According to the Livestock Marketing Information Center (LMIC), the cost of producing a calf has increased from $384 in 2000 to $883 in 2014. WOW… it way more than doubled in just 14 years. Keep in mind, though, that this is an average cost of production. Some cow-calf producers have a much higher cost of production, while others have a much lower cost of production.
I discussed cost of production with several long-time PCC customers at our two fall bull sales. It did not surprise me to learn that these producers have a cost of production that is less than half what the national average is. It’s no wonder these producers have a positive attitude! They know that the easiest money they will ever make is the money they DON’T spend.
If your cost of production is half what the national average is, you just saved (made) $440 on every calf you produced. Since that income is tax-free, its value just increased by another $100 or more. Ben Franklin once said, “A penny saved is a penny earned.” The same can be said about every $500 or $600 you don’t spend.