For the beef industry, the timing of when you enter the cattle cycle can have a significant impact. This is often called the “sweat equity” period when you are foregoing current income with the expectation that future earnings will occur.

However, even after this initial phase, many operations, particularly those that are family-based, rely heavily on unpaid labour — often from aging family members or those working off-farm — which can mask the true cost of production. At this point, an operation must ask: Are they building equity or just sweating?

The cost of labour on cow-calf operations

Total labour costs — both paid and unpaid — represent a significant portion of cow-calf total production costs (cash, depreciation, opportunity costs). On average, labour accounts for 17 per cent of the total production costs, with a range from five to 34 per cent. This highlights the substantial impact that labour (comprised of hours per cow and wages) has on the profitability and viability of cow-calf operations. Accurately tracking and valuing both paid and unpaid labour is essential for making informed financial decisions, enhancing labour efficiency and improving overall financial performance. The Canadian Cow-Calf Cost of Production Network examined the relationship between herd size, calving season, profitability, wages and overall labour costs.

Total labour costs averaged $333 per cow, with 15 per cent (or $51) attributed to paid labour and 85 per cent (or $282) to unpaid labour. Labour costs varied significantly, ranging from $73 to more than $1,000 per cow. The lower end of the range is associated with larger herds or farms that purchased all or a portion of their winter feed, reducing the labour required for forage production. However, this comes with the tradeoff of higher feed purchasing costs. Conversely, farms at the higher end of the labour cost spectrum are driven by more labour hours associated with small herds and/or have a longer calving window.

Labour costs also vary by profitability group, following a pattern similar to labour intensity (hours per cow). Low-profit farms have an average labour cost of $530 per cow, while medium-profit and high-profit farms report significantly lower average costs of $328 and $143 per cow, respectively. The difference in their means, for each of these groups, is statistically significant.

Note: The benchmark farms were divided into low-, medium- and high-profit groups based on long-term profitability (to include unpaid labour). Long-term profitability is revenue minus total production costs including cash cost, depreciation, unpaid labour, and opportunity cost on land and capital.

Wage

Sometimes, annual wages assume the business is also providing other perks, such as housing, vehicles, insurance, etc. These non-monetary payments should be clearly understood as part of the “total wage” with a value put on them. Without this, cash wages are not comparable to off-farm wages.

Paid and unpaid labour wages averaged $22 per hour in 2024, with a wider range for unpaid labour. Unpaid labour wages were estimated by asking producers what it would cost to hire someone to perform the same tasks.

However, it is important to note that many producers do not consistently track their own labour hours, making it challenging to assign a precise value to their work. Additionally, producers often find it difficult to quantify the value of their own labour, as it involves a blend of managerial, operational and hands-on tasks that are not easily comparable to market wages. This subjectivity can introduce variability in labour cost estimates, particularly for unpaid labour.

Labour hours

Labour intensity averaged 15 hours per cow, with a broad range from 2.8 to 43.3 hours. In comparison, a 2018 USDA study, based on the Agricultural Resource Management Survey, reported an average of 19.2 total labour hours per cow, including both paid and unpaid labour. A possible factor contributing to the lower labour intensity in the COP Network is its larger average herd size. The COP Network’s average herd size is 202 head, compared to 100 head in the U.S. study.

Beef cattle operations rely heavily on unpaid labour, with 83 per cent (12.6 hours) of total labour being unpaid and only 17 per cent (or 2.6 hours) being paid labour. Close to one-third of benchmark operations reported having no paid labour at all. This indicates that labour hours or labour cost primarily translates into opportunity costs for the producer. A key question, therefore, is whether the business generates enough income to compensate the operator for the unpaid hours they put into the farm.

Herd size

Economies of scale are a major driver, where operations with fewer than 50 cows invest an average of 25 hours per cow, while herds of 500 or more cows averaged three hours per cow. Similar trends are observed in the USDA study, with labour hours dropping from 43.7 hours per cow on farms with 20 to 49 cows to just 7.2 hours on farms with more than 500 cows. This consistency across studies reinforces the impact of herd size on labour intensity.

Many tasks such as developing a herd health management plan, gathering animals to move to corrals or rotate between pastures, and working on herd records frequently take a similar amount of time regardless of herd size, or only modestly more for larger herds. In addition to spreading time over more animals, larger herds may also adopt more streamlined processes, utilize specialized equipment and distribute labour more efficiently. Producers expanding their herds must also consider infrastructure capacity, labour availability and management complexity.

Labour intensity by calving season

Labour intensity can be influenced by the calving season, as different seasons require varying levels of management. According to Manitoba Agriculture, total labour requirements are highest for winter-calving operations. Fall-calving operations require approximately 10 per cent less labour, spring-calving operations 20 per cent less and summer-calving operations about 25 per cent less.

The COP Network data shows a general downward trend in labour requirements from January to May calving. Some benchmark farms in the COP Network calve in June, September, or both spring and fall. However, these groups are too small to be representative and are therefore excluded from this analysis.

Reducing labour intensity can enhance profitability

The difference in the hours per cow, for the low-, medium- and high-profit groups, was statistically different, suggesting that more profitable operations achieve greater efficiency, likely due to factors such as improved herd management, economies of scale, better infrastructure or the adoption of labour-saving technologies.

Reducing labour intensity can enhance profitability by lowering overall production costs and allowing producers to allocate time and resources more effectively. However, labour efficiency alone does not guarantee higher profits; other factors such as herd size, management practices, market conditions and input costs also play a role in overall financial performance.

Strategies to reduce labour

1. Simplify feeding and watering: For smaller herds consider providing multiple days of feed at once. Evaluate how many times winter feed is handled (e.g., swathing, raking, baling, hauling, stacking, etc.) and identify ways to minimize this. Consider the alternative cost and options (e.g., water development) compared to hauling water to remote pasture locations.
2. Streamline calving management: implement a tighter calving season. Use herd sires with calving ease to reduce the need for interventions.
3. Develop a flexible but clear grazing plan: reduce scouting or “guessing” where to move cattle to next. Consider where permanent cross-fencing would help save time.
4. Combine tasks: for example, processing all cattle at once versus individually.
5. Train cattle for low-stress handling: make the experience less stressful for both the cattle and people. Cull problem cattle that are repeat offenders (e.g., poor mothering, bad temperament).
6. Record-keeping: develop a system (e.g., spreadsheets, management app) that allows you to enter the date once, then be able to utilize it for decision-making. Minimize multiple data entry points.

Key takeaways

• Labour costs represent a significant portion of production expenses (cash, depreciation, opportunity).
• Labour intensity averages 15 hours per cow, with significant variation based on herd size and management practices.
• Larger herd sizes benefit from economies of scale, reducing labour hours per cow.
• Higher profitability is associated with lower labour intensity (less hours per cow).
• Accurately tracking and valuing of both paid and unpaid labour is necessary for making informed financial decisions, enhancing labour efficiency and improving overall financial performance.
• If using sweat equity as part of a succession plan, deferred wages should be calculated into your balance sheet to determine the true profitability of the ranch and transparently value that work. This can help you avoid misunderstandings down the road.

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Within the Canadian Cow-Calf Cost of Production Network, on average only 11 per cent of feed is purchased, with 18 benchmark farms purchasing more than five per cent of their feed. These are typically in regions with surplus feed production. However, general farms with a higher proportion of purchased feed tend to have higher feed costs. Risks associated with a high reliance on purchased feed include cash flow in drought years, when feed costs surge. This makes the cost competitiveness of homegrown feed a key differentiator between profit and loss.

2024 benchmarks

When machinery cost and fuel are considered, the average approximate feed cost1 was $690 per cow in 2024, up five per cent from 2023. This was up three per cent or $20 per cow in Western Canada and up nine per cent or $64 per cow in Eastern Canada. Overall, 33 per cent of the benchmark farms have approximate feed costs below $600 per cow, with the top third most profitable benchmark farms averaging $559 per cow with 204 days on feed and daily feed costs of $2.76 per head per day. While days on feed were not much different between the average and top third, the daily feed cost was 26 per cent lower, contributing to the 19 per cent lower cost for the entire winter.

The daily feed cost is calculated by dividing approximate feed cost by the number of total winter-feeding days, based on the assumption that most of the costs for feeding and feed production are incurred during the winter feeding period for most benchmark farms, except for year-round grazing operations. Daily feed cost for year-round grazing operations is likely overestimated due to a short winter feeding period (60 days).

Winter feeding systems

Benchmark farms were categorized by primary type of forage fed in the winter diet. These were:

• Annuals: including greenfeed, straw, swath graze, corn graze and crop residues
• Hay (perennial forages): including dry hay, haylage and baleage
• Silage (annual forages): including oat silage, barley silage, pea silage and corn silage

There is a wide range of costs observed across different feed types (Figure 1). Farms can be either high-cost or low-cost using any of the feedstuffs. This suggests that it is not the feedstuff itself that determines whether a farm is high- or low-cost, but rather how effectively the management and utilization is within the overall operation. Efficient management practices, rather than feed type alone, play a crucial role in controlling feed costs.

As input costs rise, it has raised questions about the relative competitiveness of different feedstuffs. Over the last five years, hay/silage has seen the largest increase in cost structure at 53 per cent, while annuals/silage has seen the smallest at 43 per cent and has maintained its position as the lowest cost on average.

2024 top third benchmark feed costs are:

• $559 per cow per year
• $2.76 per head per day

Approximation of feed cost is calculated as feed cost (purchase feed + fertilizer, seed and pesticides for feed production) + machinery cost (machinery maintenance + depreciation + contractor) + fuel, energy, lubricants and water (such as irrigation).

Cost-effective forage production

While relatively higher productive regions have a yield advantage that supports competitiveness it is possible for lower productive regions to be cost competitive.

• Forage yield per acre: Select species and varieties appropriate for your soil type, moisture conditions and growing season. Soil test to manage fertility and pH if needed. Cut at optimal maturity to balance yield and quality.

• Reduce harvest costs and losses: Minimize machinery passes. Optimize bale size and density to reduce labour, transport and storage costs.

• Reduce storage losses: Use net wrap or plastic wrap to reduce leaf loss. Store bales off the ground and cover to avoid weathering.

• Feed efficiency: Test forage quality to match cow nutritional requirements and avoid overfeeding protein or energy. Use lower-quality feed for dry cows, and save higher-quality for lactating cows and heifers. Reduce waste during feeding, providing only what is needed for 1-2 days.

Key takeaways

• You can be high- or low-cost with any feedstuff. Cost control is more about management than feed choice.
• Over the last five years, input cost inflation has had an impact on each feedstuff differently, with some increasing more or less than others.
• Controlling homegrown forage production costs is key to being a competitive cow-calf producer. c

What is the COP Network?

The Canadian Cow-Calf Cost of Production Network (COP Network) uses standardized data collection, which allows for comparison both within and between provinces, and internationally. Since launching in 2021, the COP Network has collected data from more than 235 producers contributing to 64 cow-calf benchmark farms that represent various management systems. Each benchmark is based on data from three to seven producers. Data collection occurs every five years with annual indexing of input and output
prices, as well as crop and forage yields, in subsequent years. Individual benchmark farm summaries can be found here.

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Even in 2024, for herds with fewer than 200 beef cows, the average weaned calf price was 13 per cent higher in the top-third performing benchmarks (based on medium-term profit). This is what drove their overall revenue to be seven per cent higher compared to the bottom two-thirds, showing that putting time and effort into building reputation cattle is worth it at every stage of the cattle cycle.

Revenue per cow was not statistically different between the herds with more or fewer than 200 beef cows, suggesting that at current high prices and tight calf supplies, there may not be a premium for larger groups. However, this may change when the cattle cycle has ample supplies and more competition between sellers.

While prices are high right now, they will not stay that way. Preparing now can make a difference when low prices squeeze profit margins. Producers who consistently deliver high-quality, uniform calves backed by consistent performance can achieve “reputation cattle” status — and command premium prices. This is crucial to surviving the price cycle lows.

Reputation cattle aren’t built overnight. They’re the result of consistent management, honesty and reliable performance. By focusing on quality, transparency and buyer needs, you can build a brand that keeps buyers coming back and puts more dollars in your pocket.

Build a high-quality calf crop

Start by defining your target market — finishing lots or backgrounders — and select genetics to meet their needs. Use reputable AI sires or purchase bulls with strong expected progeny differences for the desired traits. Maintain accurate records.

Implement a strong herd health and nutrition program. Calm handling and bunk training go a long way in reducing stress and improving performance down the line. A tight calving window (45-60 days) will also help deliver a uniform group of calves at sale time.

Brand for reputation

Develop your ranch’s visual identity. Build awareness and loyalty among buyers by finding ways to connect the quality to the source of the product. Producers who stand out in the marketplace are those who back up their quality with verified practices.

On-farm assurance programs such as Verified Beef Production Plus (VBP+) demonstrate your commitment to food safety, animal care, biosecurity and environmental stewardship. Adding certifications from the Canadian Roundtable for Sustainable Beef (CRSB) can open doors to additional benefits, but it does require producers to take extra steps. Operations certified by VBP+ simultaneously meet CRSB’s sustainable beef production standard.

A five-year Level 1 assessment (cow-calf or grazing operation) with VBP+ costs $1,250, which can be paid up front or through five annual payments ($250 per year). With a CRSB certification at $20 per head qualifying cattle credit for cattle processed at Cargill, it would take approximately 1.25 years to pay off the assessment cost. This assumes you have a 120-cow herd with an 89 per cent weaning rate, selling only your steers (53 head = $1,060 per year of additional revenue) to a certified operation and a qualifying packer.

In addition, assessment costs for verified or certification programs can be offset by incentives provided through some provincial programs to cost-share assessment costs or infrastructure linked to grant priorities. Other benefits include the Farm Credit Canada Sustainability Incentive on lending.

Market for premium value

Choose a marketing channel. Pre-sort, internet and satellite sales are ideal for producers offering large, uniform lots with verified programs. Direct sales to feedlots or through an order buyer can help build relationships and generate valuable feedback. Some auction markets provide show lists, so that buyers know who is selling. Similarly, buyers know if sellers consistently sell at the same sale every year.

Market early and clearly. High-quality photos, short videos and weight data help buyers make confident decisions and reduce their risk. Share vaccination details and weaning protocols well ahead of shipping.

Once the deal is made, deliver what you promised. Clean, calm, properly tagged calves delivered on time leave a lasting impression. Follow up with buyers, ask for feedback and share performance results if available. c

What is the Canadian Cow-Calf Cost of Production Network?

The Canadian Cow-Calf Cost of Production Network uses standardized data collection which allows for comparison both within and between provinces, and internationally.

Since launching in 2021, the network has collected data from more than 235 producers contributing to 64 cow-calf benchmark farms that represent various production systems.

Each benchmark is based on data from three to seven producers. Data collection occurs every five years with annual indexing of input and output prices, as well as crop and forage yields, in subsequent years. Visit CanFax for free individual benchmark farm summaries.

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• Genetic and phenotypical compatibility with herd mates

• Management compatibility with the operation’s production system

• Productivity that meets both current and future expectations

• Longevity reflecting the replacement heifer’s ability to stay in the herd as a productive unit

• Financial standing, specifically debt related to purchases and/or forgone income from retaining heifers with implications on cash flow

When deciding whether to retain or purchase replacements, producers need to know their:

• Annual cost of production per cow

• Average cost of a replacement heifer (raised or purchased)

• Cow replacement rates including open rates, culls and death loss as a measure of average cow longevity

There is tremendous variability within the cow-calf sector for all three of these metrics, resulting in varying willingness to pay for breeding stock. Understanding your own operation is key to knowing which choice best suits your specific goals.

In general, operations with higher replacement rates also face higher replacement costs, although exceptions do exist. Achieving a balance between managing herd age, maintaining productivity, and controlling replacement costs is essential to maximizing profitability.

Raise or purchase?

The Alberta bred heifer market tracks the average cost of raising a replacement heifer. The question is whether you are a high- or low-cost producer of replacement heifers. Some operations are low-cost and it will always make sense for them to retain their own replacements. For high-cost producers, there is potential for reducing herd costs by purchasing heifers that are suitable to the environment and management. Finding a suitable source for purchased heifers is key to making that a viable option.

In 2024, the average cost of raising a replacement heifer across the 64 benchmark farms was $3,315/heifer. That is 10 per cent below the average Alberta bred heifer price of $3,697/heifer and recognizes that the bred heifer market took off in the fourth quarter as demand increased.

In previous years, the estimated cost of raising replacement heifers was higher than the market price of Alberta bred heifers, with differences ranging from two to seven per cent in 2021 and 2023 but jumping to 21 per cent in 2022. The higher cost estimates from the Cost of Production Network were due to rising input and opportunity costs. Meanwhile, weather subdued demand for bred heifers. As forage availability improves and more cow-calf producers restock, the bred female market is expected to be strong with much higher prices.

Rebuilding after drought culling

A 2022 analysis of herd rebuilding after drought evaluated rebuilding from within the herd versus purchasing on four different culling levels (regular, 25 per cent, 50 per cent and 75 per cent culls). Producers have been affected by drought to varying degrees. However, economies of scale are critical to cost structure, as drought-culled herds have fewer animals to support overheads. This drives desire to return to the ideal herd size once forage and feed resources become available.

In addition, producers were concerned about selling at low prices during drought and buying high. Producers had to adjust retention rates to avoid prolonged equity drain due to lost economies of scale and inability to optimize pasture resources.

Farms with culling rates of 50 per cent or higher were able to regain economies of scale faster by purchasing heifers. In most cases, purchasing heifers meant taking on debt, requiring good financial status and a strong relationship with financial institutions.

Cash-flow deficits were more severe when purchasing heifers, as was interest paid by the whole farm (one per cent higher in the 25 per cent culling scenario, 18 per cent higher with 50 per cent culling and 21 per cent higher with the 75 per cent culling scenario). Cash-flow deficits indicated that this strategy is more risky, but more profitable on farms with higher culling rates (e.g., 75 per cent).

• At a 25 per cent culling rate, rebuilding from own heifers was more profitable for 16 out of 17 farms

• At a 50 per cent culling rate rebuilding from own heifers was more profitable for 14 out of 17 farms

• At a 75 per cent culling rate, rebuilding with purchased heifers was more profitable for 15 out of 17 farms

Check out the Drought Rebuilding Strategies Report for more.

Raising replacement heifers

Using 2024 data from 64 benchmark farms in the Cost of Production Network, total costs included:

• Cash (feed, land, animal purchases, machinery repairs, labour, etc.)

• Depreciation

• Opportunity costs (foregone revenue from not selling the calf)

These costs were associated with raising replacement heifers from weaning until pregnancy check in the fall of the following year, covering approximately 12 months with one winter-feeding and one summer-grazing period.

The data on replacement heifer costs was organized into three groups: low (orange bars), medium (blue) and high costs (grey). Each group includes 20 to 21 benchmarks. The low group’s heifer costs averaged $2,846/heifer, the medium group $3,279/heifer, and the high group $3,820/heifer. Correspondingly, the annual cow costs (cash and depreciation), based on the 2020-24 average are $937 for the low group, $1,093 for the medium group, and $1,482 for the high group.

As mentioned earlier, the average total cost of raising a replacement heifer in 2024 was estimated at $3,315/heifer, including cash costs, depreciation and opportunity costs. When opportunity costs for land, labour and capital are excluded, the average cost is $2,966/heifer, with a range of $2,073 to $3,810.

To find out if you are a high- or low-cost producer of replacement heifers, check out the BCRC Replacement Heifer Calculator.

Driving factors for replacement costs

What drives the differences in replacement cost between the low, medium and high groups? To explore this, we examined three key factors:

• Replacement rates

• Cost of developing heifers (including feed, land, breeding, labour and other overheads such as machinery, energy and tax)

• Opportunity cost (revenue forgone from not selling heifer calf at weaning)

Replacement rate

Replacement rate is primarily influenced by cow open rate, death loss, culling decisions and overall herd management strategies. It can be viewed as an indicator of the longevity of breeding females.

Generally, a higher replacement rate means that cows are being replaced more frequently. This may lead to higher replacement heifer expenses, but not always.

The difference between the low- and medium-cost group was statistically significant; but the difference between the medium and high-cost group was not statistically significant. This indicates that while higher replacement rates often correspond to higher costs, the relationship may not always hold, depending on other influencing factors.

Some farms maintain relatively low replacement costs despite having higher replacement rates. This suggests that other factors — such as lower-cost heifer development — help offset the potential cost increases associated with a higher replacement rate. Thus, while there is a general relationship between higher replacement rates and higher replacement costs, efficient management practices can help farms mitigate costs associated with higher replacement rates.

Conversely, farms with lower replacement rates do not necessarily experience the lowest replacement costs. In some cases, the expenses incurred to improve open rates or reduce cow death losses may outweigh the benefits gained. It is important to consider the optimal replacement rate, rather than focusing solely on minimizing open rates and death losses, to achieve cost efficiency.

Development cost

Development cost of replacement heifers includes feed, land, breeding, labour and other overhead such as machinery, fuel and tax.

The difference between the means of the low and medium groups, and the medium and high groups, were statistically significant. This indicates that development cost is a significant factor influencing replacement costs.

For example, some farms have managed to keep their replacement costs lower despite having higher replacement rates. This is attributed to their relatively low development costs, which are among the lowest of all benchmark farms. Conversely, other farms, despite having relatively low replacement rates, experience higher replacement costs per cow due to their higher development costs.

Farms with lower development costs can still maintain lower replacement costs, even with higher replacement rates. However, there is no one-size-fits-all approach to managing heifer development costs.

In some cases, the lower costs are driven by economies of scale with a large herd size (950 head), while another farm with 212 head achieves lower costs through reduced spending on labour, buildings, machinery and capital.

There was no statistical difference between the groups for opportunity costs. This is likely because opportunity costs are driven more by market conditions than internal management.

Replacement heifer cost effects

Knowing if you are a high- or low-cost producer when raising replacement heifers can influence your decision to rebuild from within the herd or with purchased heifers. It can also assist high-cost producers in lowering long-term cost structures on their operations, if they can find a suitable source for bred heifers that match their genetic, phenotypic and management conditions. Many producers are concerned that purchased heifers do not have the same longevity in the herd as homegrown heifers. This also needs to be considered when determining the net present value for a purchased heifer.

Net present value is the present value (adjusted for inflation) of expected revenues minus the present value of expenses over the lifetime of the heifer. In general, higher productivity equals greater revenue and a higher net present value for bred heifers. Lower cost structures and lower replacement rates equal higher net present value. Expectations of calf prices directly affect net present value as well.

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