Industry At A Glance: A Look At Feedyard Revenue

Industry At A Glance: A Look At Feedyard Revenue

Revenue growth is essential to garner new expansion opportunities for any business and/or industry (often referenced as “top-line growth” given that revenue is always at the very top of the income statement). Revenue available to the production sector begins at the feedyard [4], and subsequently flows back upstream to stockers [5], backgrounders and cow-calf producers [6]. It should be noted that revenue should NOT be confused with profitability. Rather, it’s simply an indicator of total dollars available within the business.  

Breaking It Down: High-Profit Vs. Low-Profit Beef Producers [7]

Total feedyard revenue is a function of three factors: live weight, number of cattle marketed, and the overall market. Revenue declined in 2009 on the heels of the financial crisis [8] and weaker markets. However, it has surged nearly 50% since then. The overall estimate for 2012 establishes a new record and exceeds $35 billion.

 aggregrate feedyard revenues

However, any number of factors could potentially impact that in 2013 including tighter cattle supply [9], overhead resistance in the live market, and potential for continued high corn prices (thus limiting weight of feedyard sales). That has some significant connotations for the industry – especially around infrastructure and supporting industries around the production sector. How do you see this trend playing out in 2013? Leave your thoughts in the comments section below.