February: Record-Keeping Source: Steve Swigert, agricultural economist
Good records, both fi nancial and production, help
producers spot trends, pinpoint cyclical changes and see things realistically. Record keeping is essential because it allows ranchers to measure, monitor and, therefore, manage. “For producers who are just starting a record keeping
system, my advice is to keep it simple,” says Swigert. “Envision what you’d like to see in a report and then fi gure out what data you need to collect to generate that report. For many producers, their primary questions can be answered by accumulating and analyzing 2 or 3 key pieces of data.” Expenses and revenues provide important clues
about what is going on. Generally, expenses provide a good starting point for identifying potential money- making changes in budget categories with the greatest expenditures. It is important to be able to gauge what an appropriate expense is, per head or per acre, for an operation of a particular ranch’s size, location and pasture resources. The corollary to the revenue side is determining the
appropriate production needed to achieve necessary revenue, he says. “It takes 3 years of records to cap- ture enough data to spot a trend and make confi dent, data-based decisions, but 1 year of data is better than none,” Swigert says.
March: Stocking Rate Source: Chad Ellis, pasture and range consultant
“Stocking rate directly infl uences animal productiv-
ity, forage production, forage quality, species composi- tion for the long-term, plant physiology and operational profi tability,” Ellis says. “Pastures that are routinely closely-grazed and
weedy are classic ecological signals, as is visible, active erosion,” Ellis says. “Producers often fi nd their expen- ditures for feed and hay climbing. On the production side, pregnancy rates and weaning weights will drop.” Stocking rates should be set based on forage pro-
duction, hedging on the conservative side. “Produc- ers associate the number of head with gross revenues but fail to associate it with gross margins,” Ellis says. “Gross margin per unit of land is a better metric to use.” To the surprise of many, the fi rst step to improv-
ing gross margins is reducing stocking rates because of the associated reductions in production costs.
April: Pasture Management Source: James Locke, soil and crop consultant
“A producer should strive to minimize the need to
offer hay and feed, because it’s easier — and usually more cost-effective — to take the cattle to the grass/ feed than it is to take the grass/feed to the cattle,” Locke says. “Having access to ample forage is a key ingredient to economic success.” Not all grasses are created equal; therefore, good
pasture managers understand that native pasture and improved pastures have to be managed differently. “Obviously, you have to have rain to grow grass,
but you also have to have grass to grow grass,” Locke says. Mismanaged forage creates an environment ripe for pasture management problems such as weed and brush encroachment and erosion. The fi rst step to making the most of what a ranch
has is ensuring that the stocking rate is correct, so the supply and demand for forage are balanced. Then, the grazing must be managed to allow ample time for the forage to grow and recover. The other primary considerations are soil fertility, and weed and brush management.
May: Net-Margin Equation/Marketing Source: Dan Childs, agricultural economist
Cattle producers’ long-term sustainability depends
on their ability to manage revenues and costs. The margin resulting from the difference between revenues and costs is profi t. “Revenue – cost = profi t” is also known as the net margin equation. It determines the ever-important bottom line of an operation. “To strengthen the bottom line, producers should
work to increase revenues through good marketing and reduce costs through good decision-making and good management.” In a purchased stocker operation, the biggest expense
in the enterprise budget is the cattle, so “the fi rst fac- tor in success is getting the right type of cattle for the right price,” Childs says. The second biggest expense is the feed cost. “The other way to make a really big difference in
the bottom line comes from doing a lot of small things right every day.” Increasing revenues also requires attention to de-
tail. “Producers are paid by pounds across the scale, so it makes sense to minimize shrink,” Childs says. Operators should also consider whether it is in their best interest to sell in the country, at an auction market or through a specialized venue.
MORE
tscra.org December 2015 The Cattleman 73
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