“Additional items that should be considered are rate
Stan Bevers, Texas A&M University AgriLife Extension economist, Vernon
of return on the operations assets and a breakdown of the expenses,” Bevers says. “What were the largest expenses of the operation?” Once the largest expenses are identifi ed, ranch
the production, resource, and fi nancial performance of the operation was the previous year. At minimum, specifi c production items that should be determined are the weaned calf percentage, pounds weaned per exposed female and weaning weights. Information on the pregnancy percentage from the
previous year, calving percentage and calving interval should also be included. “This identifi es the past pro- duction level,” Bevers says. “Then, more importantly, it identifi es where production loss is occurring.” Resources should be analyzed to determine their
performance and effects on the production and fi nan- cial situation. There are 4 resource categories: • Natural resources such as pastures — It should include the past stocking rate, the amount of feed or hay that was fed the past year and the salt and mineral program used during the past year. (This can help determine if production loss occurs due to a mineral defi ciency.)
• Human resources — Are there employees and do they understand their role in moving the ranch forward toward its goals? It may not be enough to check calving heifers every 2 days. “Production loss which infl uences the fi nancial performance may be occurring due to a lapse or lack of the employees,” Bevers says.
• Machinery and equipment resources — Repairs and maintenance are major expenses, so the current condition of the machinery and equipment needs to be assessed. Building and improvement resources should be outlined. “The current condition of fences can be a major issue,” Bevers says. “Also, are the current water resources (tanks or windmills) con- ducive to the full utilization of the pastures?”
• Finally, the fi nancial situation and performance of the operation should be evaluated. SPA provides a good fi nancial analysis of the performance of the cow-calf operation. Minimal items to include here are net income from operations, net income per breeding female, the total expenses of the operation and total cost per breeding female.
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owners or managers should determine whether these expenses are manageable in the short term or the long term. “This is illustrated by comparing high feed costs versus high depreciation costs,” Bevers says. “A drought year can sometimes explain high feed
costs. Likewise, high feed costs are manageable in the short term. High depreciation costs can be explained, but can’t necessarily be alleviated in the short term.”
Business plan – section 2 Once the fi rst section is written, the second section
is relatively easy to complete if everyone agrees on the overall goals of the operation, Bevers says. A path to fulfi ll the goals should be set by everyone involved in the ranch operation. Farley says the plan should defi ne the goals and
objectives to achieve the mission. There should also be a timeline to achieve the goals. Key goals of the ranch should include: • Production goals — The goals should include weaned calf percentage, pounds weaned per exposed female and weaning weights.
• Resource goals — Based on the past year’s results, SPA provides a good
fi nancial analysis of the performance of
the cow-calf operation.
these goals could include reducing or increasing the stocking rate, reducing or increasing the amount of feed that is fed, or better utilization of a particular pasture by improving the water resources in that pasture.
• Financial goals — These goals should include a dol- lar amount of net income per breeding female. A calendar of events as to the progress towards each goal should be included. “The responsible parties for researching these goals
March 2016 The Cattleman 89
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