Western Beef Development Centre searches for ‘just right’ herd size

LANIGAN, Sask. — The Western Beef Development Centre is trying to find out if there is an ideal cattle herd size for producers in Western Canada.

Kathy Larson, an economist with the centre, said it has been conducting an annual cost-of-production study since 2001.

Finding the optimal herd size was a motivating factor of this year’s study, which looked at 30 producers across Saskatchewan.

She told those attending the centre’s summer field day held June 26 at the Termuende Research Ranch near Lanigan, Sask., that the research suggests there is no optimal size.

“It seems that if you continue to increase your herd size, your costs will come down.”

A report commissioned by the Farm Foundation in the United States found that the optimal herd size is 500 to 1,000 cows. Larson said that report noticed a continuing trend toward larger and fewer operations in production, processing and marketing.

She said the number of feedlots in Saskatchewan with capacity of 1,000 head or more has dropped to 11 from 24 three years ago, while only two meat packers are in business in Western Canada.

Studies have also found fewer farm operations with 150 cows or less, but Larson said the results are inconclusive for the province as a whole.

“It’s all going to depend on where your interests are, your availability of labour, land and capital.”

The exponential rise in land values is prohibiting some producers from expanding, she added.

“With land prices going up, it can really hamstring you.”

Larson said the availability and cost of labour can also hinder herd expansion. Competition, particularly from the oil industry, is putting the squeeze on finding available labour. A competitive hourly rate has risen to at least $20.

The study also showed that the average cost for a herd of 150 cows or less was $744 per cow.

“As you increase your production, as you increase your herd size, you’re producing more calves and you should see a point where your costs will continue to decrease,” she said.

“The biggest gain where you shaved off $100 per cow was getting in the next herd size category of 150 to 300 cows,” she said.

“It just shows that there can be large gains made in being able to share those yardage costs. I just really encourage producers to figure out for yourself where’s your operation because it doesn’t necessarily mean, just because you’re large, you have low costs.”

Larson said management decisions will also determine costs:

  • how cows are winter fed and how long the winter feeding program is
  • herd health regimen
  • bale grazing a field feeding system to keep manure and machinery costs down

She said managing cost means managing quality, which should remain a priority for producers.

“Don’t think that being low cost is everything. I don’t want people to trim costs at the expense of quality.”

Aaron Ivey agreed that it’s important to be a better manager than a market watcher.

He also said that every operation is different. His family owns Evergreen Cattle Co. near Ituna, Sask., with a 1,200 cow-calf herd and a 2,500 head capacity feedlot.

“You’ve got to be aware of your costs and where your advantages are in your operation,” he said.

“With some operations, that opportunity is in more cows and some might be a cheaper cost of production. So it’s developing a system around your operation that works best and is the most cost effective.”

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