Report: Livestock enterprise profitability shows small gain in 2013

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Farm Forum

Data shows that the profit margin for livestock producers in 2013 grew slightly over 2012, according to an enterprise analysis of data collected from farmers and ranchers enrolled in the S.D. Center for Farm/Ranch Business Management Program administered by Mitchell Technical Institute.

According to SDCFRM instructor Lori Tonak, “Even though the market prices for livestock are at an all-time high, the profit margin for livestock enterprises showed a very small gain. The high feed prices at the beginning of 2013 impacted the profit on every livestock enterprise.”

The cow calf enterprise indicated a profit of $36.63/cow in 2013 compared to a loss of $27.05/cow in 2012. The total cost to maintain a cow in the average herd was $764/cow, a slight rise from $740/cow in 2012. The beef backgrounding enterprises were profitable in 2013 with a net return on average of $26.07/cwt. of beef produced compared to a profit of $16.66/cwt. in 2012. Beef finishing was the only enterprise that showed a decrease in net returns from 2012-$5.90/cwt. in 2012 compared to a profit of $2.53/cwt. in 2013. “Between increased feed prices at the beginning of the year and increased feeder cattle prices in the fall, beef finishing weathered the storm well by still showing a profit margin. Producers who closely tracked their feed costs showed higher profit margins across all beef enterprises this past year,” stated Tonak.

Even with increased expenses, the average hog finishing enterprise showed a profit of $15.80/cwt. of pork produced in 2013 compared to $1.71/cwt. profit in 2012. The gain in profits is a reflection of the increased live hog prices received by the producer this year, which was at $74.69/cwt this year vs $61.74/cwt in 2012.

The major factors that affect the profitability in the livestock enterprises are death loss, feed costs and purchase/selling price. Controlling input costs, practicing good herd management techniques, and having a well-planned marketing strategy can potentially increase profits for livestock enterprises.

The Farm/Ranch Business Management Program is offered to farmers and ranchers in South Dakota through Mitchell Technical Institute. The purpose of the program is to assist farm and ranch operators in upgrading their management skills. The program is available to producers across the state. For more information about the data in this article or about the programs offered, call 1-605-995-3098 or email sdcfrm@mitchelltech.edu.