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COWCALF ANALYSIS KEY INDICATORS OF PROFITABILITY

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Weaning rate = # of calves weaned / # cows exposed ... 'High profit producers wean heavier calves at lower costs' (SD, ISU, ND) ... – PowerPoint PPT presentation

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Title: COWCALF ANALYSIS KEY INDICATORS OF PROFITABILITY


1
COW-CALF ANALYSIS -KEY INDICATORS OF
PROFITABILITY
  • Range 215
  • February 4, 2004

2
PROFIT
  • PROFIT represents a managers ability to
    manipulate the interface between production and
    economics.
  • Money, people and energy flow to where PROFITS
    are the highest..
  • Lets talk about PROFIT, and the cow-calf
    enterprise.

3
WHICH IS MORE PROFITABLE??
HERD B 95 Calf Crop 600 lb Wean Wt 80 Choice
  • HERD A
  • 90 Calf Crop
  • 450 lb Wean Wt
  • 60 Choice

4
WHICH IS MORE PROFITABLE??
HERD D Annual Cow Costs 350
  • HERD C
  • Annual Cow Costs
  • 250

5
UNIT COST OF PRODUCTION/CWT OF CALF PRODUCED
  • 280 / 400 lb 70 / cwt

6
UNIT COST OF PRODUCTION/CWT OF CALF PRODUCED
  • 280 / 400 lb 70 / cwt
  • 350 / 500 lb

7
UNIT COST OF PRODUCTION/CWT OF CALF PRODUCED
  • 280 / 400 lb 70 / cwt
  • 350 / 500 lb 70 / cwt

8
UNIT COST OF PRODUCTION/CWT OF CALF PRODUCED
  • 280 / 400 lb 70 / cwt
  • 350 / 500 lb 70 / cwt
  • 420 / 600 lb 70 / cwt

9
Unit Cost of Production
  • UCOP is a relationship!
  • UCOP can be low with either high or low levels of
    cost or production.
  • If you have high costs you must have high levels
    of production.
  • If you have low levels of production you must
    have low costs.
  • Low UCOP is positively associated with High
    Profit!
  • Profits Solve Problems!

10
Literature Review
  • M. B. Johnson (SD Exp. Sta. Bull),1930 study of
    60 ranches from 4 states, 3 consecutive years
  • Quantified
  • size and type of ranch
  • production systems and performance
  • financial performance with accrual adjustments
  • Recommendations centered around increasing
    weaning rate

11
Literature Review
  • Dooley et al. ( JAS, 1982), benchmark data from
    two year survey to characterize production of
    cow-calf operations in SD.
  • WW - 484 lb
  • WR - 78
  • Age at weaning - 209 d
  • Length of breeding season - 95 d
  • Beginning calving - 117th day

12
Literature Review
  • Hoyt and Odekoven, (1992 SDSU Beef Report)
    summary of 8 years of SD Farm Mgt. data from east
    west river herds.
  • WW - 497 lb
  • WR - 91
  • High profit herds were able to produce larger
    calves at lower cost
  • Recommended that investment in depreciable
    purchases be controlled

13
Literature Review
  • 1992, leaders of cattle industry adopt SPA
    guidelines as industry standard
  • Standardized Performance Analysis
  • Goal was to have common language and methodology
  • Weaning rate of calves weaned / cows
    exposed
  • Included production , financial and economic
    analysis

14
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15
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16
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17
HERD PROFITABILITYIOWA BCBR (1982-1994)
  • PROFIT
  • TOP 1/3 LOW 1/3
  • NET PROFIT 126 -107
  • COW COSTS 310 437
  • REVENUE 436 330

18
Literature Review, Summary
  • General statements
  • High profit producers wean heavier calves at
    lower costs (SD, ISU, ND).
  • Harvested feed costs are the largest segment of
    annual cow costs should be reduced (SD, ISU,
    ND, IL, MI, NE).
  • High profit and low profit producers spend the
    same on Vet. Med. and breeding stock. CattleFax

19
Barry Dunn PhD
  • Data collection
  • Field data, voluntary participation
  • Followed SPA guidelines
  • 239 individual SPA reviewed
  • 185 herds in final data set
  • 185 with SPA P
  • 148 with SPA P and SPA F

20
Region 2 99
Region 3 60
Region 1 26
ND 1
MT 54
MN 3
SD 43
WY 6
IA 6
NE 68
KS 10
Location of participants by State and Region
21
North Central SPA, Dunn 1999
  • Data divided into 3 profit groups, based on ROA
  • High Profit Top 16
  • Low Profit Bottom 16
  • Medium Profit Middle 68

22
North Central SPA, Dunn 1999
  • ROA as measurement of profit vs Net Income
  • Net Income represents accumulation of
  • ROA measures the managerial efficiency of the
    accumulation of based on invested
  • Data not presented in terms of size of cowherd
  • Three measurements of size, size had no affect on
    SPA P or SPA F measurements

23
SPA Production Comparison
24
SPA Production Comparison
25
SPA Production Comparison
26
SPA Financial Summary
27
SPA Financial Comparison
28
SPA Financial Comparison
29
SPA Financial Comparison
30
Summary
  • When compared to Low or Medium, High profit
    enterprises have
  • gt weaning
  • No differences in
  • Weaning weight
  • Death loss
  • Pregnancy
  • Replacement rate
  • Calving distribution
  • No differences in size of operation.

31
Summary
  • High profit enterprises have
  • lt Investment (High Low vs Medium)
  • lt Total costs
  • lt Vet Med (High Medium vs Low)
  • lt Depreciation
  • lt Breakeven (UCOP)
  • gt Revenue
  • gt Net Income

32
Summary, So HOW?
  • How do I lower investment?
  • Find a way not to need IT !
  • Grazing vs. Hay!
  • Supplement vs. Feed Quality!
  • Rent rather than own!
  • Time of calving!
  • Winter Protection
  • Feed
  • Equipment
  • Increase Bull to Cow ratio
  • Two year old bulls vs. Ylgs.
  • Run bulls 1 year longer

33
How many cows?
  • The Net Income in the High Profit group can pay
    off all debt in 10 years and provide 35,000 of
    family living with 200 cows!
  • To provide 35,000 of family living with the
    Medium Profit group, it will take 972 cows and
    you will pay off no debt!
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