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With spring rapidly approaching, producers may want to consider planting some annual forages to provide their cattle with additional grazing this year.

“Some producers choose to add an annual forage to their production system when pasture rent is too high or they want to expand and can’t find more pasture,” according to Mary Drewnowski, University of Nebraska Extension specialist. “They may find that it doesn’t pencil out to plant corn, so instead, they may plant an annual forage this year and go back to their crop rotation when corn prices are better.”

Pasture rents

Pasture rent in Nebraska is becoming a hard pill to swallow for cattlemen. In central and southern Nebraska, producers are paying $50 to $60 per pair per month, which is $1.60 to two dollars per pair per day.

“That is quite expensive when we compare it to other sources of the same nutrients,” she says.

Chad Engle, livestock operations manager at U.S. Meat Animal Research Center (USMARC), tells producers about different annual mixtures they have tried at the station. They have grazed pairs on triticale in muddy, wet conditions, and he still figured they received 1.34 animal unit months (AUMs) of grazing. They have grazed an oat-radish-turnip mixture with pregnant spring cows and seen 2.2 AUMS.

“It was three to four inches tall when we turned into it, but it continued to grow,” he notes.

“We use annual forage fields as a transition to go to something else, like perennial pasture or corn residue,” Engle tells producers. “In the end, most everything we have tried was still cheaper than pasture rent.”

“One word of caution, if we are planting annuals on irrigated ground, it may be hard to justify to a banker,” he says.

Annual forages

Planting annual forages is one way producers can provide their cattle with high-quality forage, at less cost, depending on which mixture they choose. Drewnowski encourages them to choose carefully, depending upon when they want to graze.

“Winter sensitive varieties will die over the winter,” she says. “They can be planted in the fall and will produce more forage in the fall than the winter hearty varieties planted at the same time.”

“The winter-hardy varieties will overwinter,” she explains.

Winter sensitive varieties have two planting dates, March through April or in September. Winter-hardy varieties can be planted in the fall as early as August, but September may be better.

Oats are still the best choice for a winter-sensitive, cool-season forage, according to Drewnowski. But, spring triticale and spring barley can also be good alternatives.

Annual ryegrass can also be planted to help maintain annual forage quality into the later part of the season.

“If we plant a winter sensitive species in mid-March or early April, we could graze it into June, but it could get away from us in terms of forage quality. Adding an annual ryegrass or spring barley will help maintain quality,” she explains.

Drewnowski urges producers to keep in mind that annual forages are a crop risk, and they should have extra feed on hand in case the crop doesn’t establish.

“Anytime we are trying to establish something, there is a real opportunity for it to fail,” she says. “I would have some hay stockpiled to avoid wrecks. Some people even have an extra field they plan to hay but can graze if they have to.”

“Producers shouldn’t put themselves in a situation where they have a crop failure and realize that they have no feed for the cows,” Drewnowski comments. “Annuals are not like perennial grasses.”

Planting and harvest

Drewnowski recommends planting warm season species May 1 through August 1.

“The earlier you plant, the earlier we can graze,” she explains. “I would recommend planting cool season varieties after Aug. 1, but if we intend to plant July 15, I would decide whether to plant a warm-season or cool-season variety based on quality.”

“If we need yield but not high quality, I would plant warm season. If we need high quality for lactating cows or weaned calves, I would plant cool-season varieties,” she says.

Harvest efficiency is extremely important, the Extension specialist says.

“Fall forages don’t decline in quality with maturity like spring or summer forages. I would try and get all the yield I could and allocate grazing,” she explains.

Grazing

Grazing is not as efficient as haying, but it is more cost-effective, she continues. How cost-effective it is depends on how well grazing is managed.

“The first key to grazing management is starting at the right height and not letting it get away from us,” Drewnowski claims.

Small cereal grains like oats, rye and triticale should be six to eight inches in height when they are grazed.

“For rye, we may need to put cattle on it when it is four inches, depending on stocking rate. It can get away from us quickly,” she adds.

Drewnowski cautions producers who plan to graze varieties like Sudangrass and other warm-season grasses to wait until they are 18 inches tall if they could have prussic acid or nitrates.

“They need to be managed carefully,” she warns.

Gayle Smith is a correspondent for the Wyoming Livestock Roundup. Send comments on this article to This email address is being protected from spambots. You need JavaScript enabled to view it..

The Kansas Farm Management Association (KFMA), in conjunction with Kansas State University, has been involved in farm-level decisions and record keeping for over 80 years. They publish annual reports based on actual producer records, which can be useful in analyzing the variation in how farms respond to changes in both weather and markets. 

Unfortunately, Wyoming does not have this detailed data, so we cannot perform a similar analysis for our state.  However, the trends in Kansas appear to be similar to anecdotal evidence I have seen across our state.

KFMA publishes a document comparing the top, middle, and bottom-third producers in terms of profitably by enterprise. I’ll focus this report on the comparison of cow/calf producers that market calves less than 750 pounds.  

In general, it is interesting to note that, over the last 40 years, returns over variable costs range from negative $76.40 to $589.50 per cow, with an average return over variable cost of $78.01 per cow per year. However, when accounting for total costs, including unpaid family labor, real estate taxes, and depreciation, the average returns are much lower.  Returns over total costs are negative $85.72 per cow on average, and have ranged from negative $286.71 to $233.35 over the last 40 years. 

There are farms, however, that have shown returns over total cost to be much higher than average over that period. In fact, KFMA records show that variation across farms in a given years is larger than variation in average annual returns over the 40 years. There are farms that make money in most years, and farms that lose money in most years.

From 2010-2014, there are a few characteristics that the higher profit firms tend to share.

First, they tend to be slightly larger and sell slightly heavier calves. The data implies some economies of scale for ranches but only up to about 550 cows. Farms larger than that do not realize additional economies of scale, as they tend to need larger equipment and more fencing, which negates some of the benefits from being able to spread fixed costs over larger herd sizes. 

Another interesting comparison is that high-profit farms tend to receive better prices, implying some level of management is likely dedicated to marketing. 

The combination of better prices and heavier weaning weights resulted in high profit farms receiving roughly 16 percent more revenue on a per-cow basis than their lower profit counterparts. 

Higher profit farms also tend to have lower costs than the lower profit firms, with total costs being roughly 24 percent lower than the low-profit firms.  The higher profit firms from 2010-14 did spend more on pasture or grazed feeds compared to the other firms, but were able to save money on fed feeds.

It is important to note that these results tend to change as both weather and market conditions change. 

For example, in 2015 in northwest Kansas, the results are somewhat different. The highest profit producers still received much higher revenues per cow, at $1,193 as compared to the middle, and lower-third operations, at $849 and $802, respectively.  This is due to the fact that the higher profit firms had heavier calves that were 582 pounds, and received the highest price per hundredweight seen in the chart below. 

The lowest-third profit producers actually had heavier weights, at 571 pounds, than the middle-third, at 530 pounds, but due to lower prices received, they had the lowest revenue per cow. 

Also of note is that the middle-third profit producers actually had the lowest costs seen in the lefthand column, followed by the high profit farms. The high profit firms spent more on veterinary care and medicine, as well as more time working with animals compared to the middle-third of producers, implying they were more likely to be involved in a pre-conditioning program, partly responsible for the higher prices received. 

The results are that the high-profit farms averaged returns to labor and management of $281.73 per cow, whereas the other two-thirds of producers actually lost money on a per-cow basis last year as seen in the righthand column.

In the meantime, I think there are a few things to think about as we deal with the current market condition. 

Remember, all the farms that are still in business and associated with KFMA have had to deal with years that were unprofitable. Those that are more profitable than others focus on both keeping costs low, as well as ensuring continued production and revenues through proper herd and marketing management. 

During the next few years, keep your sights on the long run and make sound business plans that are able to withstand a few down years. And remember to focus on both sides of profit, revenues and costs. Learning how to better market your animals is just as important as raising them cheaply.

I recently had an interesting email discussion with a few ranchers over the subject of profit. A well-known rancher in his newsletter commented, “If you can’t make a decent profit at today’s prices, you need to get out of the cow/calf business.” I wrote back explaining that most of the ranchers I work with are not making an economic profit today.

I have the privilege of working with some of the best, most profit-minded ranchers in the region, and I expect if they are challenged, then others are in an even tougher spot. I think the real issue is that we are likely working with two definitions of profit. Many ranches are satisfied if they can pay off the operating line at the end of the year or have enough money left over to pay for groceries. Having positive cash flow is different from making an economic profit.

For a livestock business to show an economic profit, we have to kick out the economic crutches we like to prop up a livestock business with. For example, if you sold your cowherd, what could you lease the grass to someone else for? Charge your cows for this as an opportunity cost for grazed feed. What about that hay you could have sold? Charge them market price for that, as well. This continues with labor. If our cows make an economic profit, then they don’t need to be propped up with free labor from ownership. Charge the cows what it would cost to replace you and other owners for your contribution to the business.

In today’s market, once we consider these often ‘non-cash’ expenses then most ranches are not making an economic profit.

Using this definition does your livestock business make an economic profit? If the answer is no, then the next question is – should it? I put a lot of emphasis in my work on profitable ranching. Maybe I put too much emphasis on this. If you are comfortable and content with where you are and the outcomes your ranch is producing, then maybe there is no reason to be overly concerned with producing a profit.

I think the reason I put so much emphasis on profit is that those with whom I’m working want their ranch to do more. Perhaps they want to create room for another generation. Maybe they want to expand the business. Maybe they want to create a nest egg outside of the ranch for retirement or maybe they like the challenge and excitement of creating and leading a profitable business. For me personally, it would not be motivating to work for a business whose ambition was “don’t go broke.” It would be much more enjoyable to be a part of something focused on winning.

The email I received from the rancher responding to my comment started this way, “This model makes it impossible to make a cow/calf operation pencil out.” A classic quote from Henry Ford comes to mind, “Whether you think you can or you can’t, either way you are right.” It is easy to just dismiss this and blame it on the markets or the weather as the chief factors that determine your profitability.

However, it is much more meaningful be proactive. This could be learning how to do an economic analysis of your business and discovering the enterprises that are working and those that are not or going the next step and comparing the economic performance of your business to key benchmarks and developing strategies to leverage your advantages and address your weaknesses.

After all, if someone is doing it, it might be possible. Have a great summer, and I look forward to hearing from you.

When looking at costs related to cattle production, University of Wyoming (UW) Extension Economist John Ritten says, “There are lots of numbers to look at.”

“One thing we talk a lot about is cutting costs,” continues Ritten, “but the top part of the budget is really revenue. We can impact the bottom line by other ways than just cutting costs.”

Cost breakdown

However, costs are an important part of profits, and Ritten explains that costs fall into two categories – variable and fixed.

Variable costs account for things like feed and cow care, while fixed costs include expenses like machinery, buildings, taxes, land and depreciation.

“We should also include management,” Ritten says. “I’d bet that most ranchers don’t pay themselves a true management fee. We have to include how much we might make if we worked for someone else – and that’s not going to be just $18,000 a year, at least if we’re good.”

“People often blame overhead for the reason that they’re not profitable, but I don’t buy into that,” he says.

Determining profitability, Ritten explains, means that producers must have a solid definition of what is profit.

Profitability

“I talk about profit differently than an accountant might talk about it. We’re talking about something different than economic profit,” Ritten comments. “Answering the question, ‘Did we cover costs?’ is not the same as, ‘Do we have to pay income taxes?’ They are different.”

Ritten also cautions producers against benchmarking their ranches against operations that aren’t comparable.

“Benchmarking is a great idea – if we all use the same terms and measure things the same way,” he says. “If we compare to someone else, make sure to look at the same measure.”

In determining profitability, Ritten encourages producers to use economic profit.

“If we really want to consider the ranch profitable, we need to make money economically,” he says, and to do that, all expenses must be considered.

Accounting for expenses

When looking at the ranch, Ritten says that producers must look at all aspects, including feed and labor.

“All grass has value, whether we use it or rent it,” he says. “We need to charge ourselves for using the grass.”

Additionally, labor costs often go unaccounted for on the ranch.

“We need to account for all the labor – including the kids, aunts, uncles and neighbors – at calving, branding, etc.,” Ritten says. “We also need to pay ourselves a management fee, at least when we’re calculating profit. Otherwise, we’re subsidizing the ranch with our own time when we could make money somewhere else.”

Revenue equation

Ritten also notes that revenue includes production, as well as marketing.

“Weaning weights and percentages really impact how much money I bring in,” he says, “but marketing also matters. Two calves aren’t the same. If one is marketed well, he can make more money than the other.”

Marketing is one area where Ritten believes many producers can spend more time to have an impact on the profitability in the operation.

“We can make ourselves more money by investing time and energy into marketing,” he comments.

Fair analysis

With a look at both costs and revenues, Ritten says producers should understand that costs can be traded from operational to overhead. Ranchers also must be careful to cut costs without expecting to pay more somewhere else.

“For example, there’s a lot of talk about no more fed feed in ranching,” he explains. “In some parts of the state, that’s not feasible, but remember, there are substitutes. If we can buy one feed at a cost advantage, we should use it when we can.”

The same goes for buying versus raising hay.

“We need to charge ourselves market price. Even if I can put it up for $40, if I can sell the hay for $100 a ton, I need to charge myself $100 a ton,” Ritten says. I have to account for these costs.”

The numbers

A Kansas State University study collected costs and revenues from a subset of producers from 1987 until today, and Ritten says that, sadly, if fixed costs are included, ranchers were only making money 15 percent of the time.

“Analysis showed there’s more variation in a year across farms than across the four-year data set,” Ritten continues. “There were farms that made money almost every year. Going back to 1940, the average producer made $85 per cow per year, which is sad. But some people made $233 a cow, even in bad times.”

When looking at their costs, Ritten adds that the most profitable producers weren’t necessarily the lowest cost. Many of the top one-third of producers had higher vet costs and higher labor costs, which Ritten attributes to the use of artificial insemination.

The top one-third of producers made 49 percent more per cow than the bottom third, which is a remarkable difference, Ritten says.

“The highest profit farms wean more calves,” he says. “Production matters. These producers also get a higher price per pound or hundredweight. That tells me these people spend their time on marketing.”

“Granted, we won’t have an overnight success story,” Ritten emphasizes. “But if we can reduce costs, it’s a start.”

Ritten discussed spring calving costs during the 2016 Progressive Rancher Forum, held on Dec. 5.

Saige Albert is managing editor of the Wyoming Livestock Roundup and can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..

“If we’re going to be a farmer or rancher, we have to have a lot of different things that we’re good at. We have to be a little bit of a mechanic, a little bit of an electrician, a little bit of a plumber and a little bit of a vet, but we need to have a little bit of a business mind as well,” remarks Justin Mills of Platte Valley Bank.

Having a business mind includes keeping track of the numbers, not only for conversations with the banker but also for the producer’s own benefit.

“If I never look at the numbers, how do I know if I am making or losing money?” questions Mills.

Business skills

Mills acknowledges that producers work hard, getting their hands dirty, pulling calves, setting fences, irrigating and more, but penciling out the finances can often get pushed to the side.

“The bank looks at numbers a certain way, but the producer, on the other side, may look at them with a different perspective,” he comments.

As a producer, it can feel like the bank needs endless paperwork and financial data, but Mills suggests taking a different perspective.

“We need to know how this stuff works. If I go and sit down with the banker and I’ve put all my numbers and projections together, I know if things are going to work,” he explains.

Balance statement

One of the tools producers can use is a simple balance statement, which includes information such as cash equivalents, inventories and debt possessed by the producer.

“The balance statement is going to give us a snapshot of where we are from a financial standpoint,” Mills says.

The balance statement accounts for everything the producer owns and all of the money they have in accounts or investments, as well as all of the money that they owe for payments, loans or other accounts. The final product that is calculated is then considered the net worth.

“It’s not about who has the highest net worth. It’s about how things are changing. Are the finances growing? If they are not growing, are there legitimate reasons? We want to look at the changes,” Mills states.

In agriculture, there are many valid reasons for drastic changes, and it’s possible to have a net worth that goes up one year and down the next. Using the balance statement can help producers – and their bankers – see how those numbers play out.

Projections

In addition to a balance statement and keeping records of operation finances, Mills suggests putting projections down on paper.

“Some of the same numbers we use to fill out our balance statements can also go on our projections sheet,” he explains.

He continues, “Projections are sometimes a little more intriguing because now we can start to dream. But how many of us do that in the cab of our tractors and how many of us actually put it down on paper?”

Writing down projection numbers helps to zero in on what has to get done to achieve certain goals.

“If we aim at nothing, we are bound to hit it,” notes Mills.

Filling out a projections sheet includes considering likely incomes, such as crop and livestock income, as well as likely expenses, such as taxes, utilities, veterinary bills, etc.

“I always project out about 10 years for what I am going to do,” he remarks.

Taking advantage of tools

Mills also suggests learning how to use a program like Microsoft Excel to keep track of variables and financial complexities.

“We can do projections without Excel, but if we want to utilize the technology we have in front of us, we can do a lot more with the ‘what-ifs,’” he says.

He also explains that projection numbers are not set in stone. Producers can put in their best estimates and change those as different variables affect the finances.

“Don’t feel like we have to be locked into exactly what the sheet says, but, if we put some of the numbers down, it helps us to know where we are,” he remarks.

In the same way that school children receive grades to get a bearing on how well they understand the material, producers should have some kind of benchmark to track their progress.

“We need to know what our net worth is,” states Mills.

Justin Mills spoke at the Future Cattle Producers seminar in Casper in April.

Natasha Wheeler is editor of the Wyoming Livestock Roundup and can be contacted at This email address is being protected from spambots. You need JavaScript enabled to view it..