NEWS for North Dakotans
Agriculture Communication, North Dakota State
University
7 Morrill Hall, Fargo, ND 58105-5665
May 28, 1998
Harlan Hughes, Extension Livestock Economist
NDSU Extension Service
While the publicity of the 1996/97 Northern Plains snowstorms focused on the animals that died, the turnaround in the beef price cycle led to increased 1997 profits for North Dakota's beef cow producers. The increase in the market price of 1997 calves outweighed the average negative economic impact of the storms. However, earned average net returns were lowest in two areas of the state hit hardest by the severe snowstorms.
The 1997 statewide Farm Business Management Financial Summaries for North Dakota's beef cow herds point out some good news and some bad news. The good news for beef cow operators is that average gross income per cow went from $316 per cow in 1996 to $414 per cow in 1997—a 31-percent increase. Not all producers, however, sold at weaning to take advantage of the stronger fall 1997 calf prices.
The bad news for beef cow operators is that the average costs of production went up for 1997 calves. On a per cow basis, costs of production went up from a 1996 average of $368 dollars per cow to a 1997 average of $384 per cow—a 4.3-percent increase. The average unit cost of producing a hundredweight of calf went from $69 in 1996 to $73 in 1997—a 2.5-percent increase.
The net result of the 31-percent increase in gross income per cow and the 4.3-percent increase in total costs per cow is that average earned net returns went from a minus $51 per cow in 1996 to a positive $30 per cow in 1997. This is the money earned for the ranch family's unpaid family and operator labor, management, and equity capital allocated to beef cows.
Given the average herd size, the average North Dakota ranch or beef farm family earned $5,310 from their beef cow profit center during 1997. This compares to a loss of $9,384 from the average beef cow profit center during 1996.
If one looks at the average earned returns from the beef cow profit center for the 1990 through 1997 time period, you will see the first two-thirds of a cattle cycle's typical u-shaped profit curve. In preparation for the North Dakota Crisis Team meeting in mid-May, I projected earned net income from beef cows of $104 per cow in 1998 and $120 per cow in 1999. If my projections are near reality, North Dakota will see that last leg of the u-shaped profit curve materialize during the rest of this decade. Remember, the beef cow herd's low profit years tend to occur in the middle of each decade and the high profit years tend to occur toward the beginning and the end of each decade.
North Dakota's primary beef producing sections are broken into three areas: the Western Missouri Slope, North Central, and South Central. The Red River Valley is an area of the state with very few beef cows.
The average herd size for the state was 104 cows. The Missouri Slope averaged 119 cows per herd; the North Central, 103 cows; and the South Central, 94 cows. The statewide average pregnancy rate was 96.7 percent while the Missouri Slope and South Central areas averaged 98 percent and the North Central area averaged 95.3 percent. The statewide average calving rate was 94.2 percent while the Missouri Slope averaged 95.8 percent, the North Central averaged 92.7 percent and the South Central averaged 94.7 percent.
Statewide, calf-death loss was 8.5 percent while the Missouri Slope averaged 9.9 percent, the North Central 6.6 percent and the South Central 9.7 percent. Both the Missouri Slope and South Central areas had high weather-related calf-death losses last year.
The statewide average weaning weight was 538 pounds, which is down from 1995's 554-pound average and near 1996's 539-pound average. The Missouri Slope area averaged 539 pounds; the North Central, 554 pounds; and the South Central, 522 pounds.
The two most critical economic measures of physical production are weaning percentages and pounds weaned per female exposed. The statewide weaning rate averaged 86.8 percent while the Missouri Slope averaged 87.6 percent, the North Central 87.4 percent and the South Central 85.9 percent. I project, however, that breed-back during the summer of 1997 was lower in the Missouri Slope area due to poorer pre-breeding nutrition and an exceptionally early pasture turnout date.
The statewide pounds weaned per female exposed was 467 pounds. The Missouri Slope averaged 472 pounds; the South Central, 484 pounds; and the North Central, 447 pounds. I would suggest that the North Central Region has more exotic blood in its herds and that this is reflected in the higher weaning weights and the higher pounds of calf produced per female exposed.
The statewide gross income per cow averaged $414 in 1997. The Missouri Slope area averaged $418 per cow; the North Central, $449 per cow; and the South Central, $372 per cow.
The statewide pasture cost was $62 per cow with the Missouri Slope's $72 per cow the highest and the South Central's $49 per cow the lowest. The statewide winter feed costs averaged $148 per cow. Winter storms raised the Missouri Slope average winter feed costs to a high of $164 per cow while the North Central region averaged the lowest with $138 per cow. Total annual feed costs averaged $210 statewide: $236 for the Missouri Slope, $205 for the North Central and $194 for the South Central. One has to wonder if the lower feed cost of the South Central is related to the lower pounds of calf produced?
Total production costs per cow averaged $384 statewide: $416 per cow for the Missouri Slope, $391 for the North Central and $352 for the South Central.
Two critical economic measures of the beef cow herd's economic performance for the profit center are earned net returns per cow and unit cost of producing a hundredweight of calf. The statewide average earned net return was $30 per cow. The Missouri Slope averaged only $2 per cow, the North Central averaged $58 and the South Central averaged $20. The Missouri Slope's low earned returns reflect the impact of the snowstorms and tough 1996/97 winter.
The final economic measure is the unit cost of producing a hundredweight of calf. The statewide average was $73 per hundredweight of calf produced. The Missouri Slope averaged $79 per hundredweight, the North Central averaged $71 and the South Central averaged $70. Again, I am convinced that the 1997 extra-high production costs in the Missouri Slope area were due primarily to the tough—tough—winter of 1996/97.
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Source: Harlan Hughes (701) 231-7380
Editor: Dean Hulse (701) 231-6136
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