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New COP data shows many Canadian beef cow-calf operations are thriving

By: RealAgriculture Livestock Team

December 2, 2021

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Many Canadian beef cow-calf operators are not just surviving, they’re thriving.

That’s one of the key takeaways from the first report produced by the Canadian Cow-Calf Cost of Production Network, which was established in the spring of 2021. Made up of cow-calf operations from across Canada, the network of producers is working with Canfax Research Services to help fill an increasing void of cost of production (COP) data in the industry.

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Canfax manager Brenna Grant says a key goal of the Network is to ensure that provincial COP benchmarks are available for producers across the country. But she notes that it’s also important to focus on benchmarks for different production systems so producers can compare their business to similar operations across the country.

Data complied by the Network shows there is considerable variability in the COP for cow-calf operators across the country. While presenting at Farm Business Management’s recent Agricultural Excellence Conference, Grant noted that much of the variability is driven by producers operating in different environments and making different business choices, especially in areas such as equipment.

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“Some producers are very low cost with cash costs per cow ranging from $400 to $500 and total costs at $700 to $800 per cow,” says Grant. For some producers, however, cash costs can exceed $1,000 with total costs reaching north of $1,600. But high cost doesn’t mean producers are not profitable if they are delivering a high-value product that commands a premium, she adds.

Overall, average total COP for the Network participants is $1,124 per cow. Grant points out that a “really high” number of farms (84 per cent) were covering cash costs and 72 per cent were covering both cash and depreciation costs. She adds that one-third of the producers were covering their opportunity cost, including labour and management. “That means these producers are not just surviving but they are thriving in this industry… it really is possible for producers to thrive in a cow-calf operation.”

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Bernard Tobin and Grant review first-year findings from the Canadian Cow-Calf Cost of Production Network in this video report. Story continues after the the video:

In the video, Grant also discusses the need for farms to make incremental improvement in COP and profitability. She looks at the potential of reducing winter feeding costs by extending grazing with rotational grazing. The Network also looked at the impact of adjusting calving season to three cycles to increase weaning weight.

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Grant notes the significant impact drought conditions in parts of Canada had on cow-calf operations in 2021. The challenging conditions did, however, give the network an opportunity to study drought impacts from a management perspective. In the report, she shares what the Network has learned about the best options in terms of rebuilding herds when producers were forced to liquidate.

For more information on the Canadian Cow-Calf Cost of Production Network and its plans for 2022, producers are encouraged to visit the Canfax website.