Differences Between High-, Medium-, and Low-Profit Cow-Calf Producers: An Analysis of 2016-2020 Kansas Farm Management Association Cow-Calf Enterprise – A Review

Differences Between High-, Medium-, and Low-Profit Cow-Calf Producers: An Analysis of 2016-2020 Kansas Farm Management Association Cow-Calf Enterprise – A Review

Photo credit Troy Walz.

This study by Dustin L. Pendell Ph.D. and Kevin L. Herbel can be found at the Kansas State University AgManager.info website. Review and summary by Aaron Berger, Nebraska Extension Educator.

Dr. Dustin Pendell and Kevin Herbel published a paper in November of 2021 that highlighted the differences between 81 different producers with cow-calf enterprises that are part of the Kansas Farm Management Association. The paper examined both returns over variable costs and returns over total costs in 2016-2020. The authors broke out participants in the study into three groups of high-, medium- and low-profit producers. Here are differences that stood out between producers from the data when looking at returns over total costs.

  • Differences in costs between operations significantly outweighed revenue differences. High-profit operations spent $283.81 less per cow than low-profit operations in this study.
  • High-profit operations generated more gross income per cow, $176.09, than low-profit operations.
  • Differences in costs between high-profit and low-profit herds were found in feed expense. High-profit herds spent a total of $444.19 per cow on grazed and harvested feed, while low-profit herds spent $573.61. This is a difference of $128.70 per cow!
  • Labor, depreciation, machinery and interest expenses were all lower on a per cow basis for the high-profit operations than the low-profit operations. High-profit producers spent on average $116.43 less on these items than low-profit producers.
  • High-profit operations had a negative net return to management of -$107.99 per cow over the five-year period, while low-profit operations had a negative return of -$567.88 to management over the five-year period. A $459.90 difference!  Over this five-year period, on average, all farms had a negative return to management from the cow-calf enterprise. 

The Kansas Farm Management Association cow-calf enterprise data provides insights into the differences between high-, medium- and low-profit producers. Participants in the data set have the necessary production and financial records to know what their production costs are and then can use that information to make management decisions to improve profitability. In this data set, producers who aggressively controlled costs while producing more pounds of calf to sell per cow than their competitors and generated more gross revenue per cow were more profitable.  Good production with cost control, differentiated the most profitable producers from those that were the least profitable.

A one-page sample budget titled Estimated Annual Cow Costs for Nebraska 2021 is a tool that can be used to help producers to begin to estimate their own cow costs.  Good accounting and record keeping can help producers track their costs and know their cost of production. 

For producers interested in learning more about this topic, there are three Unit Cost of Production workshops scheduled for this January and February.

Jan. 13 and 14 at Scottsbluff: Panhandle Research and Extension Center. 8:30 am - 4 pm MST; contact Aaron Berger at 308-235-3122 or aberger2@unl.edu.

Feb. 2 and 3 at Mullen: Hooker County Community Center. 8:30 am - 4 pm MST; contact T.L. Meyer at 308-645-2267 or tl.meyer@unl.edu.

Feb. 7 and 8 at Basset: Basset City Building, 8:30 am – 4 pm CST; contact Hannah Greenwell at 402-387-2213 or hgreenwell2@unl.edu.

Cost is $50 per person and covers meals for both days. Please pre-register one week prior for a meal count.  Payment is due the day of the workshop. Workshops are limited to 30 people per location. Contact Aaron Berger at 308-235-3122 with questions about the workshops.