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The beef economist at Western Beef Development Center is responsible for conducting the annual cow-calf cost of production benchmarking study and for performing economic analysis on the research projects carried out at Termuende Research Ranch by Dr. Bart Lardner and his research students and associates.
 Economic Analysis of Applied Research
For every research study carried out at Termuende Research Ranch there is the question: “What did it cost?” For example, in addition to studying the effects of feeding pregnant beef cows crop residues and wheat DDGS (dried distillers’ grain and solubles) supplementation WBDC also determines the cost (e.g. $/hd/day) to feed crop residues and DDGS as a winter feed ration. Producers are keenly interested in the economics behind WBDC’s research projects as they are unwillingly to adopt a new practice if it does not make economic sense.
Detailed record keeping by WBDC Research Technician, Leah Pearce, and graduate students is key to being able to conduct economic analysis. Actual prices (i.e. purchased feedstuffs, crop inputs) are used as much as possible, but published averages are also used for some parts of the analysis. For examples, projects involving crop production will use the custom rates from Saskatchewan Ministry of Agriculture’s Farm Machinery and Custom Rental Rate Guide rather than the rates paid by WBDC to its custom operator.
Cow-Calf Cost of Production (COP)
Why participate? | What participants receive | How to sign up | Cost |
Info Required | Confidentiality | Time Required |
Since 2001, Western Beef has helped over 200 cow-calf producers calculate their cost of production (break-even price). Producers receive individual results and with their permission their information is aggregated and shared as benchmark averages as an income statement in a Fact Sheet. The most recent study was for the 2008 production year. To read one of the COP Fact Sheets, click on a PDF icon below:
| |
2001 |
2002 |
2003 |
2004 |
2005 |
2008 |
2010 |
| Fact Sheet |
|
|
|
|
|
|
|
| # of Herds |
30 |
67 |
53 |
17 |
22 |
18 |
22 |
| Herd Size |
173 |
155 |
211 |
303 |
264 |
241 |
282 |
| Wean % |
94% |
92% |
94% |
93% |
94% |
89% |
88% |
| WWT (wean weight) |
510 |
523 |
515 |
524 |
565 |
545 |
542 |
| DOF (days on feed) |
n/a |
175 |
165 |
170 |
153 |
151 |
160 |
| Total Costs ($/Cow) |
$584 |
$650 |
$601 |
$553 |
$582 |
$573 |
$615 |
| Break-Even ($/lb of calf) |
$1.22 |
$1.35 |
$1.24 |
$1.13 |
$1.10 |
$1.19 |
$1.29 |
| Margin ($/Cow) |
$144 |
($68) |
($60) |
$3 |
$138 |
($110) |
($9.29) |
The beef economist conducts on-farm visits to collect producer data from February through April each year to generate the previous year’s cost of production (i.e. February-April 2012, data will be collected for the 2011 study).
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Why should producers participate?
Participating in Western Beef’s annual COP study is a great way for a cow-calf producer to gauge their operation’s financial sustainability. Participation in the study is free (except for your time). Each participant receives a print out of their cow-calf cost of production (income statement) and ranking details on how their operation compared with others in the study.
The beef industry has been undergoing some major structural changes in recent years. Contraction of the North American beef cowherd has resulted in smaller calf crops and feeder calf prices began to respond in Fall 2010 after several years of low prices. As feed prices also rally, how long will those prices remain? Knowing what price a producer needs to break-even is invaluable. It has been said, “you cannot manage what you do not measure”. The information from the COP study can help producers in their decision-making and managing their operations. Financial institutions have expressed keen interest in having their beef producer clients calculate their cost of production.
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What do producers get from participating?
Study participants receive:
- Individual print-out of income statement showing
- Production costs and returns on a per unit of output basis for their cow-calf enterprise ($/lb of weaned calf)
- Production costs and returns on a per unit of investment basis ($/cow)
- Benchmark reports
- Long-term participants receive their own benchmark report to assess the performance of their operation over time
- WBDC Cost of Production Fact Sheet
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How can producers sign up?
Western Beef is always looking for new participants for its annual cost of production study. If you are a cow-calf producer in Saskatchewan and are interested in participating, please contact Kathy Larson
.
Albertan producers interested in determining their cost of production should consider Alberta Agriculture’s AgriProfit$ program, for more details click here.
What does it cost to participate?
It is free for producers to participate, other than the value of your time during the on-farm visit.
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What information is needed?
Prior to an on-farm visit by the beef economist producers enrolled in the cost of production study will be provided with a list of questions that should be completed. The answers to the questions will be needed to complete the cost of production analysis. Spending some time gathering the required information helps the on-farm process immensely.
Producers must be able to provide details on:
- Herd inventories (Beginning/Ending head counts of cows, bulls)
- Breeding (# exposed, # open)
- Calf crop (births, losses, # weaned, weaning weight)
- Pasture (Start/end date, # of head grazed, fees paid)
- Field feeding (Start/end date, # of animals, cost)
- Winter feed (Amounts fed, cost for each feedstuff)
- Revenue (sales receipts for calves, culls)
- Expenses (fuel, repairs, utilities, custom work, labour, insurance, interest, etc)
- Assets (all buildings and equipment; current market value for each piece)
To download a list of the questions to be completed prior to an on-farm visit, click here.
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Is individual information kept confidential?
The business information provided by participants is strictly kept confidential. Permission is obtained to allow WBDC to use information in the generation of averaged results for publication in a Fact Sheet.
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How long does an on-farm visit take?
Typically, the beef economist can only complete one visit per day due to the time involvement as well as time to travel between operations. First-time participants can take the better part of day to complete (8 hours) as the entry of asset information and allocating expenses across enterprises can be onerous. Repeat participants will take less than a day (4-5 hours estimated) as the asset details, expense categories and allocations are all set up in the first year of participation and in follow-up years the data only needs to be “updated” to reflect the most recent production year.
Completing the question list prior to an on-farm visit ensures the best use of time.
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Sources of Industry Information & Statistics
There are many places on the internet to find information on the cattle industry. There are many free resources as well as some that are fee-based.
The list below is by no means complete and if there are resources that you feel should be included below please send Kathy Larson an email with your suggested addition.
Free
Stats Canada Cattle Statistics (semi-annual Canadian Cattle Inventory Reports)
NASS Agriculture Counts (semi-annual U.S. Cattle Inventory Reports)
NASS Overview of the U.S. Cattle Industry
Canfax Free Reports
Fee-Based
CanFax (starting @ $100/year)
CattleFax (starting @ $200/year)
The Bottom Line – Spring Creek Consulting ($96/year)
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