region III (South Central area) of the North Dakota program.  The data for this study was confined to that collected and summarized through the Carrington Area program during the 1992-2001 time frame.

 

The data was collected over a ten-year period from producers enrolled in the Carrington Area Farm Business Management Program.  The minimum number of herds involved in any one year was 15 with a maximum of 32.  The total number of cows in the study, calculated on a twelve-month basis, varied from a low of 1,102 in 1992 to a high of 3,990 in 1999 with an average of 2,419 per year.  Average herd size for the ten-year period was calculated to be 100.1 cows. 

 

The data collection cycle for each herd followed the calendar year.  Replacement heifers were not included in the yearlong database but were treated as distinct and individual enterprises or profit centers.  All breeding costs or charges are absorbed within the main database and are allocated as part of the total per cow or per hundred-weight (cwt.) cost of production.  While individual enterprise records were also developed for most feeds raised, a narrow range of market values was used to price the various feeds fed to the cowherds.  Pasture and range lands were typically allocated at their cost of production or rental rate and converted over to an animal unit month (aum) basis.

 

While all costs were gathered on a 12-month basis, the income side of the enterprise, other than for the sale of cull animals or breeding stock, was terminated at weaning when the calves were physically separated and sold or transferred to a backgrounding or feeding enterprise.  While producers were encouraged to weigh all calves at weaning, it must be acknowledged that some producers did not weigh all calves when they were weaned and transferred to other enterprises.  In these cases weights were estimated using the sale weights of herd mates or similar type calves.

 

Results and Discussion

The average number of cows per year, as shown in Table 1, was 2,419 head.  The average production was 515 pounds per cow with a range of 496 to 571 pounds per cow.  The average value of this production was calculated to be $411.70 per cow.  The inventory change or real dollar value lost in the herd due to such things as culling or uninsured death loss was calculated to be $41.22 per cow.  Producers may think of this number as the depreciated real dollar value of the beef cowherd divided by the average number of cows as calculated on a twelve month basis.  Although it is not as apparent as other annual expenses, it may be among the single largest expenses that a producer will have to account for and manage (Metzger, 2000).  After discounting the value of the calves produced for this inventory change, the average gross return per cow is $370.48 with a range of $242 to $473 per cow. 

 

 

Inventory change can greatly affect herd profitability as demonstrated in 1996 and 2000 when the average high profit herds (20%) averaged an inventory change of $37.33 and $15.00 respectively while the low profit herds (20%) averaged $90.10 and $45.96 respectively.  This net inventory change figure is greatly influenced by the price paid for or the dollars invested in breeding stock, the length of time animals remain within the herd and their cull value when they leave the herd.  The average per cow net returns for the high and low profit herds in 1996 were $(1.19) and $(191.94) respectively.  For the year 2000 these per cow net return numbers increased to $207.61 and $(31.42) respectively.  The years 1996 and 2000 were chosen for comparison because of their location within the ten to eleven year cattle cycle with 1996 being the lowest point in the last beef cattle cycle.

 

Direct expenses, which included all feeds fed, averaged $271.33 per cow.  Average feed cost per cow was $200.45 and included all supplements, grains, forages and pasture or range costs.  Overhead costs, while in the range of $45 to $70 per cow, averaged $57.43 per cow for the ten-year period.  The average total costs per cow were calculated at $328.75 or $64.16 per cwt. of production.  Net return per cow was $41.73 which translated into a net return of $7.79 per cwt. of production.  It should be noted that in these calculations no charge or allowance is made for operator labor and management.  This assessment would be taken from profits received after all costs are met.  It should also be noted that although interest is included in the direct and overhead expenses, no allotment is made for principal payments that may be due on debt associated with the purchase of the breeding stock.  Any principal payment would also have to be generated through the profits of the cowherd.

 

While many producers tend to be quite familiar with weaning weights, an average of 545 pounds in this study, a more important number to become familiar with is that of pounds of calf weaned per exposed female.  The ten-year average for this measure of productivity is 497 pounds.  This method of measuring production is calculated in accordance with the Standardized Performance Analysis for beef cattle.  Using pounds weaned per exposed female is a more accurate method of measuring productivity in the beef cowherd because it measures maximum total production against the maximum number of females that were intended to calve in that production season.

 

Implications

In order for beef cow-calf producers to have the greatest opportunity to enhance their profitability they will need to know their costs of production and their actual net return after all expenses including that described as inventory change.  Producers will also need to be keenly aware of the price paid for or built into replacement breeding stock.  Some suggested goals for producers might be to: wean a minimum of 500 to 550 pounds per exposed female, achieve total direct and overhead costs of $330.00 or less per cow, maintain total feed costs at a maximum of $200.00 per cow, maintain inventory change at or less than $40.00 per cow and achieve calving and weaning percentages of at least 96% and 92% respectively.  Attaining these goals will allow producers a greater opportunity to not only enhance their profitability but also to grow and prosper in the beef cow-calf industry.

 

References

Metzger, S.S. 2001. Carrington Area Farm Financial and Enterprise Analysis Report for 2001.

Carrington Area Farm Business Management Program, Carrington, ND. and Carrington Research Extension Center, NDSU.

Metzger, S.S. 2000. Carrington Area Farm Financial and Enterprise Analysis Report for 2000.

Carrington Area Farm Business Management Program, Carrington, ND. and Carrington Research Extension Center, NDSU.

Metzger, S.S. 1999. Carrington Area Farm Financial and Enterprise Analysis Report for 1999.

Carrington Area Farm Business Management Program, Carrington, ND. and Carrington Research Extension Center, NDSU.

Metzger, S.S. 1998. Carrington Area Farm Financial and Enterprise Analysis Report for 1998.

Carrington Area Farm Business Management Program, Carrington, ND. and Carrington Research Extension Center, NDSU.

Metzger, S.S. 1997. Carrington Area Farm Financial and Enterprise Analysis Report for 1997.

Carrington Area Farm Business Management Program, Carrington, ND. and Carrington Research Extension Center, NDSU.

Metzger, S.S. 1996. Carrington Area Farm Financial and Enterprise Analysis Report for 1996.

      Carrington Area Farm Business Management Program, Carrington, ND.

Metzger, S.S. 1995. Carrington Area Farm Financial and Enterprise Analysis Report for 1995.

      Carrington Area Farm Business Management Program, Carrington, ND.

Metzger, S.S. 1994. Carrington Area Farm Financial and Enterprise Analysis Report for 1994

      Carrington Area Farm Business Management Program, Carrington, ND.

Metzger, S.S. 1993. Carrington Area Farm Financial and Enterprise Analysis Report for 1993

      Carrington Area Farm Business Management Program, Carrington, ND.

Metzger, S.S. 1992. Carrington Area Farm Financial and Enterprise Analysis Report for 1992

      Carrington Area Farm Business Management Program, Carrington, ND.

Metzger, S.S. 2000. Management Characteristics of High and Low Profit Beef Cow Producers In

East-Central North Dakota. Carrington Research Extension Center Beef and Bison Field Day  Proceedings. Vol. 23. Pp 16-19.



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