Labor Costs Up 5%/Year

Feedyard labor costs the past five years have increased about 5%/year across the board in Nebraska. And, the level and cost of benefits paid to employees is a significant factor, says Darrell Mark, University of Nebraska-Lincoln (UNL) Extension ag economist.

That was among the findings of the latest Nebraska Feedyard Labor Cost Benchmarks and Historical Trends study conducted in April 2004 by UNL with cooperation of the Nebraska Cattlemen (NC).

Mark and UNL ag econ student, Rik Smith, contacted 198 NC feedyard managers across the state. A total of 59 feedyards (average capacity of 9,473 head) responded to the survey. Those yards provided levels of salaries, benefits and bonuses paid to their employees and the number of employees in several job-function categories.

Similar labor-cost studies of NC feedyards were conducted in 1990, 1992, 1995 and 1999. Data from this latest survey can thus be compared to the historical data to observe trends in feedyard labor costs.

Benefits increased substantially in 2004 relative to 1999, Mark says. The smallest increase was 23.4% for feed truck drivers, but many were substantially higher. In fact, maintenance personnel experienced the largest increase at 71.5%. On average, the value of benefits in 2004 increased 31.2% relative to 1999, or about 6.2%/year over that period.

The level of the benefits increase for feedyards is the result of more benefits being offered to more categories of employees, and the increased cost of those benefits. Rising health insurance costs are a good example, Mark says.

Mark says feedyard businesses are offering more such benefits to more categories of employees in response to increased competition for potential workers with town-based employers.

“It may be a retailer like a Wal-Mart in town, or other businesses that offer better benefits and/or more attractive working environments, such as indoors,” he says.

The 2004 survey found the average feedyard total annual labor expense was $354,822, including benefits and bonuses. Administrative employees (manager, assistant manager, office manager and office personnel) accounted for 28%, and full-time employees 91%, of the total annual compensation.

That breaks down to a labor cost/head of cattle/day for all 59 responding of 10¢. By feedyard capacity, the figure was 11¢ for feedyards with less than 4,000-head capacity.

You can view the 22-page report of results and breakdowns by three different yard capacities at: http://agecon.unl.edu/mark/. Click on “Feedlot Labor Cost Survey” in the left column of the opening page.

Average base salary paid (all yards)