With respect to cattle inventories and price levels for both cattle and beef, the cattle industry is experiencing unprecedented times. Certainly, there have been swings both upward and downward in the feeder calf market, but prices have generally been historically high the past couple of years, with the same expectations for 2025 and 2026. Cow-calf production costs have also increased over time, with analysts suggesting U.S. average cash operating expenses per cow in excess of $1,000 this year.
While market signals indicate strong profitability for the cow-calf sector for the next few years, a typical reaction to increasing input prices is to reduce expenses wherever possible. Yes, we should always strive to manage operational costs and avoid unnecessary spending, but we must also consider what impact those costs have on herd production (i.e., pounds of calves sold per cow exposed). The following three areas are often easy targets for cost cutting, but need to be well thought out before making significant initial changes.
1. Genetics
Considering the impact a sire has on subsequent calf crops in an operation, genetics have clear value. As bull sale averages increase, it can be tempting to try to save money by buying one toward the end of the sale when prices moderate. While there are always bargains at any sale, the key is to do your homework ahead of the sale and find a bull with an expected progeny difference (EPD) and phenotypic package you like that is within your budget. Don’t spend $2,000 more than you planned on by making a rushed buy on a bull that doesn’t offer what you really need. If you are concerned about the costs of owning bulls, talk to your seedstock supplier about leasing options or compare the costs of natural service to using an A.I. program.
2. Nutrition
Feed typically comprises at least 50% of total variable costs in an annual cow-calf budget. Kansas Farm Management Association data from 2023 indicate an over $200 per-head difference in feed costs between high- and low-profit producers. Certainly, the scale of the operation can influence this to an extent, but doing things such as avoiding overpurchasing on quantities, minimizing shrink and waste, and contracting lower prices, to name a few, can help reduce feed costs. Modest investments ($15 to $30) in feed testing can go a long way in reducing overall feed expenses. Salt and mineral supplementation is often questioned as a cost source, but keep in mind that $40 to $50 per cow per year is a small percentage (4% to 5%) of the overall annual cost for a cow herd.
Nutrition, specifically prior to calving, directly impacts reproduction in a cow herd, so we really need to look at reproductive rates (i.e., pregnancy rates, weaning rates) in conjunction with costs. If reproduction is already at an acceptable level and costs are excessive, then there is probably room to trim the feed budget. If reproduction is low (less than or equal to 80% calves weaned per cow exposed), then we should refrain from initially making drastic cuts to the feed bill (particularly pre-calving) until we better understand what costs are influencing our results. Keep in mind, the timing of when a female calves in relation to grazed forage quality has a significant impact on feed costs.
3. Health
The annual herd health program for your cow herd is designed to reduce the risk of losses associated with disease. It is very important to have a sound health and biosecurity plan developed in consultation with your local veterinarian. In 2023, veterinary and medicine expenses were less than $55 per cow per year, and only a $16 difference was reported by the Kansas Farm Management Association between high- and low-profit producers. I am an advocate for annual pregnancy checking exams (typically $5 to $10 per head) simply because it provides an opportunity for a conversation with your veterinarian, which may prevent minor issues from developing into major costs.
Before waging a war by cutting costs for a cow-calf enterprise, it is important to have an honest, accurate assessment of what current costs actually are, what level of reproduction is being realized and what profit or loss is on a per-cow basis. From there, we can determine if changes need to be made. In many cases, it may only be small adjustments. Knowing these numbers is critical for equity protection (price risk management).
Two good resources available from Kansas State University Research and Extension to assist with cow-calf enterprise cost calculations include a detailed budget and profitability reports.
