Cow Calf Operation Costs Are Up. Tell Us How You’re Managing For This

The business success of beef enterprises often suffers because two questions are not evaluated regularly: 1. How much do I have invested in my cattle operation? 2. Can I get a fair market return on my investment? Some families accept a negative return because the “way of life” is a benefit. Still, good business practices will enhance the “way of life” benefit. So let us look at the dollars and cents of the cow-calf business. Commodity beef production focuses on prices, assuming the greater the price, the bigger the check, thus the more positive the outcomes. However, expenses play a key role in what remains of the beef check. The beef industry enjoyed high prices a few years ago. Today, some leveling has occurred in the current beef producer’s expectations of the market, leading to renewed interest in keeping costs under control. With no upper or lower limits to price, managerial commitment to control costs is imperative, so let's look at current costs. A review of FINBIN from the Center for Farm Financial Management, University of Minnesota, really helps get a handle on dollars. Keep in mind that this data set isn't perfect. The problem inherent to any data set is how relevant are those herds that submit data. Unfortunately, data sets are hard to establish, and those that exist are good. I just wish more herds would participate. Or more deeply, the wish is that more herds would have the data to participate. However, we use the data available. L

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2 thoughts on “Cow Calf Operation Costs Are Up. Tell Us How You’re Managing For This

  1. Nice article. Im curious how you are calculating the percentage price increase. Without doing any math, if something goes up 100% it doubles. All of the price increases should be doubled digit percentages in this article. Shouldn’t the percentage increase be the (price difference/original price)?

  2. Regarding return on investment (ROI), it is critically important that ranchers separate out the land investment/enterprise portion of their operation from all of their other enterprises. This is particularly true as land prices continue to be less and less connected to production agriculture. It is certainly handy to own some land, and we may have many good reasons for wanting to own more, but generally speaking, the more money you have invested in true cash-flow-positive enterprises the better off you will be. Land ownership is becoming less and less attractive and relevant to profitable agriculture.

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