Utilidades antes y despues del Etanol. Cow-calf returns: before and after ethanol

A new study from researchers at Texas A&M’s Agricultural and Food Policy Center and Doane Advisory Service indicates cow-calf returns have improved since 2007, when government mandates spurred a large increase in the amount of corn used for ethanol production.  The report, titled “Economic comparisons of input price changes on representative livestock operations before and after the Energy Independence and Security Act of 2007,” is available online from the National Corn Growers Association.
For full disclosure, Doane Advisory Service is a division of Vance Publishing Corporation, the parent company of Drovers/CattleNetwork.
In their analysis, the researchers used data from the Food and Agricultural Policy Institute (FAPRI) to compare 2007 and 2011 baselines for input prices for cow-calf and dairy producers in representative regions of the United States. These baselines project prices out to 2016.
Not surprisingly, the 2011 baseline projects significantly higher prices for all inputs, and for cattle prices, compared with the 2007 baseline covering the same period of years. In the 2007 baseline, corn prices ranged from $2.99 to $3.25 per bushel. Under the January 2011 baseline, corn prices ranged from $3.55 to $5.32 per bushel, with the average 2012 to 2016 price projected at $4.74 per bushel.
Cattle prices also have moved higher than most analysts would have expected in 2007. The report says that over the 2010 to 2016 period the January 2011 baseline projected feeder cattle prices were 27 to 37 percent higher than the 2007 Baseline prices for the same period.
The authors also note that the2011 baseline shows considerably higher annual inflation than the 2007 baseline for other farm inputs including fertilizer, herbicides, insecticides, fuel, lube and taxes.
For research purposes, Texas A&M’s Agricultural and Food Policy Center develops simulations of representative farms in key production areas, based on local production environments, prices, etc. For this study, the researchers used simulated beef-cattle ranches in Florida, Missouri, Nevada, South Dakota, Texas and Wyoming.
The report shows total costs of production per head increased for all of the ranches from the 2007 baseline to the 2011 baseline. Increases in the cost of crop and feed production varied considerably between regions. On the simulated South Dakota ranch, for example, crop and feed production for 2011 was listed at $52.65 per cow in the 2007 baseline and $53.29 in the 2011 baseline. For the Texas ranch model however, crop and feed production for 2011 increased from $128.67 per cow in the 2007 baseline to $157.46 in the 2011 baseline.
Average total receipts for all six ranches, meanwhile, increased more than average total cash costs for the 2011 baseline. As a resul,t average annual net cash farm incomes under the 2011 Baseline were higher than under the 2007 Baseline. Net Cash Farm Income for 2011, from the 2007 baseline to the 2011 baseline increased from $17,000 to $94,000 at the simulated Nevada ranch, from $13,000 to $41,000 at the Wyoming ranch, from $24,000 to $74,000 at the South Dakota ranch, from $13,000 to $71,000 in Missouri, from $70,000 to $118,000 in Texas and from $77,000 to $195,000 in Florida. The increases extend out to 2016, the final year covered in the 2007 and 2011 baseline estimates.
The authors acknowledge that corn prices specifically affect production costs on cow-calf operations less than they do in the cattle-feeding sector. They also note that a primary reason behind the higher calf and feeder prices driving those returns is short supplies of cattle. Cow-calf producers have trimmed cow numbers steadily since 2007, due, in part, to high production costs at the ranch and on feedyards.
Read the full report online.



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