With weaning just finishing up for spring calving cow herds, it brings the end of the first phase of production for a bovine. During this time, revenues are returned to the cow and, likewise, the costs. How much did you make by having that cow around?
Many producers will never know or even care if they made a profit or loss. However, there are people who want to know if they made money and are willing to push buttons on a keyboard or put a pencil to paper. So, how does a person calculate the return of a cow?
First, let us start with the fun and easy part, the revenue side. The calves are weaned and they have just been sold, so the receipts should be close by. Figure out what the total number of dollars was for all of the calves sold (not per head or per hundredweight). Then, for the calves not sold either for replacements or retained ownership through other phases of production, determine the price that would have been received had they all been sold at weaning. Weekly sale prices in your area can be found in many places, but one source for prices is the Agricultural Marketing Services Web site. In addition, add any culled cow or bull revenue received for the year. Therefore, we have price of calves sold at weaning, calves retained after weaning and culled breeding stock for the revenue side.
From one operation to the next, expenditures will vary dramatically - especially depending on if the cows are run on native or introduced forages. For the expenditure side of the operation, add up all of the costs over the last 12 months that should be allocated to the cows. This would include items such as hay, minerals, range cubes, vaccinations, hired labor, pasture costs, fertilizer, equipment fuel, equipment lubrication and repairs to equipment. The resulting figure is the total cost for the cow herd.
Now that we have the revenues and costs for the herd, subtract costs from revenues. This is the net return for the herd.1 Take the net return for the herd and divide by the total number of cows exposed during the breeding season last year (approximately 17 months ago). This number is the ranch net return per cow.2
So how did she do? One should compare their operation to others to see how their management stacks up to their competition. Figure 1 allows ranchers to compare their operations with a benchmark. The chart provides the estimated average net return per cow across the United States over a 19-year period. In addition, the chart features the annual costs (not including opportunity costs and returns to management) and revenues per cow (data provided by Livestock Marketing Information Center). For 2007 the estimated costs per cow, revenues per cow and net return per cow, respectively, are $515, $563 and $48.
To measure true financial success, it is important for producers to know how their operation performed relative to the industry. Therefore, I encourage every rancher to complete these calculations so that they can either brag to their friends at the coffee shop or realize there is something out of line with their operation and make corrections.
1Herd Revenue - Herd Cost = Herd Net Return
2Herd Net Return ÷ Total Exposed Cows = Net Return per Cow