  BeefTalk:
Managing Costs Can Help Bank High Calf Income
By Kris Ringwall, Extension Beef Specialist,
NDSU Extension Service
Record high prices are being received for calves, a great story, provided the
lid is kept on costs. A general principal, often overlooked by some when prices
go up, is profit (income minus costs).
Cost tracking and astute purchasing must still remain in effect. Watching
pickups and trailers hauling cattle in the fall reminds me of how big
transportation issues are in the cattle business. Weaning calves is busy and
hard work, and often means transporting calves many miles to preconditioning or
backgrounding lots.
Previous to this transportation and weaning stress, don’t forget to
vaccinate. The Dickinson Research Extension Center calves received a 7-way
Clostridia and Haemophilus somnus at branding, and will be booster vaccinated
next week along with Pasteurella and a 4-way viral vaccine. The viral will be
administered again at weaning, as well as at arrival at the feed yard.
The vaccination program helps a calf overcome the health challenges presented
when transporting calves from the comfort of their summer home to the rigors of
the feedlot. When a proper health protocol is administered, the dollars invested
in moving cattle are more apt to be recovered.
But, back to evaluating transportation costs. Of particular interest is the
cost of general use pickups and pulling rigs. The Center leases vehicles and
tracks all the costs associated with those vehicles through the North Dakota
Department of Transportation.
Currently, the choice in vehicles includes the heavy weight gas pickups at
$.44 per mile if driven conservatively, or $.35 if driven as high mileage
vehicles. The light weight gas pulling pickups are at $.45, while the heavy
weight diesel pulling pickups are costing us $.37 per mile. In contrast, the
over the road sedan costs $.27 per mile.
These costs include operating, replacement and depreciation associated with
the usage of the vehicles. In relation to the costs of a beef operation, the
reading public continually reminds me that the weaning weight of calves has very
little to do with profit.
A cost conservative operation requires less weight of calf to sell than does
a high cost operation. Ideally, producers need to strive to reduce costs and
increase revenue. Well-run operations have discovered that the little things are
what add up to be big things. One trip to town isn’t bad, but the next two just
tripled the day’s costs. The Center’s ranch is 23 miles from the operation’s
headquarters. Cattle are spread out in three counties containing in excess of 75
miles of 3 or 4-barb wire fence.
On a hot summer day, checking fence and water will easily put 150 miles on
the odometer, which costs $67 with the half-ton gas pickup. Center cattle are
checked at least every other day depending on the water source. That same trip
with a high mileage heavy pulling gas pickup will cost $53, a high mileage
diesel pickup $56, a low mileage heavy pulling gas pickup $66. Not only does the
Center need to consider the size and weight of the pickup, but also the amount
of miles the pickup will be driven.
The Center saves $10 to $14 dollars per trip by using the right vehicle. In
reality, since the pickups need to pull trailers, the only option is the heavy
towing pickups. It is cheaper to put more miles on one pickup, than less miles
on two pickups. The savings are in depreciation and salvage value.
Managing costs is not easy, and cutting costs can be even harder, but
decisions by the numbers can put more of today’s high cattle prices in the bank,
where they belong. Working cattle is not only difficult work, but also entails a
considerable dollar input. Well planned days and the elimination of extra trips
can cut costs.
Remember, you can’t manage what you do not measure. Match the need
appropriately and compare costs. Do you know what your pickup truly costs to
drive per mile? Remember, it is the little things that add up and bite you when
you least expect it.
May you find all your ear tags.
Your comments are always welcome at
www.BeefTalk.com
For more information, contact the NDBCIA Office, 1133 State Avenue,
Dickinson, ND 58601 or go to www.CHAPS2000.COM on the Internet.
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 BT0164.
###
Source: Kris Ringwall, (701) 483-2427, kringwal@ndsuext.nodak.edu
Editor: Tom Jirik, (701) 231-9629, tjirik@ndsuext.nodak.edu
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Graphic
Evaluating Transportation Costs
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Vehicle Type Cost per Mile Life Expectancy Salvage Value
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Sedan $ 0.27 5 years 35%
Light gas pickup $ 0.45 7 years 30%
Heavy gas pickup $ 0.44 7 years 30%
Heavy gas pickup $ 0.35 5 years 35%
(high milage)
Heavy diesel pickup $ 0.37 7 years 40%
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North Dakota Department of Transportation
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