A Canadian group, the Canadian Cow-Calf Cost of Production Network, found three commonalities among profitable cow-calf producers in Canada – more cows, smaller cows and lower costs per cow.
A Beef Cattle Research Council release reported the survey results from 46 benchmark cow-calf farms and three dairy-beef farms with 2021 data collected from 186 participants across Canada, the release said.
MORE COWS
Economies of scale were the main drivers of profitability.
Herd sizes in the survey ranged from 35 head of beef cows to 950 head, the BCRC said. Among the benchmark cow-calf farms, 19 had fewer than 100 cows, 10 had 100 to 200, nine had 201 to 300, and eight had more than 300 cows.
“The results indicated that farms with a larger herd were more likely to cover their cash and depreciation costs,” the release said. “For the two groups that had fewer than 100 or between 100-200 cows, only 47% and 50%, respectively, were covering their cash and depreciation costs in 2021. Once the herd size gets over 200 head, the percentage of farms covering these costs increased to 75% to 89%.”
SMALLER COWS
Smaller cows also seemed to be more profitable, the BCRC said.
Cow weights on the benchmark farms ranged from 1,200 to 1,540 pounds with an average of 1,355, the report said. Cows on higher-profitability farms averaged 47 pounds lighter than those in the lower-profitability group.
Among farms having fewer than 100 cows, the difference was even greater, the report said, with average weight differences about 78 pounds per cow. Incidentally, among farms with more than 100 cows, medium-profit farms had the heaviest cows.
A major concern among producers was that smaller cows tend to wean lighter calves and, thus, fewer pounds sold for revenue, the BCRC said. But, while weaning weights declined within the survey groups, weaning weights also declined by 19 pounds, keeping the weaning weight as a percentage of cow weights steady at about 41%.
That meant, the lower costs of maintaining smaller cows appeared to offset the lower revenue on lighter calves leading to a more positive effect on profitability, the report said. This may have been accentuated in the 2021 drought where supplemental feed costs skyrocketed.
LOWER COSTS
While the higher-profitability group had higher returns and lower costs compared to the lower-profitability group, per-cow returns were up only 11% from high to low, the report said. However, the decline in per-cow costs was more significant at 32%.
That showed that profitability did not relate to a production system, farm structure or region, the report concluded. Lower cost was more significant than returns on sales.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $143.40 to $148.93 per cwt, compared with last week’ range of $144.00 to $148.91. FOB dressed steers, and heifers went for $227.54 to $231.69 per cwt, versus $225.42 to $230.93.
The USDA choice cutout Tuesday was up $2.64 per cwt at $250.78 while select was up $1.67 at $221.28. The choice/select spread widened to $29.50 from $28.53 with 119 loads of fabricated product and 17 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $2.10 to $2.25 a bushel over the Dec futures and for southwest Kansas were steady at $1.00 over Dec, which settled at $6.81, down 2 1/2.
No live cattle contracts were tendered for delivery Tuesday.
The CME Feeder Cattle Index for the seven days ended Monday was $172.27 per cwt down $0.81. This compares with Tuesday’s Oct contract settlement of $174.82, up $0.07.