Key strategies for increased profitability in cow-calf operations

By Scout Nelson

A recent study by the University of Minnesota's Center for Financial Management, focusing on cow-calf operations across Nebraska, South Dakota, and North Dakota, has shed light on the practices that lead to higher profitability.

The data reveals that the top 20% of cow-calf producers, in terms of profitability, achieved a higher gross margin, averaging $1,183.52 compared to $959.74 for their lower-profit counterparts.

One key strategy of these successful producers was in calf sales; they sold some calves but also transferred others to different enterprises like stocker or feedlot programs. This group also benefited more from government payments, receiving an average of $20.63 per cow, as opposed to $4.06 received by the lower-profit group.

In terms of herd management, the high-profitability producers bought replacements rather than saving them and had lower cull sales with a reduced culling percentage. This was evident in their $80.35 sales compared to $143.92 in the lower-profit group.

Expense management was another critical area. The high-profitability herds incurred lower total expenses, averaging $1,045.73 against $600.64. This efficient management extended to feed costs, where they spent less overall but invested more in high-protein feeds like alfalfa. This approach enabled them to meet the nutritional needs of the cows while minimizing the cost of supplemental protein.

The study also highlighted differences in average weaning weights and pounds weaned per cow exposed, with the more profitable herds achieving better results in both metrics. The average price per hundredweight (cwt) was also higher for the high-profitability group, at $231 compared to $172.19 for the less profitable herds.

The findings underscore the importance of a holistic approach to management, focusing on both costs and income to enhance the profitability of cow-calf operations. Efficient calf sale strategies, prudent feed management, and controlled expenses are key factors contributing to the success of the top-performing producers in this sector.

Photo Credit: gettyimages-ahavelaar