The Cost of a Cow: Part 5 - Trucking, Depreciation, and Storage (Oh My!)
This post is going to address the cost of trucking the animal to the butcher, throw in an adjustment for calf mortality, brood cow depreciation, and meat storage. When we left off with Part 4.5, our steer, including feed, butchering, mineral, vaccinations, ear tags, labor, and fencing depreciation, is now costing us $2070.
Trucking is hugely variable depending on the farmer's location and resources available. If you already have a stock trailer and don't have far to drive, you're great! If you don't have a stock trailer and have far to drive, that sucks!
My situation is ideal; we have access to a stock trailer and we have two USDA inspected slaughtering/butchering facilities within 20 miles of the farm. For someone who doesn't own a stock trailer and means to pull it, figure you could probably bribe a friend with a trailer to take a cow to the butcher for $100, assuming it wasn't too far away. For us, it probably costs around $50 per animal if you're only taking one at a time.
Calf mortality is probably around 10% for a pretty average producer. Now, this cost doesn't go against the full price of the finished steer, but it does end up being a loss. Basically, you lose 10% of your net profit on each animal you were going to butcher, but you also lose the cost of the feed for the cow for the year that calf was born.
My own experience is that I've lost one calf out of 45, I've had three cows not settle out of 49, and I've had two cows die on me out of 30. One was due to a broken leg on the ice, one was due to old age.
Going with a 10% calf loss/not getting pregnant, our cow herd of 28 would probably have at least two cows that don't settle each year or lose their calf after birth, costing us about $1080 in feed, or $38.60 per animal for our herd of 28 animals.
Cow mortality. I hate this one but it's reality. The average pet cow probably lives 6-7 years and has 5-6 calves. Let's set the replacement cost of the cow at $1500. Now, if you raised the cow from birth, you can't depreciate it. If you bought it, you can. If you bought a pregnant heifer to get started, your straight line depreciation would be $1500/7 or $214 per year. (Again, I'm not an accountant, please disregard any terms related to tax depreciation and/or accounting and come up with your own numbers.)
Meat storage. Our small farmer can't run out and buy a $20,000 walk in freezer, so his/her best option is to probably invest in several upright or chest freezers. Let's say you buy a chest freezer at $400, and it costs $10/year for electricity (assuming you unplug it when it's empty). It depreciates at $40/year, so you have $50/year in cost. Let's assume you can store one beef in that freezer, so your cost/lb in the freezer is $0.10/lb.
So, we have $50 for trucking, $38.60 for calf mortality, I'm going to assume you raised the cow so you don't have depreciation against it, and we have $0.10/lb for storage.
Our steer now costs $2158.60 plus $0.10/lb*500 lb for meat storage or a grand total of $2208.60. The farmer's out of pocket cost for meat is now $4.42/lb. If you bought the cow, your cost is $2422.60 and the cost of meat is $4.85/lb.
Now, y'all are looking at this and are thinking one of two things: 1). Why is beef so much cheaper than this at the store or 2). Why am I paying a local farmer $7/lb of meat?
Part 6 will address these questions and Part 7 will summarize the costs and talk about what KD Farms is doing to reduce costs to make our beef more reasonable!
How do you feel about my analysis so far? Enlightening? Unrealistic? Helpful? What sort of questions do you have after getting to this point? Please let me know in your comments!
Be blessed!
-Kenny
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Note the silage truck on the left. This is a field I chopped last year.