INTRODUCTION

Sample costs and returns to raise beef cattle in White Pine County, Nevada, are presented in this publication. This publication is intended to be a guide, used to make production decisions, determine potential returns, and prepare business and marketing plans. Practices described are based on the production practices considered typical for a beef cattle cow-calf operation in this region, but may not apply to every operation. A “Your Ranch” column in Table 1 is provided for your use.

Cows in snow

ASSUMPTIONS

The following assumptions refer to Tables 1 through 3 and reflect the typical costs and returns associated with beef cattle production in White Pine County, Nevada. The practices described are not the recommendations of the University of Nevada, Reno, but rather the production practices and materials considered typical of a well-managed beef cattle operation in the region as determined by a producer panel conducted in November of 2004. Costs, materials, and practices are not applicable to every operation, as production practices vary among ranchers within the region.

Ranch Description

Livestock. The livestock inventory consists of 500 cows, 25 bulls, and 15 horses. Four replacement bulls are purchased annually, with a useful life of 4 years. Cow replacement is 20%, with a death loss of 2%. The weaned calf crop produced from over wintered cows and replacement heifers is 88%. Replacement heifers are selected at weaning and consist of 29 head. Steer calves, cull bulls, and cull cows are marketed for delivery in November.

Production Costs and Returns

Feed. The forage base for the ranch consists of summer grazing on federal allotments (April to November), aftermath grazing on meadows, and winter feeding of alfalfa hay and grain. Grass hay and alfalfa costs are based on 2004 market prices. These costs include the full costs of producing the hay (land, equipment, inputs, etc.) and/or purchasing the hay, whichever is lowest. A combination of salt and mineral supplements are provided during the year at an annual cost of $5.50 per head.

Veterinary/Medical. Cows and replacement heifers receive a pregnancy check in November and are provided with an external insecticide, 7 or 8 Way, and an oral de-wormer. Bulls are also provided with an external insecticide in November and given 7 or 8 Way. Weaned, replacement heifers are provided IBR, BVD, PI3, BRSV, 7 or 8 Way, oral de-wormer, Naselgen, and Bangs vaccinations. Steer and heifer calves are branded, earmarked, de-horned in May, and vaccinated with 7 or 8 Way and Naselgen. Steers are also given implants and castrated in May. Total annual veterinary costs are $9.00 per head.

Marketing/Checkoff. Calves are marketed through Video Marketing Sales in the summer with a November delivery. Cull animals are marketed through local auction markets. Annual marketing costs are calculated at 2% of total revenue. Checkoff fees are $1.00 per animal sold.

Horse Maintenance. Costs for shoeing horses, veterinary, and feed expenses are based on costs as reported by the producer panel, approximately $360.00 annually per head.

Labor. Labor involves one owner/manager, one hired employee, and one summer employee. Hired labor costs include an annual salary of $18,000.00 per labor unit with 75% percent of the hired labor time contributed to the livestock enterprise. The owner/manager receives $2,000.00 per month as a family draw. All employee benefits, payroll taxes, and workman’s compensation insurance are included in labor costs.

Returns. Returns are based on early 2004 market prices. Returns will vary from year to year and across years due to market conditions. A full listing of prices used in this publication can be found in Table 1.

Overhead and Capital Recovery Costs

Cash Overhead. Cash overhead consists of various cash expenses paid out during the year. These costs include property taxes, interest, office expenses, liability and property insurance, as well as investment/machinery repairs. A complete listing of farm investments and associated costs can be found in Table 2.

Interest on Operating Capital. Total operating capital is calculated based on 80% of total operating (variable) costs. The interest on operating capital is calculated at a rate of 6.5% for a six month period.

Property Taxes. Property taxes in Nevada differ across counties. For the purposes of this publication, investment property taxes are calculated as 1% of the average asset value of the property.

Insurance. Insurance costs for farm investments vary, depending on the assets included and the amount of coverage. Property insurance provides coverage for property loss and is charged at .666% of the average asset value. Liability insurance covers accidents on the farm at an annual cost of $1,749.00.

Fuel and Lube. The fuel and lube for all machinery and vehicles is calculated as 8% of the purchase price.

Investment Repairs. Annual repairs are provided for all ranch investments or capital recovery items that require maintenance. Annual repairs are calculated at 2% of the purchase price for buildings and equipment and 7% of the purchase price for machinery and vehicles.

Office & Travel. Office and travel costs are estimated at $3,000.00 for an average year. These expenses include office supplies, telephone service, Internet service, and travel expenses to educational seminars.

Capital Recovery. Capital recovery costs are the annual depreciation (opportunity cost) of all farm investments. Capital recovery costs are calculated using straight line depreciation. Farm equipment may be purchased new or used, depending on producer panel preferences.

Salvage Value. Salvage value is 10% of the new purchase price. It is an estimate of the remaining value of an investment at the end of its useful life. The salvage value for land is the purchase price, as land does not normally depreciate.

Average Asset Value Computation

(Purchase Price + Salvage Value divided by 2)

Straight Line Depreciation Computation

(Purchase Price - Salvage Value divided by Useful Life)

REFERENCES

Smathers, Robert (2001). The Costs of Owning and Operating Farm Machinery in the Pacific Northwest 2000. A Pacific Northwest Publication #346. University of Idaho, Washington State University, and Oregon State University.

Forero, Larry C., Glenn A. Nader, Karen M. Klonsky, Pete Livingston, and Richard L. De Moura (2004). Sample Costs for Beef Cattle Cow-Calf Production, 300 Head, Sacramento Valley. Publication BF-SV-04, University of California Cooperative Extension.

NOTES

Sample production costs and returns publications for significant agricultural products in various regions of Nevada are available online at the University of Nevada Cooperative Extension Web site at UNCE. For additional information, contact the Department of Resource Economics at the University of Nevada, Reno at (775) 784-6701 or your local University of Nevada Cooperative Extension office.

Table 1: White Pine County 500 Cow-Calf Production Costs and Returns
Gross Income Weight Per Animal Unit of Measure Total Units Price/Cost Per Unit Total Value Value/Cost Per Head Your Ranch
Cull Cows 1100.00 lbs 90.00 $0.48 $47,520.00 $95.04  
Cull Bulls 1600.00 lbs 6.00 $0.65 $6,240.00 $12.48  
Yearling Replacements 0.00 lbs 0.00 $0.80 $0.00 $0.00  
Heifer Calves 425.00 lbs 217.00 $1.20 $110,670.00 $221.34  
Steer Calves 450.00 lbs 216.00 $1.28 $124,416.00 $248.83  
Total Income         $288,846.00 $577.69  
Operating Costs Unit of Measure Total Units Price/Cost Per Unit Total Value Value/Cost Per Head Your Ranch
Aftermath Grazing Head 500.00 $12.00 $6,000.00 $12.00  
Grain Ton 8.50 $120.00 $1,020.00 $2.04  
Alfalfa Hay Ton 1400.00 $70.00 $98,000.00 $196.00  
Federal Grazing (BLM) AUM 3179.00 $1.43 $4,545.36 $9.09  
Horse (Shoeing, Vet, Feed, etc.) Head 15.00 $360.00 $5,400.00 $10.80  
Veterinary/Medical Head 500.00 $9.00 $4,500.00 $9.00  
Marketing (Brand, Video, Commission) Head 529.00 $9.33 $5,776.92 $11.55  
Checkoff Head 529.00 $1.00 $529.00 $1.06  
Salt & Minerals Head 500.00 $5.50 $2,750.00 $5.50  
Hired Labor Annual 1.50 $18,000.00 $20,250.00 $40.50  
Operator Labor Monthly 12.00 $2,000.00 $24,000.00 $48.00  
Accounting & Legal Fees $ 1.00 $3,000.00 $3,000.00 $6.00  
Maintenance (Buildings, Vehicles, etc.) $ 1.00 $16,507.00 $16,507.00 $33.01  
Fuel & Lube $ 1.00 $15,224.00 $15,224.00 $30.45  
Utilities $ 1.00 $2,100.00 $2,100.00 $4.20  
Miscellaneous Head 500.00 $6.00 $3,000.00 $6.00  
Interest Operating Capital $ $170,081.82 0.065 $5,527.66 $11.06  
Total Operating Costs       $218,129.94 $436.26  
Income Above Operating Costs       $70,716.06 $141.43  
Ownership Costs (Capital Recovery (Depreciation) & Cash Overhead) Unit of Measure Total Units Price/Cost Per Unit Total Value Value/Cost Per Head Your Ranch
Buildings, Improvements, & Equipment $ 1.00 $7,540.50 $7,540.00 $15.08  
Machinery & Vehicles $ 1.00 $16,423.50 $16,423.50 $32.85  
Purchased Livestock (Bulls & Horses) $ 1.00 $15,312.50 $15,312.50 $30.63  
Liability Insurance $ 1.00 $1,749.00 $1,749.00 $3.50  
Office & Travel $ 1.00 $3,000.00 $3,000.00 $6.00  
Interest on Retained Livestock $ 1.00 $919.88 $919.88 $1.84  
Annual Investment Insurance $ 1.00 $1,565.80 $1,565.80 $3.13  
Annual Investment Taxes $ 1.00 $2,351.05 $2,351.05 $4.70  
Total Ownership Costs       $48,861.73 $97.72  
Total Costs       $266,991.67 $533.98  
Net Projected Returns       $21,854.33 $43.71  
Table 2: Investment Summary
Buildings, Improvements, and Equipment Purchase Price Salvage Value Livestock Share (%) Useful Life (yrs) Annual Taxes Annual
Insurance
Annual
Capital
Recovery
Annual
Repairs
Barn $20,000.00 $2,000.00 100 40.00 $110.00 $73.26 $450.00 $400.00
Fencing $35,000.00 $0.00 100 30.00 $175.00 $116.55 $1,166.67 $700.00
Hauling System $1,000.00 $100.00 100 30.00 $5.50 $3.66 $30.00 $20.00
Portable Corrals $20,00.00 $2,000.00 100 12.00 $110.00 $73.26 $1,500.00 $400.00
Water Developments $10,000.00 $1,000.00 100 30.00 $55.00 $36.63 $300.00 $200.00
Machine Shop & Tools $11,000.00 $1,100.00 80 15.00 $48.40 $32.23 $528.00 $176.00
Range Improvements $15,000.00 $1,500.00 100 20.00 $82.50 $54.95 $675.00 $300.00
Electric Fence $500.00 $0.00 100 15.00 $2.50 $1.67 $33.33 $10.00
Implements $10,000.00 $1,000.00 75 20.00 $41.25 $27.47 $337.50 $150.00
Flatbed Trailer $3,000.00 $300.00 100 20.00 $16.50 $10.99 $135.00 $60.00
Bale Feeder $4,000.00 $400.00 100 20.00 $22.00 $14.65 $180.00 $80.00
Feed Wagon $3,000.00 $300.00 100 20.00 $16.50 $10.99 $135.00 $60.00
Tack $10,000.00 $1,000.00 100 10.00 $55.00 $36.63 $900.00 $200.00
Gooseneck (2) $16,000.00 $1,600.00 100 20.00 $88.00 $58.61 $720.00 $320.00
Scales $5,500.00 $1,000.00 100 10.00 $32.50 $21.65 $450.00 $110.00
Sub Total $164,000.00 $13,300.00 NA NA $860.65 $573.19 $7,540.50 $3,186.00
Machinery and Vehicles Purchase
Price
Salvage
Value
Livestock
Share (%)
Useful
Life (yrs)
Annual
Taxes
Annual
Insurance
Annual
Capital
Recovery
Annual
Repairs
Annual Fuel & Lube
120 HP Tractor $120,000.00 $12,000.00 60 25.00 $396.00 $263.74 $2,592.00 $5,040.00 $5,760.00
80 HP Tractor $15,000.00 $1,500.00 60 25.00 $49.50 $32.97 $324.00 $630.00 $720.00
Tractor/Crawler $21,000.00 $2,100.00 80 30.00 $92.40 $61.54 $504.00 $1,176.00 $1,344.00
Dump Truck $5,500.00 $550.00 60 20.00 $18.15 $12.09 $148.50 $231.00 $264.00
3/4 Ton 4x4 $36,000.00 $3,600.00 90 4.00 $178.20 $118.68 $7,290.00 $2,268.00 $2,592.00
1 Ton (Diesel) $42,000.00 $4,200.00 90 8.00 $207.90 $138.46 $4,252.50 $2,646.00 $3,024.00
Economy Pickup $10,000.00 $1,000.00 90 8.00 $49.50 $32.97 $1,012.50 $630.00 $720.00
Backhoe $10,000.00 $1,000.00 100 30.00 $55.00 $36.63 $300.00 $700.00 $800.00
Sub Total $259,500.00 $25,950.00 NA NA $1,046.65 $697.07 $16,423.50 $13,321.00 $15,224.00
Purchased Livestock Purchase
Price
Salvage
Value
Livestock
Share (%)
Useful
Life (yrs)
Annual
Taxes
Annual
Insurance
Annual
Capital
Recovery
Annual
Repairs
Annual Fuel & Lube
Bulls (25) $62,500.00 $5,250.00 100 4.00 $338.75 $225.61 $14,312.50    
Horses (15) $18,000.00 $3,000.00 100 15.00 $105.00 $69.93 $1,000.00    
Sub Total $80,500.00 $8,250.00 NA NA $443.75 $295.54 $15,312.50    
Total $504,000.00 $47,500.00 NA NA $2,351.05 $1,565.80 $39,276.50 $16,507.00 $15,224.00
Retained Livestock (Interest Rate) Purchase
Price
Salvage
Value
Livestock
Share (%)
Annual
Capital
Recovery
Relacement Heifers (29) $14,152.00 $14,152.00 100 $919.88
Total $14,152.00     $919.88
Table 3: Monthly Cash Flow
Production January February March April May June
Cull Cows $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Cull Bulls $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Yearling Repl $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Heifer Calves $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Steer Calves $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Total Income $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Production July August September October November December Total
Cull Cows $0.00 $0.00 $0.00 $23,760.00 $23,760.00 $0.00 $47,520.00
Cull Bulls $0.00 $0.00 $0.00 $3,120.00 $3,120.00 $0.00 $6,240.00
Yearling Repl $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Heifer Calves $0.00 $0.00 $0.00 $55,335.00 $55,335.00 $0.00 $110,670.00
Steer Calves $0.00 $0.00 $0.00 $62,208.00 $62,208.00 $0.00 $124,416.00
Total Income $0.00 $0.00 $0.00 $144,423.00 $144,423.00 $0.00 $288,846.00
Operating Inputs January February March April May June
Aftermath Grazing $3,000.00 $0.00 $0.00 $0.00 $0.00 $0.00
Grain $153.00 $306.00 $71.40 $33.66 $33.66 $33.66
Alfalfa Hay $19,600.00 $19,600.00 $19,600.00 $9,800.00 $0.00 $0.00
Federal Grazing $0.00 $0.00 $0.00 $568.17 $568.17 $568.17
Horse $450.00 $450.00 $450.00 $450.00 $450.00 $450.00
Veterinary/Medical $375.00 $375.00 $375.00 $375.00 $375.00 $375.00
Marketing $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Checkoff $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Salt & Minerals $229.17 $229.17 $229.17 $229.17 $229.17 $229.17
Hired Labor $1,125.00 $1,125.00 $1,125.00 $1,125.00 $2,250.00 $2,250.00
Operator Labor $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00
Accounting/Legal $250.00 $250.00 $250.00 $250.00 $250.00 $250.00
Maintenance $1,375.58 $1,375.58 $1,375.58 $1,375.58 $1,375.58 $1,375.58
Fuel & Lube $1,268.67 $1,268.67 $1,268.67 $1,268.67 $1,268.67 $1,268.67
Utilities $175.00 $175.00 $175.00 $175.00 $175.00 $175.00
Miscellaneous $250.00 $250.00 $250.00 $250.00 $250.00 $250.00
Interest OC $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
Total Operating Costs $30,251.42 $27,404.42 $27,169.82 $17,900.25 $9,225.25 $9,225.25
Net Returns -$30,251.42 -$27,404.42 -$27,169.82 -$17,900.25 -$9,225.25 -$9,225.25
Operating Inputs July August September October November December Total
Aftermath Grazing $0.00 $0.00 $0.00 $0.00 $0.00 $3,000.00 $6,000.00
Grain $33.66 $33.66 $33.66 $33.66 $153.00 $153.00 $1,020.00
Alfalfa Hay $0.00 $0.00 $0.00 $0.00 $9,800.00 $19,600.00 $98,000.00
Federal Grazing $568.17 $568.17 $568.17 $568.17 $568.17 $0.00 $4,545.36
Horse $450.00 $450.00 $450.00 $450.00 $450.00 $450.00 $5,400.00
Veterinary/Medical $375.00 $375.00 $375.00 $375.00 $375.00 $375.00 $4,500.00
Marketing $0.00 $0.00 $0.00 $2,888.46 $2,888.46 $0.00 $5,776.92
Checkoff $0.00 $0.00 $0.00 $264.50 $264.50 $0.00 $529.00
Salt & Minerals $229.17 $229.17 $229.17 $229.17 $229.17 $229.17 $2,750.00
Hired Labor $2,250.00 $2,250.00 $2,250.00 $2,250.00 $1,125.00 $1,125.00 $20,250.00
Operator Labor $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $24,000.00
Accounting/Legal $250.00 $250.00 $250.00 $250.00 $250.00 $250.00 $3,000.00
Maintenance $1,375.58 $1,375.58 $1,375.58 $1,375.58 $1,375.58 $1,375.58 $16,507.00
Fuel & Lube $1,268.67 $1,268.67 $1,268.67 $1,268.67 $1,268.67 $1,268.67 $15,224.00
Utilities $175.00 $175.00 $175.00 $175.00 $175.00 $175.00 $2,100.00
Miscellaneous $250.00 $250.00 $250.00 $250.00 $250.00 $250.00 $3,000.00
Interest OC $0.00 $0.00 $0.00 $0.00 $0.00 $5,527.66 $5,527.66
Total Operating Costs $9,225.25 $9,225.25 $9,225.25 $12,378.21 $21,772.55 $35,779.08 $218,129.94
Net Returns -$9,225.25 -$9,225.25 -$9,225.25 $132,044.79 $122,650.45 -$35,779.08 $70,716.06
Curtis, K., Riggs, W., Sceirine, D., and Wilson, R. 2004, White Pine County Cow-Calf Production Costs & Returns, Extension | University of Nevada, Reno, FS-05-42

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