Costs and Profitability Outlook for 2006 Curt Lacy Extension Economist-Livestock University of Georgia.

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Presentation transcript:

Costs and Profitability Outlook for 2006 Curt Lacy Extension Economist-Livestock University of Georgia

Department of Agricultural & Applied Economics Fertilizer Prices – A.N. prices have increased 46% since 2002

Department of Agricultural & Applied Economics Impact of Changes in Nitrogen and Potash on Hay Fertilizer Costs Per Acre* *Excludes all other costs

Department of Agricultural & Applied Economics Impact of Changes in Nitrogen and Potash on Hay Fertilizer Costs Per Ton* *Excludes all other costs

Department of Agricultural & Applied Economics Fuel Prices – Diesel prices are up 104% since 2002

Department of Agricultural & Applied Economics Impact of Fuel & Fertilizer Prices on Cost of Production

Department of Agricultural & Applied Economics Impact of Fuel Costs on Hay Costs Per Acre* *Excludes all other costs

Replacement Heifer Development Costs

Department of Agricultural & Applied Economics Replacement Female Considerations  Current economic value = -$  Breakeven purchase price = $  Years to breakeven = 7

Department of Agricultural & Applied Economics Expected Profits and Breakeven Prices ItemNet Returns (Total) Net Returns ($/weaned Calf) Breakeven ($/Cwt.) Variable Costs $6,495.64$76.42$85.41 Total Costs-$8, $98.27$116.55

Department of Agricultural & Applied Economics Now What? Where can you increase profits?  Increase conception rates  Decrease Variable Costs What is your hay cost Where do you store your hay? Do you have alternative fertilizer sources Legumes Soil ph  Decrease Fixed Costs – Equipment & Females Cull unproductive cows Purchase hay? Custom hiring hay Can you do custom work? Increasing herd size  lease cows instead of raising heifers

Department of Agricultural & Applied Economics Good News-Bad News  Most cow-calf producers should be able to cover their cash expenses for the next few years  Cost of production for beef cattle producers has risen considerably in the last 2-3 years  Fuel & fertilizer prices alone have risen from 46%-105%  Many will not be able to cover all expenses  Producers should focus on increasing weaning %, culling unproductive cows and reducing fertilizer and fuel needs