Where are Your Costs?
Here is a PDF of the
Where are you at.
This study by Whitney Bowman, Dustin L. Pendell Ph.D. and Kevin L. Herbel can be found at the Kansas State University AgManager.info website. Review and summary by Aaron Berger, Nebraska Extension Educator.
Whitney Bowman together with Dr. Dustin Pendell and Kevin Herbel recently published a paper that highlighted the differences between 71 different producers with cow-calf enterprises that are part of the Kansas Farm Management Association. The paper examined both returns over variable costs and returns over total costs in 2014-2018. The authors broke out participants in the study into three groups of high-, medium- and low-profit producers. Here are differences that stood out between producers from the data when looking at returns over total costs.
- Differences in costs between operations significantly outweighed revenue differences. High-profit operations spent $259.93 less per cow than low-profit operations in this study.
- High-profit operations generated more revenue per cow, $152.32, than low profit operations.
- Major differences in costs between high profit and low profit herds were found in feed expense. High-profit herds spent a total of $418.66 per cow on grazed and harvested feed, while low-profit herds spent $543.92. This is a difference of $125.26 per cow!
- Labor, depreciation, machinery and interest expenses were all lower on a per cow basis for the high-profit operations than the low-profit operations. High-profit producers spent on average $100.95 less on these items than low-profit producers.
- High-profit operations generated on average an annual positive net return to management of $60.53 per cow, while low-profit operations had a negative return of -$351.72 to management over the five year period.
The Kansas Farm Management Association cow-calf enterprise data provides insights into the differences between high-, medium- and low profit producers. Participants in the data set have the necessary production and financial records to know what their production costs are and then can use that information to make management decisions to improve profitability. In this data set, producers who aggressively controlled costs while producing more pounds of calf to sell per cow than their competitors were the most profitable. Good production with cost control differentiated the most profitable producers from those that were the least profitable.
A one page sample budget titled Estimated Annual Cow Costs for Nebraska 2019 is a tool that can be used to help producers to begin to estimate what their own cow costs are. Good accounting and record keeping can help producers track their costs and know their cost of production.
For producers interested in learning more about this topic, a Unit Cost of Production Workshop is scheduled for February 5 & 6 at the Cedar Creek Church which is in the Burwell area. For more information contact Aaron Berger at 308-235-3122.
Interviews with the authors of BeefWatch newsletter articles become available throughout the month of publication and are accessible at https://go.unl.edu/podcast.
Principles of Professional Ranch Caretakers
Lease us your ranch – We will take care of it.
Financially, Economically, Physically, and Emotionally.
We will keep the grass growing and the water flowing.
We will keep the fences tight and the improvements in great condition.
Where do you see your ranching enterprise in 1 year, 5 years, 10 years 100 years. The actions you take today will basically – dictate to what your ranch will be in the future.
- More Brains put together to find more Ideas to create more Solutions.
By Utilizing the cumulative Brains around you – You will have the resources to create a reality of where your operations is at and where you would like it to be.
Working hand in hand with our resources – we will create a vision and work to fulfill it through a focused effort. Your land will become a healthy vibrant ecosystem capable of sustaining wildlife and livestock beyond expectations.
You are an Investor – The land that you own will appreciate as it is – 1% to 3% per year. There will be sum bumps along the way, but your investment will continue to grow Even if you do absolutely Nothing with it.
- What if you make a commitment to make it better – Increase the grasses and the waters. What if your Land can be developed to KEEP more of the moisture in it and have less run off.
Partnerships – We offer to run your ranch land in this manor. Through Planned Timed Management Grazing and strategic placement of Water and Fences – Your Investment will have the opportunity to grow beyond your expectations.
Long Term Focused Commitment – is the Key to your operation being successful. We will enter into an agreement to LEASE your ranch and run it as if it were our own – To Grow and develop it to achieve optimal production by utilizing the Sunlight and Water along with professional stockmanship. This will develop more Grass which results in more Water staying on the place resulting in healthier soils and productive plants.
A Board of the best and brightest will be asked to make recommendations and be a part of developing the overall plan for the Land. Grass specialists and Master Stockmen will have a say as to how to operate the enterprise.
You have done a great job of getting your operation to this point in time. This will not be forgotten. Change happens and we understand. We will work together to develop a plan that will take your operation to the next stage.
Give us a call – 307.331.0357
It would be an honor to meet you and sit down to discuss what we together can do for your ranching operation.
Kit West – CEO Western Livestock & Grass
Download and read this PDF. Even though it looks like its only subject is Art – Read Deeper, Read between the lines. It APPLYs to you.
Holding on to Your Advantage –
By Kit Pharo
In last week’s PCC Update, we discussed the need to have a competitive advantage – and how to obtain one. This article was written for the benefit of the many PCC subscribers who already have a competitive advantage.
NOTE: If you don’t have a competitive advantage, I suggest you re-read last week’s PCC Update. We believe having a competitive advantage will be the difference between mere survival and true success in the future of the cow-calf business.
You have a competitive advantage because you were willing to step out of the status quo herd and do a better job of running your business. However, you will only have a competitive advantage until the majority discover they can do what you are doing. Rest assured, this will take much longer than it should.
Eventually, though, yesterday’s Herd Quitters will become the new status quo. If you want to maintain your competitive edge, you must continue to change with the times. You must recognize when you are in danger of becoming the new status quo, and start looking for new advantages. This is a never-ending challenge that I love.
Henry Ford is an excellent example of a leader who fell behind. It has been said that Henry Ford was 20 years ahead of his competition for the first 20 years of his business – and 20 years behind the next 20 years. During the boom years of the Model T, over two-thirds of the cars in the U.S. were Fords.
Henry did what he had to do to become the leader in the early car business – but he failed to adapt and change with the times. For example, he thought every car should be black. He allowed his business to stagnate under its previous success. The same thing can happen to us if we’re not careful. Nothing stays the same! The key to staying ahead is to adapt to change as it is taking place.
Quote Worth Re-Quoting –
“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.” ~ Charles Darwin
“It is not necessary to change. Survival is not mandatory.” ~ W. Edwards Deming
Production Per Acre –
By Tim Goodnight
Shifting the focus from production per cow to production per acre has been shown to increase profitability. It’s no secret that smaller framed cows will produce more calves and more total pounds per acre. In addition, these lighter calves are worth more per pound.
More pounds that are worth more per pound is a win-win, right?
As simple as this concept is… status quo producers can’t seem to understand that by focusing on individual growth and weaning weights, they are limiting their profitability. Despite the emphasis placed on growth, the status quobeef industry has not been able to increase average weaning weights over the past 15 years. The only thing that has increased in the last 15 years is cow size. This has led to the increased use of expensive inputs, which has had a negative impact on profitability.
So how can producers increase production per acre? It begins with a paradigm shift. Shifting the focus to the production and performance of the entire operation instead of the individual animal is the most important first step. Next,you should align your operation with a program that has shown the ability to increase total production without expensive inputs. Pharo Cattle Company has been that program for 30 years. If you’re ready to increase your ranch’s total production and profitability, we can help.
Quote Worth Re-Quoting –
“In times of change, learners will inherit the earth – while the learned find themselves beautifully equipped to deal with a world that no longer exists.” ~ Eric Hoffer
“Those who cannot change their minds cannot change anything.” ~ George Bernard Shaw
Marketing – The process of creating excitement about your product/service.
Sales – The process of actually selling your product/service.
Sales of the product on the Ranch – You have that figured out. Sales barns, video, and internet, they all get the job done very well with the largest number of potential buyers.
But – Marketing, that has been left up to the barns/video/internet sales facilitators. And how do they go about doing that. – The Sale Bill. The consignment list they post in publications and websites.
Why should you take an interest in “Marketing your Livestock”
Picture this – If there are 2 more bidders at the sale to BID on your livestock. 50,000 lbs at $1.10 = $55,000.
With 2 more bidders you could get say .05 +/- cents more?
50,000 lbs at $1.15 = $57,500.
What can you do to “Market your Livestock”?
Website – $500 a year.
Print Media – $500 a year.
Social Media – $100 a year.
- Take lots of pictures
- Write down what you do.
- Write down your genetics
- Ad pictures to everything.
The more visual you are the more your pictures will sell your Calves.
Build upon the reputation that you already have.
By Investing $1.00 in your Marketing – You can get $2.00 back.
I can HELP – call 307.331.0357
Rules of Thumb for Ranching
Compiled by Steve Moreland, March 23, 2017
This subject has come up on Ranch Talk on the Ranchers.net Bull Session. Here are a few axioms that have been passed on through the years. Others might find them to be of interest.
A theory I heard just lately is that the cost of five months of rented summer pasture should be equal to a third of what a steer calf is worth at weaning time. If the calf is worth $900, a third of that would be $300. $300 divided by five months would be $60 per month.
Always keep your best heifer calves.
Don’t keep kicking a dead horse. If something isn’t working, kick the habit.
Have a rigid culling program on cows in the herd. If you have to give them extra attention to get a calf sucking, graft the calf onto a better young cow and say adios’ to the problem cow.
Good nutrition trumps high-falutin’ genetics.
Never sell hay, especially if there is any chance you might come up short for your own cattle before green grass.
Uniformity helps to achieve premium prices.
If you are sitting in a pickup waiting for a cow to have her calf, park sideways to the cow and try to act nonchalantly disinterested. If the pickup is facing the distraught cow, she regards the headlights as “eyes” staring at her.
My dad and other neighbors always used to say that you should half your hay left by the first of March. Of course in those days it was a lot harder to haul in stacked hay if you ran short.
An hour in the morning is worth two in the afternoon.
Glamour tends to dissolve in sweat.
One old neighbor that my dad worked for as a young man would say each evening before supper, “Well, we didn’t get much done today but we’ll give ‘er hell tomorrow.”
It’s easy to cut a big strap if you’re using someone else’s leather.
If the sun is shining, take along a coat. If it’s cloudy do what you want.
The only way to move cattle fast is to move them slow.
It’s amazing how dumb a cow can be. What’s more amazing is how many cowboys can’t outsmart a dumb old cow.
A good cowboy on a poor horse can get a lot more done that can a poor cowboy on a real good horse.
A boy is all boy; two boys are half a boy; three boys are no boys at all.
The two most critical weeks of each year for grass and hay production are the two middle weeks of May. If you can get some rain and sunshine and no late freezes during that time period, the rest of the summer usually goes quite well.
An extra inch of rain takes the place of a lot of management.
Substance over style.
Don’t judge a book by its cover.
Always keep your cattle saleable. If cattle in good condition are worth a premium if they are offered for sale, they are worth that same premium if you own them. If you have to sell them for some reason, they will command a good price.
Extra feed on hand, whether it be left-over grass in a pasture or year-old hay, is always an asset and not a liability. It is just as good as money in the bank, and you don’t have to pay income tax on it.
You can’t starve a profit out of a cow.
The best insurance is a fat cow going into the winter.
Fat is a pretty color.
A good horse is never a bad color.
It is easier to pull a chain than to push one. Often times the same principle applies in moving cattle. A feed pickup in the lead can save a lot of whooping and hollering and exasperation at the rear of the herd. If a bunch of cattle won’t cross a bridge, try stringing out a little cake in front of the ones in the lead.
If a bunch of cow/calf pairs won’t cross a barrier such as a bridge or slippery ice, rope a calf around its neck. When it bellers, its mother will come and bring many of her bovine buddies with her. Pull the calf across the barrier, and the rest will follow.
Portable corral panels are very handy. Often times a panel or two in a strategic place can make cattle sorting a whole lot easier.
An ounce of rain is worth much more than a pound of hail.
A job well done is a self-portrait of the one who did it.
A sign in an implement dealer’s store that holds merit: “Poor planning on your part does not constitute an emergency on our part.”
The best cow dog in Cherry County resides on our ranch. He stays in the house yard digging up petunias while we work cattle.
Very often a dog that shows up at a cattle working screws things up as much as if three hard-working cow hands had not come at all.
Chinks look cool, but if the wrestler on a calf’s head is wearing them, the fringe tends to be very much in the way of the workers who are vaccinating, installing ear tags, ear marking, implanting or dehorning.
If you think a horse might buck and give trouble, try leaving the spurs off of your boots. Often times, the extra inadvertent poking that a horse gets from a rider trying to stay on, only further antagonizes the horse and makes them buck harder.
A brand put on properly gives extra insurance that it will be easily seen for the rest of the bovine’s time on your ranch. This is your stamp of ownership, so apply it the best you can—not too deep but not too lightly. A brand that does not blotch is an extra bonus.
DISCLAIMER: All of these rules of thumb have served well through the years except for 2016. It seems like last year none of these rules worked. But this has always been a “next year country,” and I have high hopes for 2017 and beyond.
Feel free to add to the list, or to debunk some of my theories.
Some of these ideas vary greatly from those of others. I am not trying to offend anyone, but only offering food for thought.