Wednesday, August 03, 2011
What Makes A Cowboy, A Cowboy?
What makes a cowboy, a cowboy? If you don’t have access to thousands of acres of rangeland, why do you have cattle? If you don’t have a million dollars to risk on feedlot operations, why do you have cattle? Is it because Dad fed cows? Is it because you like the boots and hat cowboys wear? What makes a cowboy, cowboy?
You don’t have to have range land with mountains in the background or a Texas-sized feedlot to enjoy beef production. There are many Cornbelt farmers with a small cow-calf herd that contributes to the profitability of the farming operation. USDA economists William McBride and Kenneth Mathews, writing in the June edition of USDA’s Amber Waves magazine, says there are cow-calf operations in every state and it is an economically important facet of the US.
Surprisingly, 35% of the farms in the US have beef cows on the farm. Not many, mind you, but they are there. A third have less than 10 and more than half have less than 20. Only 20% of them have more than 50 head. So a cow-calf operation and “small” are usually found in the same sentence when someone describes the diversity of their farm. When you hitch that up with the size of farms today, most cow-calf operations are usually found on farms that are considered rural lifestyle farms, which are the ones where the cattle are tended before someone heads off to their full time job away from the farm. Those types of farms are profitable only because of the off-farm income, but in many cases, the small cow-calf herd may be the primary money maker on the farm.
Those rural lifestyle farms have gross farm sales of less than $250,000 per year and the primary operator is either retired or working off the farm full time. On the other end of the scale are commercial farms with more than $250,000 in gross sales, and in the middle are intermediate farms. They have gross sales under $250,000, but the primary operator is working full time on the farm. Interestingly, each of those three has about one-third of the cow-calf operations in the US, and because of the broad diversity across those types of farms, USDA says it makes it hard for policy makers to fairly address issues with cow-calf operations.
The rural residence or lifestyle farms make up half of the farms with beef cattle, and generate 70% of the gross farm income from the beef herd, but most of the gross family income is generated from their full time job. Cow calf income generates over half of the net farm income from the intermediate farms that have gross income under $250,000, but operated by a full time farmer. The operations with gross income over $250,000 generate much more money, but only 32% from cattle sales. Those larger operations do not depend on a cow-calf operation for profit, and neither do the smaller farms which are subsidized by off-farm income. However, the operations in the middle of the pack are the most vulnerable, when it comes to input costs and market prices.
The economic vulnerability raises the issue of sustainability for the cow-calf herd. On each end of the spectrum, any losses in profitability from feeder calf sales will be covered by either wages from the off-farm job or crop sales from the farming operation. The operation with the greatest vulnerability has to have beef production in their blood to warrant continuation in times of financial stress in the cattle industry. Or as the USDA economists characterize it, “This suggests that beef cow-calf production as a lifestyle choice is at least as important as earning a profit on many farms.”
Summary:
Cow-calf operators are spread evenly across the income spectrum, from rural lifestyle farms which receive 70% of their farm income from feeder calf sales, to larger commercial farming operations that receive only 32% of their income from feeder calf sales. The challenge is to the farms in the middle which depend on cow-calf operations for 55% of their income, but which are more vulnerable to high input costs and low commodity revenue and nothing else to subsidize the enterprise. That means a cow-calf operation is as much a lifestyle choice as a source of profitability.
Posted by Stu Ellis on 08/03 at 12:00 AM | Permalink
Comments
Posted by: Mike M. at August 3, 2011 10:10AM
Nice article, Stu. Glad to see Drovers Cattle Network picked it up, too.