CATTLEFAX TRENDS
Record
CASH COW COSTS
CattleFax recently conducted its annual “Cow-Calf Survey” to analyze data from 2021. First off, thank you to those who took the time to complete the survey, it is greatly appreciated. Results came from across the country, with the Central Plains and Southeast regions making up the largest samples. The average herd size of 461 cows is well above the U.S. average, but the findings represent more operations that truly try to make ends meet from a financial standpoint. The results benefit the industry by providing insight regarding trends for management practices, marketing strategies, expansion or liquidation, and many other key metrics. More importantly, producers can utilize the findings as benchmarks to compare against their own operation. Obviously, there are extensive variations within the cow-calf segment. All the analysis may not directly apply to your enterprise. Nonetheless, the following discussion and insights should at least be thought provoking. Not only did the cattle markets experience volatility in 2021, but major inputs for cow-calf operations did as well.
28
May 2022
Inflationary pressures, continued supply chain challenges, and drought, strained producers when it came to procuring the required inputs to run an operation. As expected, cash cow costs increased from the prior year. In fact, cow costs set a record in the CattleFax dataset that dates to the late 1980s. At $613/head in 2021, cash cow costs increased $18 from 2020. It is important to note this measurement does not include depreciation or returns to management. Because of the diversification in environments and business models for cow-calf operations there is a big range around the average. Not only from region to region, but also between operations in the same state or even county. However, it is very likely that record costs in 2021 applies to most operations. The Southeast and South Plains, which each accounted for 30 percent of the survey responses, continue to report the lowest cash cow costs. Aside from the Corn Belt, the South and Southeast posted the smallest year-over-year increases in costs. A smaller adjustment to feed expenses is likely the main driver. Hay prices, excluding alfalfa, in the South Plains and Southeast were $8 and $11/ton above 2020, respectively. While the North Plains and West hay markets averaged $27 and $19/ ton higher, respectively. While the West region reported the biggest annual change of $47 per cow, elevated grazing/land expenses keeps the North Plains at the top once again for cash cow costs. Drought through 2021 certainly impacted the expense side of the ledger for both regions. In 2020, pasture made up the largest percent of expenses for both areas, followed by feed costs. Last year those two line items flipped. In the North, feed costs accounted for 33 percent of all costs, while pasture
