beef competes with other proteins unique because of the...

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Stan BeversProfessor & Extension EconomistVernon, [email protected]

Beef competes with other proteins◦ Will always be one of the most expensive

Unique because of the phases within the industry◦ Cow-calf Asset Intensive Labor Intensive

◦ Stocker Margin Business

◦ Feedlots Margin Business

◦ Packer Margin Business

◦ Retail The Beef Industry players compete within their

phases.

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25

30

35

40

45

50

Mill

ion

Hea

d

Minnie Lou BradleyBradley 3 RanchMemphis, Texas

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National Program endorsed by the NCBA in 1991

Objectives◦ Identify areas of an operation needing change in

order to fulfill owner’s objectives.◦ Determine annual COP and ROA for an operation.◦ Develop Regional Databases to establish production

and financial benchmarks.

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Facilitates the comparison of an operation’s performance between years, groups of producers, production regions and production systems.

Texas and the Texas Rolling Plains has led this endeavor.

Completed on an individual basis. Annual workshops are held to assist ranchers

with the analysis.

Turn Bulls Out -> Female Inventory- Cull not intended to breed-Exposed intended to breed+Exposed intended to breed

May 2010

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan 2011

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan 2012

Pregnancy Test ->

Opens OutBreds OutOpen InBreds In

Pairs OutPairs In

Calves Weaned

Female Inventory- Cull not intended to breed-Exposed intended to breed+Exposed intended to breed


Turn Bulls Out ->

Pregnancy Test ->

Cow-calf Production Year16-18 months long

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Rainfall Data Acres/Female Breeding Season

Length Pounds Feed Fed Average Prices Rec’d◦ All Calves◦ Steers◦ Heifers◦ Culls

Pounds per Acre

Pregnancy Percentage Pregnancy Loss Calving Percentage Calving Death Loss Weaning Percentage Calving Distribution Age at Weaning Pounds produced per

Female Weaning Weights

Turn Bulls Out -> Female Inventory- Cull not intended to breed-Exposed intended to breed+Exposed intended to breed

May 2010

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan 2011

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan 2012

Pregnancy Test ->


Pairs OutPairs In

Calves Weaned

Turn Bulls Out ->

Pregnancy Test ->

<- Beginning Balance Sheet

<- Ending Balance Sheet

Twelve Month Income Statement

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Investment per Female◦ Cost Basis◦ Market Basis

Debt per Female Feed Costs per Female

& Cwt. Grazing Costs per

Female & Cwt. Finance Costs per

Female & Cwt. Total Costs per Female

& Cwt.

Breakeven Price per pound of weaned calf

Rate of Return on Assets◦ Cost Basis◦ Market Basis

Percentage Breakdown of each cost item.

Two Primary Comparisons

◦ Comparison with a regional database average What is the ranch’s strengths and weakness compared

to the regional average.

◦ Track the same operation over time. Where is the ranch going? Is it getting there?

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583,000

81,000 64,200 4,390 1,410

- 100,000 200,000 300,000 400,000 500,000 600,000 700,000

1-49 Cows 50-99Cows

100-499Cows

500-999Cows

>1,000Cows

U.S. Cow-calf Operations

Source: USDA-NASS, “Farms, Land in Farms, and Livestock Operations: 2011 Summary”, February 2012.

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17

38

9 8

-

5

10

15

20

25

30

35

40

45

1-49 Cows 50-99 Cows 100-499 Cows 500-999 Cows >1,000 Cows

Percent of CowsThe average herd size is 42 Cows.

Source: USDA-NASS, “Farms, Land in Farms, and Livestock Operations: 2011 Summary”, February 2012.

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Texas Beef Cow Inventory, by County, January 1, 2009

0 to 10,000

10,001 to 20,000

20,001 to 30,000

30,001 to 40,000

Greater than 40,000

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$50$60$70$80$90

$100$110$120$130$140

Texas SPA database contains results from 441 herds totaling 318,389 females.

$430

$392 $373

$385 $361 $350

$377

$494

$465 $449

$516

$559

$516 $521 $497

$581

$613 $597 $603

$585 $569

$300

$350

$400

$450

$500

$550

$600

$650

10

$60

$80

$100

$120

$140

$160

$180

$200

1. Pay property taxes (I just like cows)2. Breakeven (I just like cows, but I don’t

necessarily need the money)3. Be Profitable (If I don’t make money, I have

to find something else to do)4. Genetic progression (I plan to have the “best

performing” cattle)

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2007 to 2011 45 herds 47 to 2,972 17,291 females Herds by Size:◦ 1 – 49: 2◦ 50 – 99: 5◦ 100 – 199: 12◦ 200 – 299: 10◦ 300 – 499: 9◦ 500 – 999: 4◦ => 1,000: 3

(600)(500)(400)(300)(200)(100)

0100200300400500

0 200 400 600 800 1,000 1,200

Size of Herd

-57.71

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-350

-300

-250

-200

-150

-100

-50

0

50

100

150

200

1st Q 2nd Q 3rd Q 4th Q Average

Dol

lars

per

Fem

ale

Financial Net Income Per FemaleDatabase Average = -$57.71

Q1 Q2 Q3 Q4 MeanAcres 37.0 10.6 9.6 15.4Mean 18.7

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

13

75.0

80.0

85.0

90.0

95.0


Perc

enta

ge

Pregnancy Calving Weaning

Production PerformancesDatabase Average = 83.5%

350

400

450

500

550

600


Poun

ds

Steers Heifers Average

Weaning WeightsDatabase Average = 526.0 lbs.

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300

350

400

450

500


461452

418428

442

Poun

ds p

er F

emal

e

Pounds Weaned per Exposed FemaleDatabase Average = 441.9 lbs.

$75

$100

$125

$150

300 400 500 600 700 800

Dol

lars

per

Cw

t.

Average Weaning Weights

15

0

25

50

75

100

125

150

175

200


92106

139

178

128

Dol

lars

per

Cw

t. of

Wea

ned

Cal

f

Cost of ProductionDatabase Average = $127.53

Q1 Q2 Q3 Q4 MeanRec'd 131.11 107.17 104.84 102.14 111.74Breakeven 91.87 105.95 139.40 177.66 127.53

0

50

100

150

200Rec'd Breakeven

16

250

300

350

400

450

500

550

600

650

700

750


472

535

645

753

600

Dol

lars

per

Bre

edin

g Fe

mal

e

Total Cost of ProductionDatabase Average = $600.21

0

2,000

4,000

6,000

8,000

10,000

12,000


Dol

lars

per

Bre

edin

g Fe

mal

e

Total Investment Value at MarketDatabase Average = $6,546

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-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%


Perc

ent

Rate of Return on Assets at MarketDatabase Average = 0.63%

Labor/Man, 96, 16.2%

Depreciation, 88, 14.9%

Feed Purchased, 85, 14.3%

Fert, 45, 7.6%

Rep/Maint, 40, 6.8%

Interest, 37, 6.2%Rents, 36,

6.1%Fuel, 30,

5.1%Custom, 22, 3.7%

Vet, 20, 3.4%

Utilities, 17, 2.9% Insurance, 16, 2.7%

Prop. Tax, 13, 2.2%

Misc, 12, 2.0%

Supplies, 12, 2.0%

Chemicals, 9, 1.5%

Fees, 6, 1.0%Freight, 4, 0.7%Seed, 3, 0.5%

Other, 75.74, 12.8%

Average Total Cost per Female = $600.21

Average of 45 herds, 2007-2011

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Pregnancy Rate: Greater than 91.0%◦ This includes all females Including

1st calf heifers 2nd calf heifers

Calving Rate: Greater than 88.0% Weaning Percentage: Greater than 84.0%

Your management determines these.

Any less than these, you need to figure out why. Where is the loss occurring?

Any more than these may cost too much.

Average Weaning Weights of all calves: 530 pounds.

While your management determines this to a degree (ie. Genetics, etc.), mother nature can always trump you (ie. Rainfall after calving).

Combine this will an 84% weaning percentage, then pounds per female will be 445 pounds.

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Are you stocked right for you land resources?◦ Affects reproduction, weaning weights, feed costs,

etc. Remember, if she doesn’t get bred, everything else

that follows is an expense with no income to offset it. Are my females “sized” right? Are your females weaning an appropriate

weighted calf annually for your resources?

Total Costs should be $500 to $575. Top three expenses (Depreciation, Labor &

Management, and Feed Purchased) should account for at least 45% of your total expense ($225 to $260 per female).

That gives you $$275 to $315 for everything else.

Ask yourself: Is this _______ that I am considering purchasing going to improve my reproduction and/or production efficiency?◦ Feed◦ Labor (save one more calf)◦ New pickup

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This drought will end sometime, then calf prices should be very good.

Expansion will come, but it will be very slow, probably won’t begin until 2015.

In the meantime, this industry (above the cow-calf sector) has some downsizing to do.

Stan BeversProfessor & Ext. Economist

940 552-9941 ext. [email protected]

http://agrisk.tamu.edu

beef competes with other proteins unique because of the...

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