What can producers do to improve their operations?
In their annual cow-calf and stocker survey, Cattle-Fax found the annual cash cost to carry a cow increased from $315 in 2004 to $351 in 2005. Assuming a producer has a weaning percentage of 85, an average weaning weight of 500 pounds and an average cost of $325 per cow, it would take an average price of $76.47 per hundredweight to break-even. What happens to the break-even if the cost of carrying a cow jumped to $375/cow? It would take $88.24/cwt to break-even, which is an increase of $58.82/calf. Is the solution to minimize cost per cow to maximize profits? No! To maximize profit, don’t minimize cost nor try to maximize revenue. Too often, people get caught up in one or the other trying to achieve the universal goal of generating as much profit for the assets as possible. To maximize profits, it’s necessary to consider both costs and revenues to find the optimal point where costs are being minimized and production is being maximized relative to each other. The largest cost associated
