Feed costs typically represent the single largest cost for beef cow-calf producers. Based on Kansas Farm Management Association (KFMA) data for the beef cow-calf enterprise, feed costs (pasture and non-pasture) were 47.0% of total costs in 2021 and 46.4% of total costs for the 2017-2021 average. Thus, it is important that producers know what their feed costs are and how they compare to benchmark values for other producers such that they can manage this important cost for long-term business profitability. While the nutritional requirements of a beef cow are well determined given her genetics, body size, and the environment she is in, the specific feedstuffs used to meet those requirements can vary considerably. There is a trade-off between the use of pasture and non-pasture costs in meeting the nutrient requirements of the cow and her calf. Thus, a producer with higher (lower)-than-average pasture costs might still be competitive with other producers if non-pasture feed costs are lower (higher) than average.
Reported KFMA feed costs are disaggregated into two categories – “pasture” and “feed”, where “feed” basically represents all “non-pasture” feed costs (i.e., hay, supplements, grain, etc.). While breaking total feed costs into pasture and non-pasture categories is still not sufficient to answer all questions about why some producers are more profitable than others, it does help understand some of the differences between producers.
To address some of these cost differences between producers, cow-calf enterprise total feed costs data included in the 2017-2021 KFMA beef cow-calf enterprise analysis were used. Multi-year averages were calculated for total feed costs for each of the 82 operations that had a minimum of three years of data. Figure 1 shows the multi-year average pasture and non-pasture feed costs plotted against each other. There are several points that can be made from this figure. First, the black line represents combinations of pasture and non-pasture feed costs that are equal to the average of total feed cost (i.e., $537 per cow). Values to the right of the black line (52% of the points) represent producers that have total feed costs that are above average. Likewise, values to the left of the line (48% of points) represent producers that have total feed costs that are below average. Second, the two dashed lines represent the average pasture costs of $170 per cow (horizontal dashed line) and average non-pasture costs of $336 per cow (vertical dashed line).
Values in the upper right quadrant (18% of points) represent producers with both pasture and non-pasture feed costs that are above average, which likely will make it difficult for them to be competitive in the long run. Points in the upper left quadrant (29% of points) reflect producers that have above average pasture costs, but below average non-pasture costs. Thus, these producers might be using a longer grazing season and relying less on harvested feedstuffs. The lower right quadrant (30% of points) reflects the opposite scenario where producers have higher non-pasture costs than average, but lower pasture costs (i.e., somebody with a shorter grazing season and relying upon more harvested forages). The points in these two quadrants (i.e., upper left and lower right) reflect producers that are trading off one type of feedstuff for another. Finally, points in the lower left quadrant reflect producers that likely have a competitive advantage as they have both pasture and non-pasture feed costs that are below average (i.e., 22% of operations).
Being in the lower left quadrant might be something to strive for; however, a word of caution needs to be added about what this might represent. Given that a beef cow requires a certain amount of nutrients, having costs below average for both of these suggests one of two things – either the cow is not receiving adequate nutrition, or the feed is valued at below average price/cost. The first statement may be true in any given year, but cannot happen consistently over time as production would suffer and cows might not rebreed. Likely, pasture and/or non-pasture feed costs are valued significantly below average for producers in this quadrant. Producers should always strive to have a competitive advantage, but it is also important to recognize what might be the driving force behind this and whether it is sustainable.