Hidden Costs
Podcast discusses large hidden cost of your cattle operation.
When asking cow-calf producers what it costs to raise cattle, often feed, equipment and labor are top of mind. However, one expense not typically accounted for is the decreasing value of the cow over time.
In accounting for depreciation, Dustin Pendell says cattle producers need to calculate the purchase price minus the salvage value divided by the productive life of the animal.
"Cow depreciation is a non-cash expense, which is why a lot of times, people don't think about it," says Dustin Pendell, agricultural economist with Kansas State University’s Beef Cattle Institute (BCI).
In accounting for depreciation, Pendell says cattle producers need to calculate the purchase price minus the salvage value divided by the productive life of the animal.
Along with that, Brad White, veterinarian and BCI director, encouraged producers to think of this expense broadly. "We are talking about more than just one cow. How long do she and her cohorts stay in the herd on average?"
To learn more on this topic, check out the BCI podcast Cattle Chat, specifically at the 13:45 mark.
Editor’s note: This article is reprinted with permission from BCI News. Photo by Shauna Hermel.
