The Rural Voice, 2003-01, Page 37Advice
Look at more than price
BY JANICE BECKER
Are you really making money on
your cattle or are there areas of
inefficiency which could move the
business from red to black?
Those were just two of the
questions put to beef producers at the
beef symposium in Brussels,
November 28.
While many farmers may just look
at the selling price for their calves,
Joanne Handley and Nancy Noecker
of OMAF asked whether they had
calculated all the costs associated
with raising those animals to market
age.
"You must look at other aspects
than price," said Handley. "The
value per head incudes weight,
quality and vaccinations. You have to
look at the size of the cow that fed
the calf and what it took to feed the
cow to get the calf to market weight.
If you don't know what that cost is,
how can you know if there was a
profit?"
Handley outlined a cost of
production (COP) formula which
incorporated the annual cost of the
cow herd compared to the total
pounds of calves produced.
From there, the farmer must
determine the unit cost of production
for the cost per pound.
"How can we make changes if we
don't know the costs?" she asked.
By comparing two sample herds,
Handley showed how the herd with
heavier weights and a higher market
price was not necessarily the one
with greater profits.
In determining the whole herd
differences, Handley looked at
average weaning weights, weaning
weight per cow exposed as there
were some deaths or twins and the
calving interval as well as external
revenue generated by the herd such
as bull sales.
The feed costs varied greatly
between the two examples when
Handley looked at the purchasing of
feed, forages and grains.
For variable costs, she included
items such as'animal health and
breeding costs, hired labour,
to see efficiency in cow/calf
transportation, hydro and operating
interest on loans.
Fixed costs included taxes,
insurance, rent and interest or
depreciation costs.
The COP was then calculated by
adding feed costs with variable and
fixed expenses which were
subtracted from the revenues.
Once the Toss or profit was
determined, Handley asked farmers
to look at which components were
stopping profits from being realized.
The first place to look would be
feed waste, she said. The animals
only consume two to two -and -a -half
per cent of their body weight so one
measure would be to protect the hay.
Once efficiencies have been found
in one herd, Noecker said it was
important to then compare those
numbers with provincial averages.
OMAF is currently trying to
establish a data base so that
producers can benchmark their herd
against others,.allowing them to find
strengths, weaknesses and area for
improvement.
By keeping and using records.
Noecker said farmers would be able
to compare their own herd production
over time. then against benchmark
numbers and with the beef cycle to
find what works for an individual.
A database would also give
producers an opportunity to learn
from each other.
"As you add herd management and
intensify herd knowledge, there is a
decrease in unit cost for products."
said Noecker. "It takes time and
management to increase dollars. Beef
cows can make money."
OM'AF, Ontario Cattlemen's
Asociation and Beef Improvement
Organization is looking for 50 beef
producers with at least 50 head to
collect records for at least three years
for inclusion in the database. (All
identifying information will be kept
confidential.)0
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JANUARY 2003 33