RANCHING Business
If you’re not measuring and monitoring, you’re really just a
hunter-gatherer, content to take what the circumstances provide.
With that said, anyone’s ability to identify issues
goals? What resources does the operation have that are complementary to achieving those goals? “Sometimes the goals aren’t realistic with the re-
sources at hand,” Aljoe says. “In that case, these have to be reconciled by identifying the most pressing issues.” Those needs could include soil and forage manage-
ment, stocking rate, surplus equipment, livestock man- agement and marketing. Generally, it is a combination of several factors, he says. “Many times producers don’t know where the pain
is coming from, so they want to treat the symptoms,” Aljoe says. “It’s important to dig until you identify and correct the underlying cause.” For instance, producers may notice they have less
grass and more weeds, and that they’re feeding more hay than ever. With those symptoms, the underlying issue may actually be too many cattle for the avail- able forage. Those producers may need to reduce herd numbers to get better forage response; increasing pro- ductivity per head or per acre, he says. “It’s counterintuitive to consider destocking as a
strategy for making more money, but only because we’re conditioned to think about inventory instead of margins,” Aljoe says. When producers are evaluating their operations, it
can be helpful to involve objective advisors such as the consultants at the Noble Foundation. By working with many operations, the advisors have amassed broad, deep experience and can help identify problems that producers may overlook or minimize.
It takes 3 years of record keeping to capture enough data to identify a trend.
68 The Cattleman January 2015
is directly related to the availability of good records, both production and business. Start with the basics and build from there, knowing that it takes 3 years of record keeping to capture enough data to identify a trend, he says. “Establish a goal and a 3-year management plan,”
Aljoe says. “Monitor and measure the progress and make adjustments along the way, but don’t abandon the plan.” Keep the plan simple and execute the best manage-
ment practices well. “Most people need to simplify and master the basics
of their operation before making it more complex by adding additional enterprises,” Aljoe says. “For most cow-calf operators, a simple terminal system usually makes good business sense.” Regardless of the business’s complexity, expenses
and revenues provide important clues about what is going on. In general, expenses provide a good starting point for identifying potential money-making changes in budget categories with the greatest expenditures, he says. It’s important to be able to gauge what is an ap- propriate expense per head or per acre for an operation of the ranch’s size, location and pasture resources. This information can come from research or from advisors such as the Noble Foundation, Extension Service, or USDA Natural Resources Conservation Service (NRCS) professionals. The corollary to the revenue side is determining
the appropriate production to achieve the necessary revenue, he says. Again, objective sources can help. Revenue issues often arise from marketing strategies or, more likely, the lack thereof, he says. Of course, expenses and revenues can’t be analyzed
without good records. Record-keeping is essential because it allows ranchers to measure, monitor and, therefore, manage. “Producers can’t manage what they don’t measure,”
Aljoe said. “If you’re not measuring and monitoring, you’re really just a hunter-gatherer, content to take what the circumstances provide.”
thecattlemanmagazine.com
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