SWIFT CURRENT, Sask. – Sandy Russell wants producers who think they need to get a buck a pound for their calves to break even to think again.
The market and policy analyst and partner in Spring Creek Land and Cattle Consulting in Outlook, Sask., said producers should stop relying on their intuition and find out exactly what they need from the marketplace to make money on their calves.
“Be on top of your numbers,” she told producers attending the Foraging into the Future conference in Swift Current.
Read Also
University of Saskatchewan experts helping ‘herders’ in Mongolia
The Canadian government and the University of Saskatchewan are part of a $10 million project trying to help Mongolian farmers modernize their practices.
Prices are good and supplies are tight so producers are more willing to talk numbers, but times will get tough again and producers should prepare.
“Now is the time to get on top of it,” she said.
After a two-year hiatus in 2006 and 2007, the cow-calf cost-of-production analysis first done at the Western Beef Development Centre in 1998 was again conducted in 2008 and released last fall.
The analysis is a detailed look at an operation’s practices and separates each farm enterprise. For example, a farm’s cow-calf enterprise does not own land but the forage or grain enterprise does.
The 2008 data was generated from information provided by 18 producers with an average herd size of 241 cows.
Russell and WBDC beef economist Kathy Larson crunched the numbers and found that in October and November of 2008, the average price for 400 to 500 pound feeder steers was $1.03 to $1.15 per lb. The range for 500 to 600 lb. steers was 98 cents to $1.07 per lb.
“The break-even price based on the average total costs for the 2008 (study) participants was $1.21 per lb. for a 545 lb. calf,” the study concluded.
Prices were not high enough for producers to make money, which was obvious in the huge losses seen in 2008.
Russell said total costs in 2008 were slightly less than $574 per cow. When unpaid labour was included as an expense for the cow-calf enterprise, the average net margin was a loss of $111 per cow. When unpaid labour was removed, the net loss was $70 per cow.
She said initially nearly 40 producers attended cost-of-production workshops but inaccurate or incomplete data was removed from the study.
Better numbers could be obtained if data from 50 herds were assembled over a consistent 10-year period, she said.
“I would never coach anyone to make management decisions based on a collective data set,” Russell said.
No two herds are the same and producers operate under different economic measures such as debt level and working capital.
“All production decisions need to be put into financial context.”
