Here’s the One Number That Correlates Directly to Profitability

Dallas Mount has a question: "If you could only show me one number on your ranch that directly correlated to the profitability of your cow-calf operation, what would that number be?" He says that traditionally folks assume the answer is weaning weight or price received for calves. But it turns out they're wrong. The answer is hay fed per cow. "If you feed cows for 6 months a year," says Mount," it is going to be very difficult to compete on profitability with a ranch that feeds no hay or only storm feeds for two weeks a year on average." Mount defines profitability as gross margin per cow - "the cow-calf unit that has the most money left over from the value of production after paying direct costs." Feed is often the largest direct cost, so there is often opportunity to reduce feed cost without sacrificing too much production.  It is a balancing act.  We don’t want to ‘starve a profit’ into a cow, but a cow herd that requires large amounts of fed feed is very likely to be unprofitable. "Reducing or eliminating hay feeding has other benefits beyond improved gross margin per unit," Mount adds. "The overheads required to run a business that needs piles of hay can substantially change when you get the hay out." According to Mount, the average ranch feeds hay for about 120 days a year no matter where they live. But in every region, there are also exa

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One thought on “Here’s the One Number That Correlates Directly to Profitability

  1. BINGO! to Kathy and Dallas.

    So, reduce hay as much as you can.

    Sell as much heavy metal as you can.

    If a hay shed burns down, take the insurance money and go to Mexico.

    See you there next winter!

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