Jones: The “bigger” are going “broke-r” in The Beef State
My husband and I have been operating a cow/calf herd in central Nebraska for almost 25 years. I would consider us the last generation that was able to enter the industry and be able to hang on, albeit by a thread.
When we started around 2000, there was NebGuide that said it took 250 cows to support a married couple and then an additional 100 cows for each child. It seemed straightforward and gave us a target to hit.
As the years have progressed, we have kept our nose to the ground, putting one boot in front of the other, taking pride in the cattle herd we have built and hopeful for the future it might one day provide for our children. As the years pass, our curiosity about the future viability of the independent cattle rancher has really turned to accepting the disparaging reality.
Recently, the University of Nebraska Beef Extension specialists revealed what we have not wanted to admit to anyone except our banker and accountant.
UNL released their Summary of the Beef Heifer Replacement Forecast for 2023 based on their UNL Cow Herd Budget. The Cow Herd Budget was a collection of financial information from a variety of real cattle operations dispersed throughout six different regions in Nebraska. I commend the operators that kept and submitted their financial records for this study. One had to swallow some pride to do it.
They captured data from such a diverse array of operations, from a 50
In the Jan. 13, 2023, edition of Tri-State Livestock News, John Nalivka said that cattle producers need to know the economics of their own operations. Nalivka stated, “Economies of scale is key to profitability in a free-market economic system.” I have some argument with that because the current cattle market doesn’t feel so “free,” but I digress. This UNL study blows the economies of scale theory out of the water. The 50
What is the magic number of cows that a kid starting out must run to be profitable? Seven hundred head? One thousand head? I know my husband and I have grown our herd to the max, based on our No. 1 limiting factor, LABOR. The key word being “energy” and I’m not talking about the cow’s. I’m talking about our own. At some point you can’t get around anymore fence, you can’t put up any more hay, you cannot calve anymore cows (yes, we calve in April and May out on range, and we have had a fall herd in the past) because you have maxed out your own energy resources. It would be great to add some hired help, but who are we kidding, we can’t even afford to pay ourselves.
The bottom line is at the bottom of the cash flow sheet, either in the red or black! You can divide that by number of head (to get the loss/profit per head), the total pounds (to get cost/profit per pound), or even divide it by the number of hairs on the calf’s head but it is still either red or black! You are either making money or you are not. Judging by the prices that consumers are paying in the grocery store, someone in the supply chain IS making money, but it is not us.
The conclusion from the study is the bigger the operation, the more off-ranch income there better be because, after all, more than our cows gotta eat… our kids do too. Without aggressive cattle market reforms, no one will be surprised at a continually contracting domestic cowherd. We can’t lose money, working this hard forever. Maybe if we add “the American rancher” to the endangered species list we can get Washington’s attention?