Beef Cattle Budgets
Knowing operating costs helps with risk protection products and marketing opportunities.
What does it cost to maintain a cow for the year? This is a common question asked by producers across the nation. Many outlets will give you a number; however, that number doesn’t mean a thing. That is an average, given a variety of inputs, using a variety of other average numbers. Each operation needs to determine its own cow budget.
What goes into a budget?
The most significant component of every cattle budget is feed. This is true for the cow, feeder-calf or finishing operation. Creating a balanced ration is the first step, and assigning the feedstuff a price is the second step in the process. Knowing how much feed is fed or acres grazed during the time frame is the third step.
There are many other numbers to add to the budget after the feed cost has been determined. All enterprises need to consider fuel or trucking rates as animals are moved from their home place to pastures, feedlots or the sale barns. Overhead costs for water and electricity and maintenance costs for fences and buildings also need to be factored in. For the cow and heifer herds, there are replacement animals and breeding fees to consider.
What can I do with the numbers?
An accurate budget is important because it helps with marketing and other decision-making efforts. Using the new Weaned Calf Risk Protection insurance product, or Livestock Risk Protection, for feeder calves can be done more effectively when you know the profit you are trying to protect. Other decisions related to feed purchases, marketing venues, pasture rent, etc., can be made to improve profitability once the real numbers are known.
Using the Beef Cattle Budgets Tool
The South Dakota State University (SDSU) Extension Beef Cattle Budgets Tool can be used to estimate revenues and costs associated with six different beef cattle enterprises: heifer development, cow costs, backgrounding from November to February, finishing steers, backgrounding yearlings from 750-1,100 pounds (lb.) and finishing yearlings from 1,100-1,400 lb.
To use the spreadsheets producers need to have an understanding of the costs related to their operations. Balanced rations should be created to ensure that the No. 1 expense in the cattle operation is accurately represented. SDSU Extension cow-calf and feedlot staff can aid with this activity. An accurate representation related to the weight and value of the animals in the herd, transportation expenses, veterinary and medication expenses, breeding-related expenses, culling rate, bull value, and salvage value should also be used in the spreadsheet.
These budgets are provided to aid producers with risk and price management decision-making. Producers who know their cost of production can combine risk management tools, like Livestock Risk Protection insurance, with marketing tools to limit losses or increase their average selling price.
Editor’s note: Heather Gessner is an SDSU Extension livestock business management field specialist.
