Feed grain prices remain at near record prices and the cost of by-products that Virginia cattlemen annually depend on are running about 20% higher than last year.  In addition to feed costs, fertilizer and fuel cost escalation have increased the costs of harvested forages.  It is these conditions that mitigate the net profits of a cow-calf operation in a time when cattlemen are receiving almost record prices.  The chart below contains a breakdown of the major cash expenses for a cow-calf unit in western Virginia (ERS, 2010).  The numbers will not match every operation, but the key point is the contribution of purchased and harvested feeds of the total cost; about 56%.  If pasture costs had been added to the feed costs, the total nutritional costs would be close to 70% of the cash expenses.
   

Value of forages is rising

 Figure 1. 2010 Annual Cash Costs, $/ Cow

Economic analysis of cow-calf records in a number of the Midwest and Great Plains states have consistently identified lower annual winter costs with high profit operations and the inverse where low profit operations have an above average winter feed expenditure.  Herd size does tend to play a role where smaller herds (<30) tend to have a higher feed cost.  Figure 2 contains the total cash costs and some key components plotted over the last 15 years.  The trend is up on all costs, but the key point to detect is that pasture costs have been and continue to be one of the more stable costs over time.  This pasture cost in this summary would include a bare minimum of fertilizer.  The use and amount of fertilizer applied to pastureland would certainly change the trend line.  As in Figure 1, the source of the cost data is the Economic Research Service and an annual survey which they conduct.  Thus the values presented are the average of information provided by cattlemen in the survey area.

   

Value of forages is rising

 Figure 2. Total Operating Costs and Feed Costs over Years

Virginia Cooperative Extension budgets indicate that it costs about $1.35/d to feed grass hay to a 1200 lb cow during the winter.  A 90 d winter feeding period totals $ 121.50/cow/year.  However, if the hay feeding period is 135 d then the cost/cow totals $182/cow.  Extending the grazing season 30-45d can have important financial impact on the herd.  Supplement costs are not included in these totals. Generally as long as there is green grass to graze supplement is not needed.  Depending on cow nutrient needs and hay quality, significant investment in supplement can be needed to achieve the same result as grazing stockpiled fescue.

Given the current cost environment, the value of grazed forage has increased when compared to a day of winter hay feeding. Secondly, the quality of the hay has become more of an issue when you consider the cost of supplying TDN or protein from feed grains or by-products to balance the nutrient needs that are unmet when feeding poor hay.

Steps to remember: 1) maximize grazing / minimize use of stored forages

                               2) store forages to minimize weather damage and loss

                               3) test forages to insure that supplementation is accurate and efficient

It is true that input costs have increased the annual costs of cow-calf production.  It is also true that those cost escalations have increased the value of every grazing day and the value of high quality forages.  Management and financial decisions (stockpiling fescue, adding clovers, etc.) need to account for the changing cost and returns that you face in today’s production environment.

Source: Dr. Mark A. McCann, Extension Animal Scientist, VA Tech