When lecturing to the beef production capstone course in the division of animal sciences at the University of Missouri, I like to ask uncomfortable questions. Here’s one of my favorites: “How many cows does it take to make a living off a commercial cow-calf operation?”
Asking for a show of hands from my students this spring, I spouted off some numbers. “Who thinks 40 cows can generate a full-time living?” (That is approximately the average herd size in Missouri and much of the mid-South.) No hands went up. Everyone in the room agreed it was not realistic to expect to make a full-time living with 40 cows.
“How about 100 cows?” A couple hands went up, hesitantly. “Two hundred cows?” Several more hands were raised. “What about 300 cows?” That got most of the hands in the air, though the hands were accompanied by some grimacing faces. This is a senior-level course, so bear in mind many of these students are probably hungry for a higher standard of living after four years of the frozen pizza life. Of course, one’s desired standard of living would factor into how one answers that question, but let’s set aside that consideration for a moment. From my perspective, the question of how many cows it takes to make a living is a trick question for an entirely different reason.
While asking the question, I had the MU Extension southern Missouri cow-calf planning budget up on the screen behind me in the lecture hall. (It is available at the following link: extension.missouri.edu/publications/g679) Based on typical production practices and prices in the state of Missouri, that budget shows a commercial cow-calf operation generating approximately -$175 per cow for the year when all costs of production are accounted for.
You probably see where this is going. The students said it would take 300 cows to make a living. So it was time for the really uncomfortable question: “What is 300 times -$175?”
That generated a pause and some awkward silence. It should give us pause, too. When a typical cow-calf operation is generating net losses per cow, why do we think it helps to have more cows?
Two kinds of costs
Beef cattle production systems in this state and more broadly are broken. That is evidenced by the poor returns generated by many operations in most years. If you’re curious, that planning budget showed an annual loss per cow of approximately $220 in 2021, $205 in 2020 and $230 in 2019. This is not just a 2022 input cost problem. We have a system problem. It is our system of production itself that doesn’t work, both in terms of overhead and operating costs.
Overhead costs
Herd size is theoretically advantageous for the cost structure of a cow-calf operation because of economies of scale: Overhead costs can be spread across more calves. All too often, however, the decision to incur a large overhead cost was not made as a business decision to begin with. Most of the overhead costs of production that make raising cattle easy (dare I say glamorous?) are simply not affordable for small to midsized operations.
The brand new dually pickup with a bale bed comes to mind as an example – handy, sure, but quite expensive both to own and operate. It should be obvious that a smaller-scale commercial cow-calf operation cannot rationalize those kinds of overhead expenses; there simply are not enough calves produced. Any profit potential would be killed by the equipment overhead costs embedded in every calf. That operation needs to find a different way to get the job done or needs to do something different entirely. The same dually with a bale bed could very well be one of the better equipment investments for an operation of a different scale, but the choice to invest in that type of equipment must be profit-driven. Trying to scale up an operation to justify the ownership of a piece of equipment is getting it all backwards. Do we just want to own the equipment for show?
I am on record as being no fan of hay-intensive winter-feeding models for beef cows, but a hay production enterprise is a helpful example. Ownership of the tractor(s), baler, rake, tedder, bale trailer and any other equipment used exclusively for hay production can only stand a chance to pencil out when there are enough tons of hay produced. The hidden cost of equipment depreciation embedded into every bale should scare most cattle producers away from making their own hay, simply because there are too few bales to spread those overhead costs across. Yet, producing one’s own hay – and ultimately feeding a lot of it – is business as usual in the cow-calf world. Or maybe we should say “business” as usual. If we aren’t making decisions that pencil, do we really get to call it a business? To quote the financial radio host Dave Ramsey, perhaps “We buy things we don’t even need with money we don’t even have to impress people we don’t even like.” How many of our overhead costs are just theater?
Operating costs
Unfortunately, just becoming leaner in terms of equipment ownership still won’t fix the cost structure of most cow-calf operations. We have big problems with excessive operating costs on a per-cow basis as well. Sometimes we incur excessive operating costs because we are drawn to buy the latest product, additive or piece of tech. Other times, we incur excessive operating costs because the production model is based more on tradition than profit projections. Look at social media posts from those in agriculture, and it’s easy to begin putting much of what you see into one of those two buckets. Whether we are doing things just to keep up with the Joneses or just because Grandpa Jones “always did it that way,” aren’t some of our operating costs just theater?
Purchased feed resources are the largest operating cost of production for most cow-calf businesses. How much of those costs are theater? We like to see condition on cattle. But if we like to see more condition than that which generates an economic return, building that extra condition was not a business decision. Go to most bull sales, and, despite everything we know about negative impacts of overconditioning on thermoregulation of the testes and resulting semen quality, you will find that buyers pay more for overconditioned bulls. Fat bulls are theater. Fat cows are theater too. We want some level of condition on cows, of course, and we need to strategically build body condition reserves in advance of calving especially. But if the winter feeding strategy is designed based on the appearance of the animal rather than the economic performance of the operation, that is not a business decision. How much of our feed costs are theater?
The second-largest operating cost of production for most operations is the hidden cost of cow depreciation. From my perspective, this cost is controllable through simple approaches to market cows more proactively. Poorly profitable females – not just non-pregnant females, but late-conceiving females as well – ought to be marketed in many cases, if we are honest about their economic return potential for the operation. Why do we give free passes knowing those females will generate poor or even negative net returns for the year? Failure to market underperforming cows is really just theater, if we take a hard look in the mirror. We want to maintain cow inventory. We would rather have the cow numbers, even if some of those cows are doing the bare minimum or nothing at all. Maybe something deep inside us still feels like our personal worth relates to the size of our flocks and herds. But whether we are putting on a show for others or just for ourselves, it is theater all the same.
Tomorrow is a Monday morning
Before you write me an angry email, know that I write this just as much to myself and my own operation as to anyone else. We live in a spendy, image-conscious culture, and appearance-driven decision-making is more pervasive in the cow-calf world than we may wish to admit. But if we are engaged in theater – in this inefficient and resource-intensive kind of beef cattle production that is not actually economically viable – the mantra that we are trying to “feed the world” might rightly be called theater too.
The good news is that we can change. “Tomorrow is a Monday morning,” as C.S. Lewis writes. There is nothing – other than ourselves – stopping us from making big, systemic changes. We can make our production model more sensible. We can stop incurring costs that don’t actually generate return on investment. We can market cows that are not performing. We can get out of these long calving season, long hay-feeding season models of beef cattle production that drain both us and our bank accounts. We can do something radically different. We can build cow-calf business models that generate real profits.
Unless you’re selling tickets, the theater isn’t going to pencil.
