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How does your annual cow cost compare?How does your annual cow cost compare?

There’s a big difference in annual cow costs between the top third of producers and the bottom third. And the trend is becoming more pronounced over time.

Nevil Speer

November 20, 2018

1 Min Read
How does your annual cow cost compare?

The Kansas Farm Management Association (KFMA) is one of the largest farm management association programs in the country. Data derived from KFMA is very useful with respect to benchmarking and trends within the beef industry. Many of the participants represent mostly mid-size (including both diversified and full-time) operations and possess a long-standing track record enabling meaningful comparisons over time.

This week’s illustration outlines annual cow costs (both direct and indirect costs) from KFMA categorized by profit segments: low third, middle third and top third, respectively. The graph highlights differences among those groups, but also the cost trends within each group over time.  

Focusing on cow costs, the 2017 analysis reveals that cow-calf operators in the top third profit group had annual cow costs of $944 versus the bottom third group that spent $1,206 per cow – a difference of $262 per cow. Also interesting to note, the top third segment has been able to contain or limit the inevitable increase in annual costs more effectively over time.  

What’s especially important here, KFMA emphasizes production and selling price obviously impact profit – but the largest component in segmenting the differences among these groups are differences in cow costs. That is, the most significant difference among the groups isn’t an advantage/disadvantage in terms of weaning weight or marketing rate or selling price, etc. Rather, the overwhelming driver toward determining the bottom-line – year-in, year-out – revolves around an enterprise’s cost structure. 

Related:What’s the difference between low cost and high return cow-calf producers?

How do your cow costs compare to those outlined from the KFMA data? What are you biggest concerns or focus areas to reduce costs going forward? Leave your thoughts in the comments section below.  

Nevil Speer serves as an industry consultant and is based in Bowling Green, KY. Contact him at [email protected].

About the Author(s)

Nevil Speer

Nevil Speer serves as an industry consultant and is based in Bowling Green, KY.

Nevil Speer has extensive experience and involvement with the livestock and food industry including various service and consultation projects spanning such issues as market competition, business and economic implications of agroterrorism, animal identification, assessment of price risk and market volatility on the producer segment, and usage of antibiotics in animal agriculture.
Dr. Speer writes about many aspects regarding agriculture and the food industry with regular contribution to BEEF and Feedstuffs.  He’s also written several influential industry white papers dealing with issues such as changing business dynamics in the beef complex, producer decision-making, and country-of-origin labeling.
He serves as a member of the Board of Directors for the National Institute for Animal Agriculture.
Dr. Speer holds both a PhD in Animal Science and a Master’s degree in Business Administration.

Contact him at [email protected].

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