Farm Management Minute: Analyzing your cow costs
Last year we saw record-breaking profits in the cattle industry. For most of you this is not new information. For the average rancher enrolled in the South Dakota Center for Farm/Ranch Management Program, the net return was $596.55 for each cow. That is a remarkable year of profit. Conversely, direct expenses were $597.67 and overhead expenses were $142.20 per cow; now is the time to be looking ahead to keep these expenses manageable. In 2014, the highest expense in raising cattle was the pasture cost of $133.88 per cow. That is not including any other feed such as hay, mineral or other supplements. Most of the feed cost is based on if we receive proper amounts of rainfall for our pastures and also if we are able to harvest enough winter feed.
Last year, the average rancher spent $25.33 per cow on vet expenses. I think most producers would agree that this is an area we don’t want to cut back on.
In 2014 the average amount spent on repairs was $40.95 per head. The repairs can be from fixing stock dams, fence repairs, livestock equipment and many other areas. An operation that runs 200 cows spent $8190 total in repairs for that herd.
Depending on where you live and what county you are in, many have seen a huge increase in property taxes. In 2014 the average producer spent $10.62 per head in land taxes.
Most people are surprised how depreciation figures into the big picture with overhead expenses. Depending on how new the operation’s equipment is, the average rancher spends $57.41 per head just in deprecation. Again using a 200 head ranch, that adds up to $11,482.00 depreciation expense for that operation.
Having good records is the best way to analyze all aspects of expense in an operation. By comparing your own ranch to the state averages, it is easier to see what expenses could be adjusted so that your operation’s expenses are not higher than average. If you would like more information about the South Dakota Center for Farm/Ranch Management please contact David Koupal at 605 995-7193, cell 605 299-6163 or email David.Koupal@mitchelltech.edu.