 Hello everyone, my name is Brian Parman, I'm the North Dakota State University Agricultural Finance Specialist and today I'm going to do a video on North Dakota cattle production costs and budgeting and talk a little bit about the advantages to backgrounding heifers at the end. I've looked through a lot, I'm going to use the farm business managers data for some of this. What I'm showing here is average net return per beef cow in the state of North Dakota since 2005. You can see in 2019 that was around $60 per head. It's down off of 18 and down off of 17, kind of approaching the lower period of 2016 but on average as a state still positive well off the high of 2014 but again still positive per cow. This is the net return per cow across North Dakota. Now the difference between high net income and low net income without going through all the data and showing just reams of tables I can tell you it's costs. Year over year what you wind up seeing is that average market price for the that received for calves for the top producers versus the bottom producers in terms of net income is very similar within a few bucks per hundred weight and actually weaning weights for the most part are very similar for the top end and the bottom end in terms of net income. So in other words most producers are receiving similar market prices year over year. They're weaning similar weight calves on average and weaning percentages as well. In other words the low low net income 20% are not just poor at keeping their calves alive. No, their weaning percent is about the same as the top end producers. So these factors right here while very important it doesn't appear as though there's a huge discrepancy between the bottom and the top end in the state. The largest difference between the higher net revenue beef cow producers and the lower net revenue is in costs especially feed costs. When you go comb through the data you can see that feed costs are one of the biggest reason often maybe a hundred hundred and fifty dollars more per head than the higher end producers in terms of net revenue. And so that's really making all the difference in the world right there. So let's look at efficiency for beef cattle production just one statistic one metric going forward and that is this operating expense ratio. The top 20% in terms of operating expense ratio about 68.8% of their revenues are going to pay operating expenses on average since 2010. Never really going above in 2016 was a little little tighter at 78% but for the most part hanging around that 70 high 60s to 70% mark now if we look at the low 20% it's closer to 79 to 80% and in the leaner years even 90% going to operating costs like in 2018. So that's a lot of money not left over to pay overhead and depreciation and these other other fees that have to be paid for any beef cattle operation with that much money paid toward operating expenses. And if you look at the middle 40 to 80% well that's about that's closer to what the top 20% are paying that's that 70 69 to 70% in operating expense ratio. So it just shows and by the way the middle 40 to 80% have a positive net return as well. So it just shows that there's this group of producers down near in the low 20 that are having a hard time being able to account for and source and generate feed especially in these cold winter months at a financially sustainable rate. It gets expensive and I understand that I think we all do but that's the area where it tends to be the difference between the higher net revenue and the lower net revenue individuals is right there in the costs. Now the biggest and best thing that you can do is budgeting capital but capital budgeting partial enterprise budgeting that's it's it's hard to identify where a lot of this money is going if it's not detailed out like it is here and this is North Dakota State University's cow-calf enterprise budget. We just use averages across the state with total cost per cow at $659 your costs may differ that's why when you go to this link here you can download this budget you put in your numbers be as detailed as you can here's where you put in your revenue type figures and then it comes out with your total returns okay. So the first thing to identifying some cost saving measures is knowing where all your costs are going and indeed finding out are we spending too much on silage hay are we spending too much on pasture other protein feed minerals etc. etc. So that's one thing to really keep in mind is that detailed enterprise budgets are the first step towards finding out where all the money is going and trying to evaluate are there some cost saving measures that can be taken or when you're comparing yourself maybe to some of the state averages why are my feed costs so much higher is it because I'm paying too much pasture or brand is it because I'm paying too much for hay and silage those kind of things that's what this helps identify the most and without it it's really nearly impossible to determine where a lot of the money is going and then the final thing I wanted to say that Tim Petrie has mentioned several times and as have I and that is backgrounding heifers we talk about ways that we can at a relatively low-cost increase revenue for our beef producers and backgrounding heifers is one of those ways when you look at the difference between heifers at say 500 weight versus 800 weight the price slide changes from $28 difference per hundred weight to $14 per difference per hundred weight so in other words you can make money simply closing the gap between steers and heifers by holding on to them to 800 pounds even if you break even on the feed okay and break even on the overhead and feed just closing that price gap you can make you know upwards of $50 a head per more then if prices swing your way it can be much much better but the point of this is if you and then if you can put on some weight even cheaper if you have the access to some cheaper feed or something then then then the possibilities grow it's a little more tricky with steers because of the fact simply because of the fact that you know they're worth a lot more so this is closing the price gap there with heifers is is is another way so with that I'd like to thank you for watching if you have any questions about cow-calf enterprise budgets or some more info information requested about the data showing the difference in in production costs for our lower higher cost producers feel free to email or call me and thank you for watching