Agricultural News
Beef Cow Production Costs at Record Highs in 2013- Jim Robb of LMIC Explains
Fri, 18 Oct 2013 05:19:10 CDT
For market analysis purposes, the LMIC has been estimating annual cow-calf returns since the mid 1970's. Jim Robb with the LMIC says those estimates are not based on survey data. Assumptions used represent rather standard production and marketing practices and are not indicative of a particular operation. Producers hit by Mother Nature events like drought or unusual blizzards, like that centered on Western South Dakota recently, probably had much higher production costs than calculated by the LMIC. Finally, LMIC only includes cash production costs plus pasture rent, and not all producer economic costs are used.
Robb was a guest earlier this week on Agriculture Today on the K-State Radio Network and his comments are featured in today's Beef Buzz with Farm Director Ron Hays.
Costs faced by U.S. cow-calf operations have surged in recent years. In the last five years, cash costs plus pasture jumped from about $550.00 per cow to nearly $800.00 in 2013. The LMIC uses 14 major cost categories (from purchased protein feed to interest cost) and every category has increased. In 2012, the summed calculated costs exceeded $700.00 per cow for the first time.
Fortunately for the cow-calf sector, cattle prices this fall are higher than a year ago. So, estimated cow-calf returns per cow will be up in 2013 compared to 2012's. The calculated return over cash costs plus pasture rent in 2012 was only about $32.00 per cow, that left little or nothing for the unaccounted economic expenses, or herd expansion, even if a cow-calf producer was located in a non-drought zone. This year, even with higher costs, calf prices have been compensating. The result is that LMIC's estimated returns are about $125.00 per cow. That will be the highest since 2005. However, there is a major cautionary note; due to drought many cow-calf operations had to sell off many cows. Even if per cow returns are higher, their enterprise is providing limited net income because in 2013 they have fewer calves to sell than in prior years.
Looking ahead to 2014, there is a bit of good news on the cost front and cattle prices are forecast to continue to record year-over-year gains. Purchased feedstuff costs should drop in 2014. In fact, cash costs of production per cow are projected to decline slightly in 2014. That cost drop plus high cattle prices set the stage for much improved per cow returns in 2014. In fact, those cash returns could substantially exceed 2004's record high.
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Network- but is also a regular audio feature found on this website as well. Click on the LISTEN BAR below for today's show- and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
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