How Much Is Slauter Beef Cow in Ky
Author(s): Greg Halich, Kenny Burdine, and Jonathan Shepherd
Published: Feb 25th, 2021
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The purpose of this article is to examine cow-calf profitability for a spring calving herd that sold weaned calves in the autumn of 2020 and provide an estimate of profitability for the upcoming year. Table 1 summarizes estimated costs for a well-managed bound-calving cowherd for 2020. Every operation is different, so producers should evaluate and modify these estimates to fit their state of affairs. Note that in this table we are non including depreciation or interest on equipment/fencing/facilities, besides as labor and land costs.
Calves are assumed to be weaned and sold at an average weight of 550 lbs. In the fourth quarter of 2020, steers in this weight range were selling for prices in the upper $130'southward and heifers in the low $120's, on a state boilerplate basis. Therefore, a steer / heifer average price of $1.30 per lb is used for the assay, which is actually the same price that was used last year. Weaning charge per unit was estimated at 85%, meaning that information technology is expected that a calf volition exist weaned and sold from 85% of the cows that were exposed to the balderdash. Based on these assumptions and adjusted for the weaning rate, average dogie revenue is $608 per cow.
Pasture maintenance costs are assumed to be relatively low at $20 per acre, and would include just bones greenbacks costs of pasture clipping (fuel, maintenance, repairs), and a limited amount of reseeding, fertilizer, and fencing repairs. Producers who consistently apply larger amounts of fertilizer to pasture ground would see much higher pasture maintenance costs. The pasture stocking rate is assumed to exist 2.0 acres per cow, merely producers should carefully consider the stocking charge per unit for their operation as this will vary greatly. Stocking rate impacts the number of grazing days and winter feeding days for the operation (i.due east. loftier stocking rates volition mean more hay feeding days), which has large implications for costs on a per cow basis.
These bound calving cows will use ii.5 tons of hay per cow, and the estimated cash cost of making this hay (fuel, maintenance, repairs, supplies, fertilizer, etc.) is $35 per ton. Mineral toll is $35 per cow, veterinary / medicine costs $25, trucking costs $15, machinery greenbacks costs for wintertime feeding and other miscellaneous jobs is $15, and other costs (insurance, property taxes, water, etc.) are $40. Breeding costs are $twoscore per cow and should include almanac depreciation of the bull and bull maintenance costs, spread beyond the number of cows he services. Marketing costs are currently around $25 per cow, but larger operations may market cattle in larger groups and pay lower commission rates.
Breeding stock depreciation and involvement are major costs that are oftentimes overlooked. They are generally not cash costs that need to be paid on a yearly footing, unless y'all have a loan on them, but they are real costs that need to be paid at some point. As an instance, presume a bred heifer is valued at $1300, has eight productive years, and has a cull cow value of $600. The average yearly depreciation is calculated equally follows:
$1300 bred heifer value
–$600 cull-cow value
$700 total depreciation
$700 depreciation / eight productive years = $88 cow depreciation per year. The actual depreciation will vary beyond farms. When buying bred replacement heifers, the initial heifer value is articulate. With subcontract-raised replacements, this cost should be the revenue foregone had the heifer been sold with the other calves, plus all expenses incurred (feed, breeding, pasture rent, etc.) to attain the same reproductive stage as a purchased bred heifer. At an average value of $950 (halfway between bred heifer and cull value) over her lifespan on your subcontract, and assuming a 3% interest rate results in a $29/moo-cow/year involvement cost, or a total of $117/cow/twelvemonth in combined depreciation and interest.
Note that based on the assumptions in our example, total specified expenses per cow are $440 and revenues per moo-cow are $608. Thus, the estimated gross return is $168 per cow. At kickoff glance, this positive render looks impressive, but is likewise misleading. A number of costs were intentionally excluded because they vary greatly across operations. Observe that no depreciation or interest on equipment/fencing/facilities was included. Notice likewise that labor and land costs were too not included. Thus, the gross return needs to be adjusted by these costs to come up up with a true render to the farm.
Since these costs vary so much from i operation to the side by side, it may exist helpful to choice a specific sized farm and provide estimates for these costs: a 40-moo-cow operation that is producing its ain hay and has all farming operations on its own land (80 acres of pasture and 30 acres of hay).
Assume this farm has on average $50K in equipment which depreciates roughly $1000 every year, or $25/cow/year in depreciation. At 4% interest, an additional price of $2000 in interest per year, or $50/moo-cow/year, would be realized. Assume too this farm has fencing, barns, working facilities, etc., with an initial value of $50K and a lifespan of 25 years. That would amount to $50/cow/year in depreciation and $25/cow/year in interest.
If nosotros have ii.0 acres of pasture and .75 acres of hayground per cow, and value that at a country hire of $36/acre, that would be $100/cow/yr in land rent. Presume also that we have determined we have $100/moo-cow/twelvemonth in labor, which would corporeality to $4000 total per year for the entire herd.
These non-greenbacks costs add up to $350/cow/year on our example subcontract: $150 per cow in depreciation/involvement on equipment/fencing/facilities and $200 per moo-cow in land rent and labor. We encourage you to judge these for your own operation, just the unfortunate reality is that they quickly add up on most farms. The $168/moo-cow/twelvemonth gross return over cash costs and cow depreciation does not await quite as good at present. After adjusting for these other costs, the cyberspace return (all costs included) is –$182 per cow per year, or –$7280 for the 40-cow farm.
Some other way to look at this is to just include the depreciation and involvement for equipment/fencing/facilities ($150/cow/twelvemonth), and not include land and labor ($200/cow/year). In this instance, the return would increment to $18/cow/twelvemonth, and would represent the farms return to land and labor. Did this farm actually lose coin on a greenbacks basis? No, not if they are using their ain labor and their state is paid for. Merely the farm also did not make a real profit. This subcontract essentially paid the equipment/fencing/facilities depreciation and involvement in full, but the cattle farmer and land effectively worked for free.
These numbers will vary across operations, but estimating your own toll structure is extremely important. Our guess is that compared to our instance farm, at that place are far more cow-calf operations of similar size with a higher cost structure than there are operations with a lower cost structure in Kentucky. Put simply, well-managed spring calving herds were probable covering all greenbacks costs, breeding stock depreciation/interest, and depreciation and interest on equipment/fencing/facilities, just were not generating a return on their labor or land this terminal year.
Readers tin can use Table 2 to modify the assay based on their cost construction and expected dogie prices, for 2020 and time to come years. It uses all costs except for land and labor, so the table shows a return to land and labor.
As an example, we used $1.30/lb in our base scenario every bit the expected steer/heifer price for 2020. Given the toll structure, we used ($0 modify on the left-manus side of the table), the expected return to country and labor is $xviii/cow/year, just every bit was previously described. If a cattle farmer sold their calves for an average price of $1.35/lb, and had a $50/cow/year cheaper price structure (-$l change on the left-paw side of the tabular array), their expected return to land and direction would be $92/cow/year. If another cattle farmer thought the $one.xxx/lb calf price was accurate, merely had $50/cow/year more expensive cost structure (+$50 on the left-hand side), their expected render to land and direction would exist -$32/moo-cow/year. In this last instance, they had no return to their country and labor and were $32/moo-cow/year short in roofing all their depreciation and interest expenses.
Predicting cattle prices is near impossible given the numerous factors that affect the market. While the impact of higher feed prices on feeder cattle and dogie values is crusade for business, several other factors paint a more optimistic motion-picture show for the current year. The size of the US cowherd continues to shrink, which means the 2021 dogie crop will be smaller. Domestic demand is likely to improve throughout the twelvemonth as eating place business picks upwards. Finally, beef exports showed a lot of improvement in the fourth quarter of 2020, and this trend is likely to continue into 2021.
Given that, our all-time guess for fall 2020 prices for that same 550 lb steer/heifer are in the $1.35-1.45/lb range. At a $1.forty/lb price, and using the same price structure, the render to country and labor would now be estimated at $65/moo-cow/year. This would still not fully compensate a moo-cow-dogie operator for the value of their labor, and would not provide whatsoever return to country, but it would be an improvement from 2020. Put simply, profit continues to be a challenge for cow-calf operations which means that efficiency and cost command will be of great importance once again.
Reducing and managing costs was i of the chief focuses of the Moo-cow-Dogie Profitability Conferences that were held during the winter of 2019-2020. Unfortunately, COVID-nineteen forced us to abolish over half of the conferences we planned to evangelize last year. The good news is that we volition exist offering these in a virtual format this winter on the evenings of March 23-25. Registration, agendas, and other information can be establish at the Virtual Cow-calf Profitability Conference webpage. We hope that y'all will bring together us on those evenings as we think every cow-calf operator in Kentucky tin can benefit from the textile beingness covered.
Greg Halich is an Associate Extension Professor in Farm Management Economics for both cattle and grain production and can exist reached at Greg.Halich@uky.edu or 859-257-8841. Kenny Burdine is an Acquaintance Extension Professor in Livestock Marketing and Management and can be reached at kburdine@uky.edu or 859-257-7273. Jonathan Shepherd is an Extension Specialist in Subcontract Management and can be reached at jdshepherd@uky.edu or (859) 218-4395.
Author(due south) Contact Information:
Greg Halich | Associate Extension Professor | greg.halich@uky.edu
Dr. Kenny Burdine | Associate Extension Professor | kburdine@uky.edu
Jonathan Shepherd | Extension Specialist | jdshepherd@uky.edu
Source: https://agecon.ca.uky.edu/cow-calf-profitability-estimates-2020-and-2021-spring-calving-herd
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