CATTLEFAX TRENDS

&KEY FINANCIAL PRODUCTION DATA

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Collecting and analyzing data is becoming more costs involved, and recording every single item could be important each day for businesses in all types of industries. In unnecessary depending on your operation. A couple simple, the cow-calf segment, there is almost an unlimited amount yet effective options are using receipts or bank statements/ of data that can be acquired and analyzed. The difficult part check stubs to track expenses. The recoding frequency can is having the time and resources to not only gather but also vary from weekly to annually. Although, to truly keep tabs on study the information. However, capturing some of the basic income and expenses, it is recommended to track cash flow at measurements, if not currently being done, can provide least on a quarterly basis. significant benefits to making sound business decisions for Once you have decided on a process, categorizing revenue your operation. In the cow-calf business there are two general and expenses will help with analysis. Depending on your categories, financial and production, the data can fall into. operation and what you plan to do with the data will dictate

When it comes to analyzing finances, tracking cash flow is how detailed you need to be. Nonetheless there are several the first step. Most producers have no problem remembering classifications that are necessary for everyone. Pasture, feed, what their calves sold for, but that is only half of the equation labor, vet/medicine, and bull/breeding are variable costs that for profitability. The only way to calculate a breakeven for apply to basically all cow-calf businesses. Some common your calves is to know your costs. fixed costs or overhead include facilities, equipment, and

Understanding where money is spent is key to making utilities. For cow-calf operations, significant revenue may improvements to your bottom line. For example, if you put only happen once or twice a year, when marketing calves. But up your own hay but never figured the costs, it is not possible it is important to keep track of any other forms of income to compare against alternatives. Maybe it is cheaper to hire throughout the year, such as cull cows and bulls. someone or purchase most of your hay needs. Obviously, Once an operation has a sound accounting system, this there are numerous factors that go into a decision like this, will allow producers to hone in on key metrics to improve but it begins with measuring expenses. their bottom line. In CattleFax’s annual cow-calf surveys, most

Tracking finances can be done several different ways. It of the operations that fall under the “high-return” category can be as complex or basic as you want to make it. Using have some of the lowest cash cow costs. As we’ve experienced a detailed accounting software system is what everyone the last couple years with black swan events, you cannot would use in a perfect world. However, there are added control the direction of the market. However, there could be

specific costs some operations have more authority over that would improve profitability.

Another capability that comes from recording cash flow, especially after a few years, is more accurate budgeting. For some operations this is not important, but for those that are required to, or see value in budgeting, historical data should help refine annual expectations.

Aside from spending the time to precisely document finances, there are more potential challenges when recording cash flow. Oftentimes there are other enterprises besides the cow-calf business. For example, the same equipment is likely used for both a farming and cow-calf enterprise, so it would be misleading to apply all equipment costs to one enterprise. Also, it is recommended for operations that retain ownership through the stocker or backgrounding phase to have two separate enterprises. An entire article could be written about how to correctly allocate expenses and revenue to the appropriate enterprise. Bottom line, it is a very important step to get an accurate profitability measurement.

On the production side there is a long list of data points that can be collected, as seen in the accompanying table. Obviously, some are more critical than others. One number that sounds easy, but is the most significant, is inventory. This includes cows, calves, and bulls. A basic example to prove how important accurate inventory records are, is calculating cash cow costs. Let’s assume your total cash cow costs are $350,000 and you estimate you run 500 cows, equating to $700 per cow. In reality, 490 head contributed to the total cash cow costs – a difference of roughly $14 per head. That changes the breakeven on a 550-pound calf by over $2.50/cwt.

Not having an accurate head count to estimate cash cow costs is likely a rare occasion. But other key production metrics require precise inventory numbers throughout the year. One of the most popular calculations that is used to measure the productivity of an operation is weaned calf crop percent or calves weaned per cow exposed. The math is fairly self-explanatory, but you are comparing how many cows were exposed during the previous breeding season relative to the number of weaned calves. This is a good starting point to see whether there are any potential fertility, health, or nutrition issues in the cowherd. If this measurement brings up a red flag, a deeper dive into pregnancy rate, number of calves born, or death loss is necessary.

A couple of other metrics that can be useful when making decisions that just require time and basic record keeping is calf date of birth and cow age. These two variables can be especially useful for operations that keep their own replacements. An older cow that consistently calves early, implies that she has bred back on time to maintain a shorter calving interval. This suggests she possesses the optimal maternal genetics that should be kept in the herd. On the other hand, young cows that slip to late in the calving season should likely work their way toward the top of the culling list, since it is very difficult for a cow to move up her calving date. Obviously, other factors need to be considered when selecting replacements or culling. However, with fertility or reproductive efficiency being the single most important economic trait for a cow-calf operation, these two variables that are simple to track should not be left out when decisions are made.

The saying “you can’t manage what you don’t measure” is relevant in today’s cow-calf segment. In a business that historically has very tight margins, using supporting data to make decisions has never been more pivotal. While profitability is expected to improve, the odds favor the need for data will only increase in the future. Like it or not, consumer preferences for sustainability and traceability continue to gain in popularity. This will create the need for more documentation and measurements to be collected.

To help identify which measurements are necessary to improve your operation and how to use them, CattleFax provides a very detailed online breakeven calculator for producers. Visit www.cattlefax.com/ccbe/ to analyze your business.

UFFALOE CATTLE has been your trusted partner B At the Genetic Edge Sale 5, we added the 3011 cow family in the development of International Red Brangus Cattle from Dennis Kmiec at Triangle K (IRBBA #9). BCC Ms Rocky since 1993 when we purchased our first IRBBA Red Bran- Street 3011U still produces outstanding calves. She is a donor gus heifers from John Werner at Dogwood Creek (IRBBA and granddam of many 3011 offspring in IRBBA herds. Her sire #10). The Dogwood Creek 22 cow family works in our herd was Sureway’s Rocky Street 227N, a 2-time IRBBA Show Sire today and a 22 heifer is offered in the 2021 Divas Sale at the of the Year, owned with Dennis Kmiec. We acquired the 124 and 30th IRBBA Anniversary Meeting. 227 cow families, from Jim and Linda Hunt at Sureways (IRBBA Wilma and Bruce Buffaloe were the high volume and high #2). A granddaughter of our donor, BCC Ms Pretty Girl 124S3, dollar buyers at Genetic Edge Sale I in 1995, where we added was a champion at the 2021 International Show. the internationally famous and champion 307 cow family from In 1997, we acquired the 53 cow family from Bryan Raybon Don Cox at Cox Excalibur (IRBBA #5). BCC Ms Buffaloe 307S at K&K Farms (IRBBA #3). Buffaloe’s Ms Victoria 53F3 was is a CX Chief Cardinal 847/G daughter who produces cham- purchased by Chase Lund as a show calf. She and her heifer pion calves when mated to BKC Superman 101U. Embryos calf were crowned Grand Champion Cow/Calf Pair at the 2021 from this mating are available. Superman’s dam, BCC Nancy’s International Show.

Byte 101R1, is a Buffaloe-generated female. You will find a Ask IRBBA Breeders whose genetics work in their herd, on grandson from our 101 cow family as a champion in the 2021 the ranch, and in the show ring and their answer is BUFFALOE

International Show. CATTLE. Come visit us at the ranch at Nursery, Texas!