Costs and Profitability
Outlook for 2006
Curt Lacy
Extension Economist-Livestock
University of Georgia
$ Per Cow
COW-CALF RETURNS
AND CATTLE INVENTORY
U.S., Annual
Mil. Head
150
140
100
130
50
120
0
110
-50
100
-100
90 C-P-67
1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004
Cow-Calf Returns
Cattle Inventory Jan 1
07/27/05
Fertilizer Prices – 1997-2005
A.N. prices have increased 46%
since 2002
$350
$300
$200
$150
$100
$50
Nitrogen (AN)
Phosphorous (DAP)
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2
0
0
5
2
0
0
4
2
0
0
3
2
0
0
2
2
0
0
1
2
0
0
0
1
9
9
9
1
9
9
8
$0
1
9
9
7
$/ton
$250
Potash (Muriate)
Impact of Changes in Nitrogen and
Potash on Hay Fertilizer Costs Per Acre*
Nitrogen
$ 0.30
$ 0.40
$ 0.45
$ 0.50
$ 0.60
Potash
$ 0.15 $ 0.20
$ 117.00 $ 126.00
$ 141.00 $ 150.00
$ 153.00 $ 162.00
$ 165.00 $ 174.00
$ 189.00 $ 198.00
$ 0.25
$ 135.00
$ 159.00
$ 171.00
$ 183.00
$ 207.00
*Excludes all other costs
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$ 0.30
$ 144.00
$ 168.00
$ 180.00
$ 192.00
$ 216.00
Impact of Changes in Nitrogen and
Potash on Hay Fertilizer Costs Per Ton*
Nitrogen
$ 0.30
$ 0.40
$ 0.45
$ 0.50
$ 0.60
Yield (Tons/Acre)
3.00
5.00
$ 43.80 $ 26.28
$ 51.80 $ 31.08
$ 55.80 $ 33.48
$ 59.80 $ 35.88
$ 67.80 $ 40.68
*Excludes all other costs
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$
$
$
$
$
7.00
18.77
22.20
23.91
25.63
29.06
Fuel Prices – 1997-2005
Diesel prices are up 104% since 2002
$2.50
$1.50
$1.00
$0.50
Diesel (bulk)
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2
0
0
5
2
0
0
4
2
0
0
3
2
0
0
2
2
0
0
1
2
0
0
0
1
9
9
9
1
9
9
8
$0.00
1
9
9
7
$/Gallon
$2.00
Impact of Fuel & Fertilizer Prices on
Cost of Production
$90
$80
$70
$60
$50
$40
$30
$20
2002
500# Calf ($/Cwt.)
2005
Hay ($/ton)
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Impact of Fuel Costs on Hay Costs
Per Acre*
90
80
$/Acre
70
60
50
40
30
20
10
0
*Excludes all
other costs
1
2
3
Cuttings/Year
$1.50
$1.75
$2.00
$2.25
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$2.50
Replacement Heifer Development Costs
Item
Heifer
Heifer Development Budget
Unit
Cost/unit Quantity Item cost
cwt.
$ 100.00
5.5 $
550.00
Winter Pasture
ac
$ 135.00
0.67 $
90.00
Coastal Pasture
ac
$ 140.00
0.67 $
93.80
Other Pasture
ac
$
-
0.67 $
-
Hay
ton
$
65.00
1.65 $
107.25
Feed - Developing Heifer
lbs
$
0.05
540 $
27.00
Feed - Pregnant Heifer
lbs
$
0.05
300 $
15.00
Feed - 1st Calf Heifer
lbs
$
-
$
-
Other Feed
lbs
$
-
$
-
Mineral
hd
$
18.20
1 $
18.20
Ear Tags
hd
$
2.80
1 $
2.80
Vet & Med - Vaccinations
hd
$
6.12
1 $
6.12
Vet & Med - Preg check
hd
$
3.00
1 $
3.00
Labor
hrs
$
9.00
1.5 $
13.50
Total Variable Costs
Interest
hd
hd
7.00% $ 463.34
$
$
926.67
32.43
Bull Costs
hd
19.20
1.00
$
19.20
Non-breeders
percent
15.00% $ 959.10
$
143.87
Total Costs of Retaining Heifers
hd
$
1,122.17
Adjustment for cull heifer sales
hd
800 $
102.00
$
1,020.17
Total net costs for retaining heifer
$
$
85.00
$
Replacement Female
Considerations
 Current economic value = -$218.77
 Breakeven purchase price = $801.40
 Years to breakeven = 7
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Expected Profits and Breakeven
Prices
Item
Net
Returns
(Total)
Net
Breakeven
Returns
($/Cwt.)
($/weaned
Calf)
Variable
Costs
$6,495.64
$76.42
$85.41
Total Costs
-$8,352.60
-$98.27
$116.55
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Now What? Where can you
increase profits?



Increase conception rates
Decrease Variable Costs
 What is your hay cost
 Where do you store your hay?
 Do you have alternative fertilizer sources
 Legumes
 Soil ph
Decrease Fixed Costs – Equipment & Females
 Cull unproductive cows
 Purchase hay?
 Custom hiring hay
 Can you do custom work?
 Increasing herd size  lease cows instead of raising heifers
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Good News-Bad News
 Most cow-calf producers should be able to
cover their cash expenses for the next few
years
 Cost of production for beef cattle producers
has risen considerably in the last 2-3 years
 Fuel & fertilizer prices alone have risen
from 46%-105%
 Many will not be able to cover all expenses
 Producers should focus on increasing
weaning %, culling unproductive cows and
reducing fertilizer and fuel needs
Department of Agricultural &
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