Opportunity in Management

Tips for making the cow herd more efficient and more profitable by 2036.

by Troy Smith, field editor

MANHATTAN, Neb (June 16, 2016) — Who would have thought, five years ago, that cow-calf producers would see calf prices at $275 per hundredweight (cwt.) at the same time that oil was priced at $30 per barrel? It’s evidence that no one can predict the future.

Curtis Mathis said a growing population with evolving social norms and perceptions of agriculture, increasing costs of production, labor challenges, and an uncontrollable pattern of precipitation would have topped the list of concerns for beef producers 20 years ago, and still do today.

“We can watch for trends, though” said Clay Mathis, Texas A&M professor and director of the King Ranch Institute for Ranch Management, during the 2016 Beef Improvement Federation (BIF) Annual Meeting and Symposium hosted June 14-17 in Manhattan, Kan. “We should try to prepare for what’s likely to happen — create a scenario for the future,” he advised the audience.

Mathis said a growing population with evolving social norms and perceptions of agriculture, increasing costs of production, labor challenges, and an uncontrollable pattern of precipitation would have topped the list of concerns for beef producers 20 years ago, and still do today. But what about 20 years from now?

Considering the proportional changes in calf prices and expense category indicators over the past couple of decades, Mathis thinks cow-calf producers should prepare for these trends to be somewhat similar in the future. In order to make the cow herd more efficient and profitable by 2036, producers should focus on high-leverage interventions at the production system level.

Lauding improvements to beef production, through genetics, Mathis lamented the fact that the cow-calf industry has made little improvement to overall pregnancy rate, weaning rate and total pounds of weaned calf produced per cow exposed. Despite advancements in genetics, total pounds of beef sold off the ranch has not improved much in the last 20 years and neither has reproductive performance.

“I think we have more opportunity for improvement in management than in genetics. That doesn’t mean genetics are not important,” stated Mathis, adding that opportunity certainly exists to better utilize advanced genetics in this country’s collective commercial cow herd. “But I believe there is greater opportunity for improving efficiency and profit for most operations through management.”

Mathis stated his belief that future success will not stem from reducing costs and increasing revenue, as mutually exclusive efforts. Rather, improved efficiency and profitability will come from optimizing expenses and performance in production systems that will yield the lowest unit cost of production for the most valuable calf that can be produced in the operational environment.

Gains may be made through long-term selection or strategic inputs that yield small improvements, but Mathis advised producers to seek high-leverage change for greatest impact. As an example, he called crossbreeding a high-leverage management decision offering more than hybrid vigor. Because of the effect on fertility, calf age at weaning and calf weaning weight are improved. Because crossbreeding fosters cow longevity, fewer replacement females are needed annually, leaving more forage available for cows already in production.

Mathis said another high-leverage consideration may exist is how a producer calves heifers. Since tending first-calf heifers often requires more labor, producers should look for ways to do it with less labor. It may mean giving up a bit of production performance, but producers could realize an improved economic outcome. Hay feeding is yet another high-leverage consideration, because of the costs associated with labor, equipment and storage.

According to Mathis, cow-calf producers most likely to be efficient and profitable in 2036 will have adapted their production systems to optimize labor, purchased feed, and depreciation in ways that minimize unit cost of production. He believes successful operations will employ technologies proven to provide a positive return on investment, consistently market calves and cull animals at their highest value, and manage price risk effectively.

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