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Increased Feed Cost Reduces Livestock Enterprise Profitability in 2012

“Once again listed costs showed an upward trend from the previous year. It is no secret that the increased values of feedstuffs had a dramatic effect on livestock profitability in 2012. This information is based on the enterprise analysis from the farmers and ranchers enrolled in the SD Center for Farm/Ranch Business Management Program, administered from the Mitchell Technical Institute,” according to FBM instructor Will Walter.The cow calf enterprise indicated a loss of $27.05/cow in 2012 compared to a profit of $88.34/cow in 2011. The total cost to maintain a cow, in the average herd, was $740/cow vs. $604/cow in 2011. The beef backgrounding enterprises were profitable in 2012 with a net return on average of $16.66/cwt. of beef produced compared to a profit of $44.29/cwt. in 2011. Beef finishing average net return was $5.90/cwt. in 2012 compared to a profit of $18.49/cwt. in 2011. “Of note is the substantial difference we see between the high return and low return herds in all the enterprises. This makes it imperative to be aware of your own costs when making management decisions. Most cowherds were able to maintain their inventory, but will need more abundant and thus less expensive feed sources and a sustained market price for profit potential in 2013,” stated Walter.

The average hog finishing enterprise showed a slight profit of $1.71/cwt. of pork produced in 2012 compared to $9.27/cwt. profit in 2011. The reflection of higher feed prices is evident here, as prices received between the years were similar: $63.21 in 2012, $62.87 in 2011.

The average dairy herd in the program showed a loss of $398/cow in 2012 as the average price of milk sold declined to $17.73/cwt. from $20.16 in 2011. The total expense per cow in 2012 was $3288, whereas 2011’s total expense/cow was $3059. The cost to produce 100 pounds of milk in 2012 was $19.35 compared to $15.30 in 2011. A decrease in production was reflected in the total cost/cwt.

The major factors that affect the profitability in the livestock enterprises are death loss, feed costs and purchase/selling price. Good management of your livestock enterprises will increase your chances of profitability.The Farm/Ranch Business Management Program is offered to farmers and ranchers in South Dakota through Mitchell Technical Institute. The purpose of the program is to assist farm and ranch operators in upgrading their management skills. The program is now available to producers across the state in 2013.


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