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3 ways to earn more & spend less per cow in beef herds
Three economic differences separate high- from low-profit cow-calf producers, according to enterprise analyses from the North Dakota Farm Business Management (NDFBM) program. “The high-profit producers earn more income per cow, have lower direct and overhead expenses, and spend less for replacement females,” says Steve Metzger, with NDFBM.
These three trends create a substantial economic difference between high-profit (HP) and low-profit (LP) producers. “In 2007, the HP cow-calf producers in the NDFBM program earned $289 more in net income per cow than the LP producers,” says Metzger. “The LP group had a net loss of $66 per cow; the HP group averaged a $223 profit per cow."
Averages are drawn from the financial records of 126 cow-calf producer participants.
The top 26 herds comprise the 20% in the HP group, and 25 herds make up the 20% in the LP category. Average herd size for all producers is 145 cows.
The trends separating HP from LP producers are characterized by the following three differences, according to Metzger’s analyses.
1) Income Per Cow
The performance trait responsible for the lion’s share of increased income per cow in the HP herds is the number of pounds of weaned calf per female exposed to the bull in the previous breeding season.
“The HP herds averaged 543 pounds of weaned calf per exposed female,” says Metzger. “The LP herds averaged 449 pounds. Last year that accounted for more than $100 a cow in income – a critical difference.”
Calving percentage is another area where HP and LP producers differ. They average 95.4% and 92.4%, respectively.
Also differing is the percent of calves weaned out of the total number of calves born. The HP producers had a weaning average of 91.9%, while the LP herds averaged 86.8%.
Weaning weights accounted for part of the difference. HP herds averaged a weaning weight of 591 pounds; LP herds averaged 518 pounds.
2) Direct, Overhead Expenses
Direct expenses for the HP herds totaled $340 a cow; the LP producers spent $397 in out-of-pocket costs. “Much of the difference between the two is in the cost categories of fuel, repairs, and utilities,” says Metzger.
In terms of overhead, the LP group spends more for hired labor, insurance, and interest. “They also tend to use more borrowed money,” says Metzger. Records show little difference in feed costs.
3) Cost Of Replacing Females
HP producers spent $70 per cow less for replacements. Management practices contributing to this difference are subtle but significant. For example, buying cows (especially older cows) when the price is high contributes to a higher replacement cost, says Metzger.
Culling rate plays a role, too. HP herds cull cows at a rate of 13% each year, while LP herds cull 21%. The higher rate suggests poor cow performance and shorter longevity. One of the best strategies for producers to improve profitability is to know where they stand on individual herd and per-cow production numbers and costs, he says.