Cow/Calf Operations Cost Per Pound of Beef Sold
Farm Management Update, April 1996
By Henry Snodgrass
The cattle cycle is alive and functioning! For the cow/calf producer the question now is, "How can I ride the wave until prices improve?" Most folks will agree that you as an individual cow/calf producer have little impact on the price of cattle in general. So if you cannot increase the price, what can you do? You can reduce cost, increase pounds sold per cow, etc. The major factor to keep in mind is that the "cost per pound" for livestock sold is determined by dividing total farm cost by the pounds of livestock sold.
You can impact the cost per pound by either reducing the total cost of producing a pound of saleable calf, or increasing the number of pounds being sold. Use last years records, or average records from several years, and arrive at what it cost to produce a pound of saleable beef. From the records list the ten biggest cash expenses and evaluate each one to see if it can be reduced. Forget about the expenses you can not control, for example, taxes, and concentrate on the expenses you have direct control over. Work on the easiest ones first. Labor may have gotten high, you can reduce it. Purchased feed, repairs, vet and medicine--think through each expense item and see if it can be reduced. Think about what return you are going to get for a dollar spent.
Pounds of calf sold is the other component of the equation. Weaning weight, calving percentage, death loss all come into play when figuring the pounds of calf sold. The table below shows break-even prices per hundred weight as cow cost and pounds of calf sold change.
|Annual Cash Cow Cost|
|Weight of Calf Sold||Prices Needed to Cover Cash Cost $/cwt.|
The above table is dealing only with cash cost. Not included are such things as loan repayment, equipment purchases, etc.
It will take a combination of holding cost down and keeping pounds of calf sold/per cow up in order for you to be around when the cattle cycle moves into positive ground.
Visit Virginia Cooperative Extension