preston39
Well-known member
News Update
May 2, 2007
Cattle Producers Can Prioritize Managing Costs and Making Wise Investments
Priorities First: Identifying Management Priorities in the Commercial Cow-Calf Business by Tom Field, Fort Collins, Colo., and sponsored by the American Angus Association, is the first comprehensive effort to prioritize management and economic issues for cow-calf producers.
(A detailed summary can be found at http://www.angus.org or contact the American Angus Association to obtain a printed copy of Priorities First.)
Dissecting a portion of the Priorities First research findings provides an important perspective on the issue of controlling production costs. When the survey was conducted, a cost control question was included with five of the 15 management categories. The survey simply asked how important it was to maintain below industry average costs within individual aspects of the operation. The category "Harvested Forages and Supplemental Feeds" carried some important results, which parallel industry findings.
Survey respondents believed strongly that harvested forage and supplemental feed costs must be monitored. This area was identified as the most critical cost-control point of the five surveyed. However, overall survey results identified herd nutrition as the highest-ranking management priority for cow-calf producers. Respondents are precisely committed to satisfying the cow herd's nutritional needs. Yet, there was a large difference in how the survey prioritized pasture and range management vs. where it ranked harvested forages and supplemental feeds. The message is clear that herd nutritional needs should be met through grazing. Harvested forages and other supplemental feedstuffs should be secondarily used with a critical eye on costs.
An analysis of 19 university cow-calf budgets supports the Priorities First findings. The analysis detailed both pasture cost per cow and hay/supplemental costs per cow. Of the five budgets with the lowest pasture percentage of total feed costs (average 25%), the total feed cost per cow averaged $255. In comparison, the five budgets with the highest pasture percentage of total feed costs (average 57%), the total feed cost per cow averaged only $218. Thus, a 32% increase in pasture percentage resulted in a cost savings of $37 per cow.
Cattle-Fax research has demonstrated the lowest-cost, most profitable cow-calf producers actually spent more than low-profit producers in three areas: pasture maintenance, herd health and bull genetics. Research also indicated that extending the number of months cows spent grazing (while proportionally reducing time consuming harvested feeds) could lower annual feed costs. On April 13, 2007, Cattle-Fax released additional data on operating returns. According to the data, during the 1980-2006 timeframe, the top one-third of producers generated $24.1 billion in revenue or $89.19 per head on a cash cost basis. The lower one-third of producers generated a net loss of $9 billion and showed a loss of $29.56 per head. The middle one-third of producers was essentially in a breakeven business generating a small per-head profit. The one noteworthy difference between profitable and unprofitable producers was lower cow costs.
In 2002, Oklahoma State University's (OSU) Cooperative Extension Service (Doye et al. 2002. Oklahoma Cooperative Extension Service, What We Are Learning From Standardized Performance Analysis (SPA) Data. F-231) released an analysis supporting the Cattle-Fax data. The OSU data was based on cow-calf SPA information and compared the average financial and production statistics for low-and high-cost producers in Texas, Oklahoma and New Mexico. Data were sorted by net income ($/cow). Producers with the highest net income were labeled Top 25% (high income), followed by Second 25%, Third 25%, and finally Low 25% (low income).
While the complete study revealed a wealth of financial and cost information, the relevance of the data to Priorities First is clear. High-income producers' average cost of production was $320 per cow compared with $556 per cow for low-income producers. High-income producers have less invested per cow in all asset categories: current assets (e.g. cash and supplies), breeding livestock, machinery and equipment and real estate. The high-income producers' average cost of production was $80 per hundredweight (cwt.) compared with $159 per cwt. for low-income producers.
— Release provided by the American Angus Association
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Makes sense...cost spread over more revenue dollars will reduce cost per unit produced...thus more profit per unit. From the timing of this report I doubt if the current costs of fuel/feed/fert. is included. Which, if correct, the profit numbers are skewed high.
If your unit cost is lower...help us with how you do it.
Our costs is lower for the following reasons;
1) If we consider real estate costs it is offset by appreciated real estate value.
2) We use little/no chemicals.
3)We only purchase good used(not New) equipment.
4)We produce 95% of dry feed used.
5)Fuel consumption in trucks/tractors is conserved with planned trips. No motor idling.
6)Winter forage is increased annually/reducing production of hay costs.(We fed hay for 62 days this winter)
7) Equipment maintenance is performed closely
7 A) Frills are kept to a minimum.(Cant use the number eight)..get a smiley..?)
9) Insurance is shopped annually.
10)Off season material purchases are made.
11) Animal care/management is closely monitored.
12)Labor hours are made to be productive.
May 2, 2007
Cattle Producers Can Prioritize Managing Costs and Making Wise Investments
Priorities First: Identifying Management Priorities in the Commercial Cow-Calf Business by Tom Field, Fort Collins, Colo., and sponsored by the American Angus Association, is the first comprehensive effort to prioritize management and economic issues for cow-calf producers.
(A detailed summary can be found at http://www.angus.org or contact the American Angus Association to obtain a printed copy of Priorities First.)
Dissecting a portion of the Priorities First research findings provides an important perspective on the issue of controlling production costs. When the survey was conducted, a cost control question was included with five of the 15 management categories. The survey simply asked how important it was to maintain below industry average costs within individual aspects of the operation. The category "Harvested Forages and Supplemental Feeds" carried some important results, which parallel industry findings.
Survey respondents believed strongly that harvested forage and supplemental feed costs must be monitored. This area was identified as the most critical cost-control point of the five surveyed. However, overall survey results identified herd nutrition as the highest-ranking management priority for cow-calf producers. Respondents are precisely committed to satisfying the cow herd's nutritional needs. Yet, there was a large difference in how the survey prioritized pasture and range management vs. where it ranked harvested forages and supplemental feeds. The message is clear that herd nutritional needs should be met through grazing. Harvested forages and other supplemental feedstuffs should be secondarily used with a critical eye on costs.
An analysis of 19 university cow-calf budgets supports the Priorities First findings. The analysis detailed both pasture cost per cow and hay/supplemental costs per cow. Of the five budgets with the lowest pasture percentage of total feed costs (average 25%), the total feed cost per cow averaged $255. In comparison, the five budgets with the highest pasture percentage of total feed costs (average 57%), the total feed cost per cow averaged only $218. Thus, a 32% increase in pasture percentage resulted in a cost savings of $37 per cow.
Cattle-Fax research has demonstrated the lowest-cost, most profitable cow-calf producers actually spent more than low-profit producers in three areas: pasture maintenance, herd health and bull genetics. Research also indicated that extending the number of months cows spent grazing (while proportionally reducing time consuming harvested feeds) could lower annual feed costs. On April 13, 2007, Cattle-Fax released additional data on operating returns. According to the data, during the 1980-2006 timeframe, the top one-third of producers generated $24.1 billion in revenue or $89.19 per head on a cash cost basis. The lower one-third of producers generated a net loss of $9 billion and showed a loss of $29.56 per head. The middle one-third of producers was essentially in a breakeven business generating a small per-head profit. The one noteworthy difference between profitable and unprofitable producers was lower cow costs.
In 2002, Oklahoma State University's (OSU) Cooperative Extension Service (Doye et al. 2002. Oklahoma Cooperative Extension Service, What We Are Learning From Standardized Performance Analysis (SPA) Data. F-231) released an analysis supporting the Cattle-Fax data. The OSU data was based on cow-calf SPA information and compared the average financial and production statistics for low-and high-cost producers in Texas, Oklahoma and New Mexico. Data were sorted by net income ($/cow). Producers with the highest net income were labeled Top 25% (high income), followed by Second 25%, Third 25%, and finally Low 25% (low income).
While the complete study revealed a wealth of financial and cost information, the relevance of the data to Priorities First is clear. High-income producers' average cost of production was $320 per cow compared with $556 per cow for low-income producers. High-income producers have less invested per cow in all asset categories: current assets (e.g. cash and supplies), breeding livestock, machinery and equipment and real estate. The high-income producers' average cost of production was $80 per hundredweight (cwt.) compared with $159 per cwt. for low-income producers.
— Release provided by the American Angus Association
=======
Makes sense...cost spread over more revenue dollars will reduce cost per unit produced...thus more profit per unit. From the timing of this report I doubt if the current costs of fuel/feed/fert. is included. Which, if correct, the profit numbers are skewed high.
If your unit cost is lower...help us with how you do it.
Our costs is lower for the following reasons;
1) If we consider real estate costs it is offset by appreciated real estate value.
2) We use little/no chemicals.
3)We only purchase good used(not New) equipment.
4)We produce 95% of dry feed used.
5)Fuel consumption in trucks/tractors is conserved with planned trips. No motor idling.
6)Winter forage is increased annually/reducing production of hay costs.(We fed hay for 62 days this winter)
7) Equipment maintenance is performed closely
7 A) Frills are kept to a minimum.(Cant use the number eight)..get a smiley..?)
9) Insurance is shopped annually.
10)Off season material purchases are made.
11) Animal care/management is closely monitored.
12)Labor hours are made to be productive.
