  BeefTalk:
Track Enterprise Income to Develop Beef Production Plan
By Kris Ringwall, Extension Beef Specialist,
NDSU Extension Service
As producers attend beef educational sessions a common topic is the calf. The
value of the calf, as well as the opportunity to increase the value of the calf,
is center stage at many of these meetings.
This preoccupation with calf value would lead an outsider to believe the sale
of calves is the only revenue produced in the beef herd. Most of us within the
business realize other sources of income do exist. In reality, the other sources
of income may even be greater than the sale of steer calves.
It is important to dig out the notebooks, boxes or other containers that
contain last year’s income notes and do the research. Once on the trail,
tracking income is often difficult. Actually, the allocation of expenses is
easier than income, because expenses are generally allocated to the specific
enterprise or, when in doubt, to overhead. The overhead is then appropriated
back to the various enterprises based on the relative size of each enterprise.
If a producer manages 400 cows and farrows 20 sows, a relative allocation of
expenses can be settled upon. Income must be exact. A producer would not credit
the sale of pigs to the cow-calf enterprise. Unfortunately, account deposits may
get lumped together, so individual sale receipts need to be reviewed to
determine which dollar was received from which enterprise. And within the beef
operation there are multiple enterprises, the most obvious being steer calves
and heifer calves.
Last year the North Dakota State University Dickinson Research Extension
Center sold 22 steer calves at an average value of $425.19 for a total income of
$9,354.11 and 49 heifer calves at an average value of $385.20 for a total of
$18,874.61. The total income for the cow calf enterprise was $28,228.72.
The next enterprise for many producers is preconditioned or backgrounded
calves. Although the center does precondition calves, no calves are sold. The
bulk of the DREC calves are sold as finished steer calves, the DREC’s second
beef enterprise.
Last year the center sold 116 finished steers at harvest for an average value
of $878.15 for a total of $101,864.96. No finished heifers were sold. The sale
of finished steers is our largest enterprise A third beef enterprise at the
center is heifer development. In 2001, we developed most of the heifers
produced, but sales of these heifers will be in January 2002. The enterprise did
generate the sale of 31 open heifers as yearlings. These yearlings averaged
$706.91 for a total of $21,914.32. For this year, profit from heifer development
will show in inventory change, not cash sales.
The last enterprise is the sale of cull breeding animals. This enterprise
should be kept separate and can be a major source of income. Last year the
Dickinson Research Extension Center sold 24 heiferettes (younger than average
cows) for an average of $575.37 and a total of $13,808.93. Seventy cull cows
were sold at an average value of $477.92 for a total of $33,454.62. The last
cull category is bulls, and the center sold 10 for an average price of $831.73
for total cull bull sales of $8,317.30. The total income for the cull enterprise
was $55,580.85.
The total for all sales at the Dickinson Research Extension Center for 2001
was $207,588.84 on 322 head of cattle.
So who pays the bills? The bottom line is that all the enterprises do. In
2001, approximately 49 percent of the revenue was from fed cattle, 27 percent
from cull sales, 14 percent from weaned calves and 10 percent from heifer
development. Yes, cow-calf producers are in the cow-calf business, but
understanding the source of income is the first step in developing a solid
business plan.
Your comments are always welcome at www.BeefTalk.com.
For more information, contact the North Dakota Beef Cattle Improvement
Association, 1133 State Avenue, Dickinson, ND 58601 or go to www.CHAPS2000.COM
on the Internet. In correspondence about this column, refer to BT0073.
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Source: Kris Ringwall, (701) 483-2427, kringwal@ndsuext.nodak.edu
Editor: Tom Jirik, (701) 231-9629, tjirik@ndsuext.nodak.edu
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Value of Cattle Sold in 2001
NDSU Dickinson Research Extension Center
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Cattle Type Number Average Value Total Value
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Steer calves 22 $ 425.19 $ 9,354.11
Heifer calves 49 $ 385.20 $ 18,874.61
Finished steers 116 $ 878.15 $ 101,864.96
Finished heifers 0 0 0
Open heifers 31 $ 706.91 $ 21,914.32
Heiferettes 24 $ 575.37 $ 13,808.93
Cull cows 70 $ 477.92 $ 33,454.62
Cull bulls 10 $ 831.73 $ 8,317.30
Total 322 NA $ 207,588.84
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