Management and financial decisions need to account for the changing cost and returns facing cattlemen in today's production environment.
Feed grain prices remain at near-record prices and the cost of by-products that cattlemen annually depend on are running about 20% higher than last year. In addition to feed costs, fertilizer and fuel cost escalation have increased the costs of harvested forages. It is these conditions that mitigate the net profits of a cow-calf operation in a time when cattlemen are receiving almost record prices.
Economic analysis of cow-calf records in a number of the Midwest and Great Plains states have consistently identified lower annual winter costs with high-profit operations, and the inverse where low-profit operations have an above-average winter feed expenditure. Herd size does tend to play a role where smaller herds tend to have a higher feed cost. The trend is up on all costs, but the key point to detect is that pasture costs have been and continue to be one of the more stable costs over time.