Farm | Why is Grass-fed Beef so Expensive?
why is grass-fed beef ‘so expensive’
Do you ever wonder why grass-fed beef is ‘so expensive’? I mean after all aren’t the cattle just eating grass?!
Today I’d like to share the cost behind one pound of Homestead beef. Like all of my ‘cost’ sharing posts I want to preface this as Homestead’s costs. Your farmer down the lane may have different costs for different reasons. Things like the number of livestock raised, diversity of livestock, farm employees, the number of people being supported by the farm, production costs, land costs, taxes, health care needs - and the list goes on - all effect what a farmer has to charge to make a living. Therefore, today I’m sharing with you what it costs ME to raise one pound of beef. However, my hope is that by sharing my ‘behind the scenes’ that you’ll find an appreciation for the costs behind every small farmer’s pricing strategy; whether flour, honey, cider (my new fav), vegetables or beef.
A few things I’d like to preface before we get started
I buy ‘feeders’, meaning weaned calves (no longer feeding on their mother’s milk) ready to be fed to harvest. I do not have a breeding program here at Homestead for my cattle and I’m not currently planning on starting one. I’ve been able to find quality calves from local farms who focus on breeding stock. This choice allows me to focus on growing quality beef.
I grow these steers for roughly 18 months from the time they arrive on my farm.
I take an hourly wage of $20 per hour.
The costs I’m sharing below are based on ‘full farm capacity’, which for now I’m calculating will be right around 26 steers (we’re halfway there).
I’m basing these numbers on our Hereford cattle which finish at a higher weight than the Highland cattle. Highland cattle finish smaller, are on our farm longer and therefore cost more to raise. However, we do so few of these that I felt it was a better portrayal of our farm to show the cost in raising Hereford beef.
The Cost of Steers
The most basic price is the cost of the animal. The cost of beef steers fluctuates, sometimes substantially, from year to year. When I brought home my first steers in 2015 I paid $2.50 cents per pound live weight (live weight is the actual weight of the animal). The last several years that has been back down to $1.40-1.70 per pound. For today’s purposes I’m going to use my last two year average cost for a steer.
Two year average cost per steer | $625
The Cost of Feed
Most seasons I can count on good grazing from May to October. I’m hoping to extend this season at our farm through more intensive management but we’ll use this as a good ‘normal’ season for purposes of this post.
These are the number’s I’m using when I calculate the below feed costs. The rental cost of land in Dane County is currently going for $180 per acre. The cost for a bale of good alfalfa hay goes for $4 per bale. My taxes on the agriculture acreage I run are $4,000 annually.
Cost of Hay | $490
Cost of Pasture | $187
Cost of Mineral | $75
Cost of Land Taxes | $230
Feed Cost | $982 per head
The Cost of Labor
Valuing yourself as an entrepreneur is difficult at times. However, I do believe I should be paid for my time. So, I pay myself $20 per hour while doing farm related chores.
Another point to note is that the labor cost below is only calculated on the labor hours I’m directly working with the livestock. My marketing time, delivery time and keeping up accounts (ie entering things into QuickBooks) are not accounted for in this cost. Mostly because I have a hard time keeping track of that time (maybe I’ll find a way to track it in the future).
Cost of Labor | $600
Other Related Costs
Slaughter costs | $600
Freezer Licensing Costs | $20
Cost of Maintaining Equipment | see below
Credit Card Processing | see below
Marketing Costs | see below
Other costs that I have not directly accounted for (and valued) to this point are the cost of accepting credit cards, maintaining my website, paying myself for marketing time, paying for listings on local pages to sell beef, maintaining equipment, maintaining/investing in infrastructure and purchasing necessary equipment. Up until this point we’ve been fully funding this operation with 100% of the funds from sales we make as well as our personal contributions. These costs are partially the cost of starting up a farm so once we’ve built everything up I’ll be better able to break out the annual cost for maintenance etc.
OK, so where does that leave us?
Cost of raising one steer | $2,827.00
Cost of good | $2827.00 / 400 lbs. of sale-able product
Cost per pound = $7.07
My Goal as a Farmer…
…is to be transparent about this career I love. There is nothing more rewarding to me than seeing someone who’s lived their whole life buying from the grocery store (like I did) find value in knowing who raised the food on their table. Everyone, at least the majority of people, understands that a ‘farmer’ raised their food. However, buying from local family farms means you get to know THE farmer that raised it. To me there is nothing more valuable than knowing that the beef and lamb (pork, chicken, goat etc….) you’re eating tonight was raised in a humane manner, lived it’s best life, and died quickly without stress.
I really hope this was a helpful glimpse into what goes into that pound of beef you’re serving for dinner.