CATTLEFAX TRENDS
&
KEY FINANCIAL PRODUCTION DATA
The IBBA is proud to bring you the CattleFax Trends Publication. Look for this article each month in the Brangus Journal and Frontline Beef Producer. If you would like to learn more about CattleFax, please go to www.cattlefax.com. Collecting and analyzing data is becoming more important each day for businesses in all types of industries. In the cow-calf segment, there is almost an unlimited amount of data that can be acquired and analyzed. The difficult part is having the time and resources to not only gather but also study the information. However, capturing some of the basic measurements, if not currently being done, can provide significant benefits to making sound business decisions for your operation. In the cow-calf business there are two general categories, financial and production, the data can fall into. When it comes to analyzing finances, tracking cash flow is the first step. Most producers have no problem remembering what their calves sold for, but that is only half of the equation for profitability. The only way to calculate a breakeven for your calves is to know your costs. Understanding where money is spent is key to making improvements to your bottom line. For example, if you put up your own hay but never figured the costs, it is not possible to compare against alternatives. Maybe it is cheaper to hire someone or purchase most of your hay needs. Obviously, there are numerous factors that go into a decision like this, but it begins with measuring expenses. Tracking finances can be done several different ways. It can be as complex or basic as you want to make it. Using a detailed accounting software system is what everyone would use in a perfect world. However, there are added
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costs involved, and recording every single item could be unnecessary depending on your operation. A couple simple, yet effective options are using receipts or bank statements/ check stubs to track expenses. The recoding frequency can vary from weekly to annually. Although, to truly keep tabs on income and expenses, it is recommended to track cash flow at least on a quarterly basis. Once you have decided on a process, categorizing revenue and expenses will help with analysis. Depending on your operation and what you plan to do with the data will dictate how detailed you need to be. Nonetheless there are several classifications that are necessary for everyone. Pasture, feed, labor, vet/medicine, and bull/breeding are variable costs that apply to basically all cow-calf businesses. Some common fixed costs or overhead include facilities, equipment, and utilities. For cow-calf operations, significant revenue may only happen once or twice a year, when marketing calves. But it is important to keep track of any other forms of income throughout the year, such as cull cows and bulls. Once an operation has a sound accounting system, this will allow producers to hone in on key metrics to improve their bottom line. In CattleFax’s annual cow-calf surveys, most of the operations that fall under the “high-return” category have some of the lowest cash cow costs. As we’ve experienced the last couple years with black swan events, you cannot control the direction of the market. However, there could be
