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Make your cows earn their living

A Nebraska Extension specialist covers the economic categories of running a cow-calf operation.

Elizabeth Hodges, Staff Writer

June 18, 2024

4 Min Read
Cattle in field
EARN A LIVING: It doesn’t matter how much your neighbor spends each year to keep his cow herd, but you should know how much your cows are costing you, and then develop strategies to help them pay their own way. Curt Arens

If you were to ask your neighbors how much it costs them to run their cows every year, what number would they give you?

Thinking about the economic inputs for each cow is not something that we consider each day. However, this metric can bring more clarity to how much it costs to run cattle on the ranch.

At the 2024 Nebraska Farm Bureau Young Farmers and Ranchers Conference held this past winter in Kearney, Aaron Berger, Nebraska beef Extension specialist, covered the different economic categories of running a cow-calf operation.

“If I’m running a business and I don’t know what it costs, in what kind of position does that put me? It makes it hard to make decisions,” Berger said.

What goes in …

Ranchers might not be asking their cattle to pay fair market value on feed, but to capitalize the return on investment for these cattle, ranchers should. Berger shared a conversation that he has had with many ranchers in the southwest part of the state.

“I own the land, so now, they just have to pay the taxes,” Berger said. “But that grass has value, so you should expect some return on your investment.”

Elizabeth Hodges - Aaron Berger, Nebraska beef Extension specialist, walked producers through how to maximize revenue

Berger said feed can equate to 40% to 70% of total economic cost of the cow. This feed cost includes grazed and harvested feedstuffs. While it can be difficult to cut feed costs, there are other areas of economic costs that producers can consider.

Labor and equipment are the second-highest economic cost that cow-calf producers will incur. While this might be No. 2 on the list of economic cost, it is the highest cash cost that producers have.

Berger lumps these two aspects of the ranch together because if producers have equipment, there is labor associated with running these implements.

Coming in at No. 3 for economic costs associated with the ranch are cow replacement and bull costs. Something that ranchers should consider when thinking about cow replacement is cow depreciation.

“Cow depreciation is a real expense, and I would say there is an awakening to the reality of this for folks,” Berger said. “It used to be 10 years ago, people didn’t ever talk about this, but more and more people are talking about it today.”

Berger brought up an example: If you buy a cow for $3,000 today, how much will she be worth in a couple of years when you try to sell her? He said that her value could even drop to $1,000.

FINDING COW PROFIT graphic

… Must go out

Once all the inputs are considered in cow costs, looking at increasing revenue, sharpening marketing strategy or decreasing the costs of production can bring more viability to the ranch.

Improving profitability is something that many producers continually try to work toward. Breaking profitability down into three different categories, as Berger has, can make it more manageable.

The first category of increasing revenue involves charging more when producers go to sell calves. However, this might not be a plausible way to better the return on investment. In the same light, the cattle market is not something that ranchers have a lot of control over. Berger said that while you can look for resources to improve your marketing strategy, it is important to look first at the cost of production.

Curt Arens - cow in field

Berger broke costs into two different categories: direct and overhead costs. Direct costs include inputs such as vaccines, tags and protein supplements. The overhead costs include labor and equipment such as tractors, chutes, pickups and horses.

The overhead costs do not usually change if the number of cows increases. But direct costs will increase with more cows on the operation.

“If I am spending a dollar, what am I getting back?” Berger asked.

To calculate how much each cow is worth, figure out the unit cost of production.

The formula for the UCOP is simple — take both the direct and overhead costs and divide them by the units produced. Finding the units produced can be different based on how the operation is structured, but it can either be each calf or pounds produced.

While you might not need to know how much it costs your neighbors to raise their cattle, it can be beneficial to understand what you are putting into your cattle and what you get in return.

Learn more by emailing Berger at [email protected].

Read more about:

Cow calf

About the Author(s)

Elizabeth Hodges

Staff Writer, Farm Progress

Growing up on a third-generation purebred Berkshire hog operation, Elizabeth Hodges of Julian, Neb., credits her farm background as showing her what it takes to be involved in the ag industry. She began her journalism career while in high school, reporting on producer progress for the Midwest Messenger newspaper.

While a student at the University of Nebraska-Lincoln, she became a Husker Harvest Days intern at Nebraska Farmer in 2022. The next year, she was hired full time as a staff writer for Farm Progress. She plans to graduate in 2024 with a double major in ag and environmental sciences communications, as well as animal science.

Being on the 2022 Meat Judging team at UNL led her to be on the 2023 Livestock Judging team, where she saw all aspects of the livestock industry. She is also in Block and Bridle and has held different leadership positions within the club.

Hodges’ father, Michael, raises hogs, and her mother, Christy, is an ag education teacher and FFA advisor at Johnson County Central. Hodges is the oldest sibling of four.

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