Ag Notes: Remember what drives profitability in the cow-calf business

The recent corn price escalation has many cow-calf producers lamenting the cost of corn and its impact on the cost of by-products. Additionally, the cost of grain has an impact on fat cattle prices which has downstream implications on the calf prices we realize in Kentucky. It is great to understand the connections among commodities and their impact on prices we receive. However, cow-calf producers do not need to lose sight of the management practices under their control which directly impact the profitability of their enterprise.
The prices received for cattle, production levels (weaning weight and pregnancy rate) and operating costs work together to determine profitability. More than 60 percent of the cash costs related to cow-calf budgets are related to feeding the cow herd with pasture grazing or stored feeds. Feed supplement and mineral costs also add to the yearly feed/ nutrition portion of the budget. Analysis of low-cost producers has repeatedly revealed that maximizing grazing days and minimizing use of stored forage is an important step to lowering costs and improving profitability. Stockpiling tall fescue coupled with strip grazing is our best way of reducing stored forage needs. Accumulating forage has been particularly difficult in view of this year’s drought. Recent rains coupled with mild temperatures have helped with some fall forage growth. Strip grazing of stockpiled forage will maximize utilization and minimize waste.
Another component of nutritional expenses is purchased feed to supplement pasture or hay. In most cases, green growing forage does not require supplementation. Supplementation of hay or silage is typically reserved for lactating cows or developing heifers. Basing a supplement plan on forage quality via a forage analysis allows more precision and perhaps the knowledge that forage alone could meet a cow’s nutrient requirement. While trying to economize on purchasing feed it is important not to underfeed due to nutrition’s impact on reproduction.
Attention should be given to practices in each category that impacts profitability. Price can be affected by marketing plans and methods, production levels are impacted by management and costs are impacted by purchasing decisions. Having production and financial records allow further examination of your operation’s strengths and weaknesses. Several studies indicate that an important variable separating high and low profit operations is management of input costs. Your local extension service office has several of the tools available to assist in recording financial and production records.

Jerry Little is Boyle County extension agent for agriculture/natural resources.