Update 2019: Gross income vs. costs of cows
Last week, Industry At A Glance took a fresh look at the most recent cow herd data available from the Kansas Farm Management Association (KFMA). Reviewing KFMA data is always invaluable – it provides key information on general trends within the beef industry and the decision-making process of beef producers.
The state management association programs allow participants in agriculture and ranching to get a comprehensive analysis of their respective businesses that make up the ranch operation. This information then leads to the establishment of meaningful benchmarks for comparison purposes, both from a production and financial perspective. These benchmarks also have key implications for operations across the country.
As reported last week, KFMA data is particularly useful. The Kansas program is one of the largest in the country and consists primarily of medium-sized operations. Perhaps most importantly, this is a long-term program with excellent consistency over time, thus providing a good idea of the real trends occurring within the operations of the participants.
This week’s data represents annual gross income versus total costs of cows, categorized by feed and non-feed costs. There are a few key takeaways from the cumulative results:
- Total costs per cow have been north of $ 1,000 since 2013. Many producers “estimate” their costs and often report that they are closer to $ 700 to $ 800 per cow per year. The KFMA analysis is very thorough and is probably a good representation of the real costs for a large part of the cow / calf sector.
- Feed costs consistently represent around 45% to 48% of total costs.
- With the exception of 2005 and 2014, cow / calf farmers – on average (more details in a future column) – lost money on cow farming. In other words, the average return to management has always been negative, with costs exceeding gross income per cow.
How do these trends relate to your operation? Are your (actual) costs and revenues generated in line with these results?
Nevil Speer is an industry consultant and is based in Bowling Green, KY. Contact him at [email protected]