Saturday, January 15, 2005


Economic Efficiency Of 2004 IRM Herds

In today's economic climate, high production is a necessary condition for making a profit with a beef cow herd; but, high production is not a sufficient condition ensuring that you make a profit. Economic efficiency is the sufficient condition for high profits. Today, that high production has to be obtained with both high production efficiency and high economic efficiency.

The above table illustrates three measures of economic efficiency applied to my last six IRM Herds analyzed. All of these herds were analyzed for the production of their 2004 calves. Non of these herds had herd performance records.

The three economic efficiency measures are:

Earned net income: defined as gross income per cow minus total production costs per cow.

Unit Cost Of producing A Hundredweight Of Calf: defined as the ratio of the beef cow herdÂ’s total production costs divided by the total pounds of calf produced.

Costs To Produce A Dollar Of Gross Income: defined as the total production costs per cow divided by the gross income per cow. The remaining profit margin, after costs of production are subtracted out, is the earned returns to unpaid family and operator labor, management, and equity capital invested in the beef cow herd. Posted by Hello

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