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Guest Opinions

New Southeastern Wyoming Cattle Budget Available

Written by John Ritten

By  UW Extension Production Economist John Ritten

The Cooperative Extension Service (CES) at UW has just released a cow/calf budget for southeast Wyoming.

The budget was put together mainly by Kendall Eisele, a recent Masters graduate in the UW Department of Ag and Applied Economics, with some input from myself, Christopher Bastian from the Department of Ag and Applied Economics and Steve Paisley of the Department of Animal Science. The budget is published through CES under bulletin number B-1217, and is available at wyomingextension.org/agpubs/pubs/B1217.pdf.

The bulletin is designed to portray a “typical” cow-calf operation in southeast Wyoming, and production practices are based on what would be considered a well-managed operation in the region. This budget represents a producer with a herd of 200 cows, and it assumes a 90 percent weaning rate, a 15 percent replacement rate and a cow-to-bull ratio of 30:1.

The ranch size is based on the average for Platte and Goshen counties, 2,183 acres, which is smaller than the state average of 2,726 acres. Actual values for any operation will vary based on resource base and management practices. A sample of ranchers from the selected study region attended an extension education field day at the James C. Hageman Sustainable Agriculture Research and Extension Center (SAREC) in 2010 and participated in a focus group interview. Participating ranchers provided feedback on a sample enterprise budget using “real practices and experience.” Their recommendations were used to develop the budget presented here. The budget is meant to provide an estimate of potential costs and returns and should not be considered an endorsement or exclusion of production practices by the focus group participants or the University of Wyoming. The budget is based on a spring calving operation that sells calves in the fall at weaning.  

The ranch is assumed to calve in April, with breeding occurring mid-June to mid-August. Weaning occurs Oct. 15, and cull cows are marketed at the end of April, or after preg-checking in November. Cattle are on summer pasture from May 1 to Oct. 15 and then move to winter pasture. Hay is fed, as needed, from Jan. 1 to April 30.
The table on page 5 of this edition shows the revenues associated with selling calves and culled animals, and the costs are shown across broad categories. Feed expense costs include grazing costs (grazing is assumed to occur on both public and private lands) and hay feeding costs, as well as salt, mineral and supplement costs. Reproduction costs include both bull costs and the costs associated with replacement heifers. Animal health costs include general vet fees, medications, veterinary supplies and vaccinations. Labor costs only include those needs not met by the family. Marketing and transportation costs include fuel, inspection and commission, as well as liability insurance during hauling. For more a detailed cost structure, please see the actual extension bulletin.

Return over variable costs (ROVC) is an intermediate calculation and shows the returns remaining that can be applied to the fixed costs. ROVC is what is left to cover fixed costs of an operation including facility maintenance, machinery repairs and maintenance, depreciation, taxes and interest on any operating loans. As most operations differ in their asset base and therefore fixed costs, ROVC is often a useful calculation to analyze an operation. As can be seen in this budget, there is not a lot of revenue left over after accounting for variable costs.

While this budget may not represent a specific operation, a manager or producer can use the format of the CES bulletin to place their own values in and calculate the difference in returns and costs. Keep in mind that by either increasing the returns of the operation (possibly by producing heavier, or higher quality calves) or by reducing costs (decreasing feed needs for example) a producer can leave himself or herself in a much better position than this budget portrays. Also, participating in value added programs, such as age and source verification, could help increase operational profitability.