What Really Determines Profitability in Grass Farming 3 of 3 with Jim Gerrish

🎙️ Episode Title: What Really Determines Profitability in Grass Farming (Part 3 of 3) with Jim Gerrish
📝 Featured Speaker: Jim Gerrish

In this final episode of the three-part series, Jim Gerrish focuses on the factors that truly drive profitability in grass-based livestock farming, particularly in cow-calf operations. He emphasizes that the greatest profit lies in the first 400 pounds of calf weight gain, while additional weight becomes increasingly costly. Gerrish explores rising production costs, cow depreciation, regional differences in cattle performance, and effective cost-control strategies. He stresses the importance of managing costs and avoiding reliance on higher commodity prices for profitability.

🔑 Key Points Covered:

1. Diminishing Returns on Additional Calf Weight:
   Gerrish explains that cow-calf profitability is highest in the first 400 pounds of calf weight. Beyond that, costs increase, and the price per pound decreases, making it harder to profit from heavier calves.

2. Kansas State Farm Management Data:
   Gerrish highlights data showing rising production costs over time, especially due to events like the Texas drought and the ethanol mandate. Even during record cattle prices in 2013, Kansas farmers faced significant losses per cow.

3. Cost of Production Analysis:
   Neville Speer’s analysis shows the steady increase in production costs, now nearing $900 per cow for larger herds. Gerrish emphasizes the challenge of profitability given the current revenue levels in the industry.

4. Factors Driving Cost Increases:
   Rising input costs such as fuel, labor, and pasture lease rates, as well as cow depreciation, have driven up production costs. However, top-performing operations have found ways to manage these costs effectively.

5. Managing Cow Depreciation:
   Cow depreciation is a major expense, and Gerrish introduces the 'five and out' program as a strategy to sell cows at five years of age when their value is still high, thereby managing inventory value and mitigating losses.

6. Regional Differences in Cattle Performance:
   Gerrish discusses the regional variances in cattle performance, noting that Northern Plains cattle perform better due to cool-season forages and favorable climates, while Southeastern states face challenges with warm-season grasses and heat stress.

7. Cost-Effective Management Practices:
   Gerrish stresses that focusing on reducing input costs, such as eliminating winter hay feeding, and implementing efficient management practices is key to achieving profitability in grass farming.

🌱 Actionable Insights:

1. Focus on the first 400 pounds of calf weight for optimal profitability, as costs increase significantly beyond that.
2. Monitor production costs for feed, land, labor, and cow depreciation, and look for ways to reduce these expenses.
3. Adopt the 'five and out' program to manage inventory value and reduce the impact of cow depreciation on profitability.
4. Assess cattle breeds and forage types based on regional climate to optimize performance and profitability.
5. Implement cost-control measures like reducing or eliminating winter hay feeding to lower overall production costs.
6. Stay informed about market trends and cost analysis from reputable sources like Neville Speer to make data-driven decisions.

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