How Much Dose a Fully Grown Beef Cow Sell for
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 fall of 2020 and provide an approximate of profitability for the upcoming year. Table 1 summarizes estimated costs for a well-managed bound-calving cowherd for 2020. Every performance is different, and then producers should evaluate and modify these estimates to fit their situation. Note that in this table we are not including depreciation or interest on equipment/fencing/facilities, equally well every bit labor and state 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 country average basis. Therefore, a steer / heifer average cost of $i.30 per lb is used for the assay, which is actually the same cost that was used final year. Weaning charge per unit was estimated at 85%, pregnant that it is expected that a dogie will be weaned and sold from 85% of the cows that were exposed to the bull. Based on these assumptions and adapted for the weaning charge per unit, average calf revenue is $608 per moo-cow.
Pasture maintenance costs are assumed to be relatively low at $twenty per acre, and would include only basic cash costs of pasture clipping (fuel, maintenance, repairs), and a express amount of reseeding, fertilizer, and fencing repairs. Producers who consistently employ larger amounts of fertilizer to pasture ground would see much higher pasture maintenance costs. The pasture stocking rate is assumed to be 2.0 acres per cow, only producers should carefully consider the stocking rate for their operation as this will vary profoundly. Stocking rate impacts the number of grazing days and winter feeding days for the operation (i.e. high stocking rates will mean more than hay feeding days), which has big implications for costs on a per cow basis.
These spring calving cows volition utilize two.5 tons of hay per cow, and the estimated greenbacks price of making this hay (fuel, maintenance, repairs, supplies, fertilizer, etc.) is $35 per ton. Mineral cost is $35 per cow, veterinary / medicine costs $25, trucking costs $xv, machinery cash costs for winter feeding and other miscellaneous jobs is $15, and other costs (insurance, property taxes, water, etc.) are $xl. Breeding costs are $40 per cow and should include annual depreciation of the balderdash and balderdash maintenance costs, spread across the number of cows he services. Marketing costs are currently around $25 per cow, just larger operations may marketplace cattle in larger groups and pay lower commission rates.
Breeding stock depreciation and interest are major costs that are often overlooked. They are more often than not not greenbacks costs that need to be paid on a yearly ground, unless you take a loan on them, but they are real costs that demand to be paid at some point. As an example, presume a bred heifer is valued at $1300, has viii productive years, and has a cull cow value of $600. The average yearly depreciation is calculated equally follows:
$1300 bred heifer value
–$600 cull-moo-cow value
$700 full depreciation
$700 depreciation / 8 productive years = $88 cow depreciation per yr. The actual depreciation volition vary beyond farms. When buying bred replacement heifers, the initial heifer value is clear. With farm-raised replacements, this price should be the acquirement foregone had the heifer been sold with the other calves, plus all expenses incurred (feed, breeding, pasture rent, etc.) to attain the aforementioned reproductive stage equally a purchased bred heifer. At an average value of $950 (halfway between bred heifer and choose value) over her lifespan on your subcontract, and assuming a 3% interest charge per unit results in a $29/cow/twelvemonth interest price, or a full of $117/moo-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 beginning glance, this positive return looks impressive, only is likewise misleading. A number of costs were intentionally excluded because they vary greatly across operations. Notice that no depreciation or interest on equipment/fencing/facilities was included. Discover too that labor and land costs were also not included. Thus, the gross return needs to exist adjusted by these costs to come upward with a true return to the farm.
Since these costs vary so much from i functioning to the adjacent, it may exist helpful to option a specific sized farm and provide estimates for these costs: a 40-cow performance that is producing its ain hay and has all farming operations on its ain land (80 acres of pasture and 30 acres of hay).
Assume this subcontract has on average $50K in equipment which depreciates roughly $k every year, or $25/cow/year in depreciation. At iv% interest, an boosted cost of $2000 in interest per year, or $50/cow/twelvemonth, would be realized. Presume 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 $fifty/cow/year in depreciation and $25/cow/year in interest.
If nosotros take 2.0 acres of pasture and .75 acres of hayground per moo-cow, and value that at a land rent of $36/acre, that would be $100/cow/twelvemonth in land rent. Assume as well that nosotros accept adamant we have $100/moo-cow/year in labor, which would amount to $4000 full per year for the entire herd.
These non-cash costs add upwardly to $350/cow/year on our case farm: $150 per cow in depreciation/interest on equipment/fencing/facilities and $200 per moo-cow in land rent and labor. We encourage you to estimate these for your own operation, just the unfortunate reality is that they quickly add up on almost farms. The $168/cow/twelvemonth gross return over greenbacks costs and cow depreciation does not look quite as skillful now. After adjusting for these other costs, the net return (all costs included) is –$182 per cow per year, or –$7280 for the twoscore-moo-cow farm.
Another manner to look at this is to simply include the depreciation and interest for equipment/fencing/facilities ($150/cow/year), and non include land and labor ($200/cow/year). In this case, the return would increase to $18/cow/twelvemonth, and would represent the farms render to land and labor. Did this subcontract actually lose money on a greenbacks ground? No, not if they are using their own labor and their land is paid for. Only the farm also did not brand a real profit. This farm substantially paid the equipment/fencing/facilities depreciation and interest in full, only the cattle farmer and country effectively worked for free.
These numbers will vary across operations, but estimating your own price structure is extremely important. Our guess is that compared to our case farm, in that location are far more than cow-dogie operations of like size with a higher cost structure than in that location are operations with a lower cost structure in Kentucky. Put just, well-managed bound calving herds were probable covering all cash costs, breeding stock depreciation/interest, and depreciation and interest on equipment/fencing/facilities, but were non generating a return on their labor or land this terminal twelvemonth.
Readers can use Table 2 to alter the analysis based on their toll structure 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 case, we used $1.30/lb in our base of operations scenario as the expected steer/heifer price for 2020. Given the cost structure, we used ($0 change on the left-hand side of the table), the expected render to land and labor is $18/cow/year, merely as was previously described. If a cattle farmer sold their calves for an average price of $1.35/lb, and had a $50/cow/yr cheaper cost structure (-$50 change on the left-manus side of the table), their expected render to land and management would exist $92/moo-cow/year. If another cattle farmer thought the $one.thirty/lb calf toll was accurate, but had $50/cow/year more expensive cost construction (+$fifty on the left-hand side), their expected render to land and direction would be -$32/cow/twelvemonth. In this last example, they had no return to their land and labor and were $32/cow/yr brusque in covering all their depreciation and interest expenses.
Predicting cattle prices is almost impossible given the numerous factors that affect the market. While the touch of college feed prices on feeder cattle and calf values is cause for business concern, several other factors paint a more optimistic picture for the current year. The size of the U.s. cowherd continues to shrink, which means the 2021 dogie ingather volition be smaller. Domestic demand is likely to ameliorate throughout the year as restaurant business concern picks up. Finally, beef exports showed a lot of comeback in the fourth quarter of 2020, and this trend is likely to proceed into 2021.
Given that, our all-time approximate for fall 2020 prices for that aforementioned 550 lb steer/heifer are in the $i.35-one.45/lb range. At a $i.40/lb price, and using the same cost structure, the render to land and labor would now be estimated at $65/cow/twelvemonth. This would still not fully compensate a moo-cow-calf operator for the value of their labor, and would not provide whatsoever render to land, but it would be an improvement from 2020. Put simply, profit continues to be a claiming for cow-calf operations which means that efficiency and cost command volition be of not bad importance once once again.
Reducing and managing costs was one of the primary focuses of the Cow-Calf Profitability Conferences that were held during the winter of 2019-2020. Unfortunately, COVID-xix forced the states to cancel over half of the conferences we planned to evangelize last year. The good news is that we will be offer these in a virtual format this winter on the evenings of March 23-25. Registration, agendas, and other data can be found at the Virtual Cow-dogie Profitability Conference webpage. Nosotros hope that you will join u.s. on those evenings as we recall every cow-calf operator in Kentucky tin do good from the material beingness covered.
Greg Halich is an Acquaintance 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 Associate Extension Professor in Livestock Marketing and Management and tin can exist reached at kburdine@uky.edu or 859-257-7273. Jonathan Shepherd is an Extension Specialist in Farm Management and can exist reached at jdshepherd@uky.edu or (859) 218-4395.
Writer(southward) 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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