Those costs were running around $400 per cow just 15 years ago. However, during the past several years, producer costs have surged sharply higher and now average nearly $900 per head per year. That represents a 225% increase or nearly 5.6% annually in the past 15 years.
While markets have been favorable, costs have also escalated. And therein enters the challenge as larger supplies begin to pressure markets.
As such, profitability will likely be dramatically squeezed in the years to come, unless costs decline proportionally. That’s where watching the trend is important.