The cost of raising a calf varies based on the type of calf and its sex. In general, female calves are more expensive than male calves because they have a higher value when they grow up. The cost of a calf depends on the breed, age, and gender of the animal. It also depends on who is buying it. If you are a farmer or rancher, you will pay more for the calf than if you were just going to raise it yourself for meat.
The location of your purchase also affects the price of calves. Cattle tend to be cheaper in states where they are more common, like Texas and Oklahoma. However, if you live in an area that has a large number of vegans or vegetarians, you might find yourself paying more for your cow because there’s less demand for them in that area.
How Much Does A Cow Cost? – A calf will bring in $655 per cow. The Breakeven feeder calf price will increase linearly with an increase in annual cow cost. The impact of drought on calf movement and high input costs on decision-making are also examined. You can use this information to develop your cost structure and decide whether a calf is economically viable. A simple cost analysis will be shown below.
Average calf revenue is $655 per cow
It’s not surprising that the average calf revenue per cow has increased in recent years. In fact, the average price of a calf was $1100 in June 2016, compared to $655 in June 2017. This increase is attributed to the lowered cost of calf production. And, the average weaning rate has been estimated at 85%. According to a study from Kansas State University, 85% of all cows are exposed to a bull at least once before they wean. The results are very encouraging – a calf yield of $655 per cow is expected by 2021.
However, there are many costs that are not included in the calculation. Some are purposely excluded from the calculation because they vary so widely between operations. For example, labor and land costs are not included in the total cost of a cow. These two costs have little impact on the overall gross return. If you are a cattle farmer looking for a way to boost your profits, this report is for you.
Cattle producers must develop a plan for marketing their calf products in order to achieve profit. This means figuring out the unit cost of production (UCP), the price paid per pound of the calf, and the total cost of the operation.
Market research reveals that the average calf revenue will reach $655 per cow in 2021, according to Kansas Farm Management Association data. It will continue to grow, as more producers choose to focus on improving the profitability of their cow-calf operations. The study shows that, if you follow the tips provided by the KCMA, you’ll have a successful and profitable cow-calf enterprise.
Breakeven feeder calf price responds linearly to an increase in annual cow cost
The breakeven feeder calf price increases linearly with an increase in annual cow cost. Generally, a higher breakeven price requires a lower feeder calf price, so the more expensive the cows, the higher the feeder calf price must be. For example, a herd with an annual cow cost of $900 must sell 500-lb calves for $225/cwt to break even. On the other hand, a herd with an annual cow cost of $1,000 would require a breakeven feeder calf price of $250/cwt. If performance is not maintained, breakeven prices will be unable to meet these levels.
The beef cattle industry is currently in a contracting phase of its cycle. Its breeding herd, consisting of cows and heifers, supplies calves to the cattle inventory. However, increased cow and heifer slaughter will shrink the calf crop. Additionally, the southern Plains are experiencing extreme drought, which forces many cattle producers to remove them.
The prices of dairy heifer calves, beef, and replacement heifers are highly sensitive to the milk price. A producer weighing the price of a feeder’s calf would lose $80/head if the market dropped to $1.75/lb. Consequently, producers must carefully follow trends and set reasonable price expectations. For instance, the CME website provides daily and monthly feeder calf prices, as well as the Alberta Beef Producers’ daily cattle report.
The higher the dairy heifer calf price, the lower the SSA is expected to be. Hence, an increase in the dairy heifer calf price will make scenario 3 unfeasible, and the farmer will incur substantial losses owing to forgone opportunities. However, the higher the heifer price, the more the breakeven feeder calf price will increase.
In addition to sex semen, the purchase price will play a role in SSA. If the price of a dairy heifer calf increases by $20, the breakeven heifer calf price will increase by $54. Under scenario 3, a further increase in the SSA will result in a loss of $125/head. Therefore, the breakeven feeder calf price responds linearly to an increase in the annual cow cost.
Impact of drought on calf movement
Despite the recent drought, more than half of the states with large cow-calf operations are still marginally affected. In fact, four of the top ten states in beef cow inventory have less than half of the state’s area in moderate drought. This is particularly troubling considering that more than 15 million beef cows in that region are trying to graze drought-parched grasses. In addition, weekly USDA reports on cattle slaughter are higher than usual, and Shagam says this may be a reflection of inventory catch-up following the COVID-19 supply chain disruptions.
As a result, cattle producers have culled their herds and sold the cattle that were left. Counting the number of sold cattle, many producers have cut their herds in half or more. Despite these challenges, producers are looking to better times to rebuild herds. For instance, Rachael Merrill, of Blackduck Co-op AG Services, recently ordered Rangeland Cake for her cattle. The protein supplement will help the herd stretch its pasture.
To evaluate the impacts of drought on calf movement, we can look at soil moisture. Researchers have determined that the minimum historical NDVI value for determining drought is 3.5. The data on soil moisture will provide a useful index for comparing current Vegetation Index (VI) values to those of previous years. This data is a key part of our drought assessment. Without it, we wouldn’t know how to accurately predict the impact of the drought on calf movements in the future.
Climate change is also impacting livestock production in other ways. A severe drought, for example, may result in massive liquidation of beef cows in the first half of the year. The impact of this situation could negatively impact cattle markets. The drought will affect production, causing a loss of revenue in the beef and dairy sectors. In addition, the lack of forage in some regions may also limit milk production.
The recent megadrought in the western United States has made the situation even worse. It is no longer the driest megadrought on record, but the dryest years in that period have been drier than in previous decades. The two most extreme drought years since records began were the most parched and thirstiest years in history. The new drought is exacerbated by the changing climate, with the resulting shortage of water.
Impact of high input costs on decision-making
There are three main effects of high input costs on decision-making. Firms may decide not to raise prices when they face high input costs, fearing that the increase will hurt sales. However, producers with high demand can raise prices without fearing losing customers. These firms can pass along their higher costs as markup. The markup covers profits, other costs, and new investments. High input costs also increase firms’ ability to pass on higher costs to consumers.
In the United States, the consumer price index increased 5.4 percent in June, the largest monthly increase since August 2008. Meanwhile, raw-material costs have been rising steadily since July 2020. Several manufacturers and distributors have increased prices to keep up with the cost increases while minimizing their impact on financial performance. While this has had a negative impact on companies’ profitability, it has become more important than ever for them to reflect increases in product prices.
The impact on firms is greatest when they can pass on higher input costs to consumers. But this is often impossible because there are no alternatives to passing on higher input costs. Companies must decide if they want to increase their prices by reducing their profit margins or pass on the costs to consumers. The question is, “How do we reduce these costs while maintaining a competitive edge?”