Being Average

While thumbing through a status quo beef publication, I came across an article about “average producers.”   The leadoff sentence said, “Being average in the cow-calf business means you are probably just breaking even.”   That got my attention, so I read on.

When you look at cow-calf producers across the nation, you will find producers with several thousand cows all the way down to producers with just 20 cows.   Nationwide, most cow-calf producers have small herds that are subsidized by off-farm income.   Their cow-calf programs were never designed to be profitable.   Therefore, most cow-calf producers never make a profit.

One might think you must be a big producer to be a profitable producer.   That’s not true! In a ten-year period, most of the biggest producers do good just to breakeven.   They will have some good years mixed in with some bad years.   For the most part, the good years have high calf prices, while the bad years have lower calf prices.   This is something the producer has no control over.

The two things that have the greatest effect on profitability are cost of production and stocking rate (pounds per acre).   Fortunately, these are also the two things the producer has the most control over.

Reducing cost of production is easier than most cow-calf producers think – but it will usually require a slight paradigm shift.   Most expenses are fossil fuel-based.   Real success in this business will take place when we transition from fossil fuel energy to free solar energy.   Winter feeding is usually the biggest expense.   With the right kind of cows and with proper grazing management, most winter feeding can be eliminated.   Working with nature will also lower cost of production.

Increasing stocking rate and pounds per acre will never take place until you stop focusing on increasing pounds per animal.   Status quo producers have been focused on the wrong thing for the past 50 years.   With the right size and type of cow, most cow-calf producers can increase stocking rate by at least 30 percent.   With proper grazing management, it is possible to increase stocking rate by another 50 to 200 percent.

Back to the article in the status quo magazine…

The article started taking a turn for the worse after the third paragraph.   One of the suggestions provided was to wean calves with above average weaning weights.   If the average weaning weight is 520 pounds, then the author suggested we strive to produce calves that weigh 550 pounds at weaning.   I wanted to SCREAM!   How can intelligent people get it so wrong?

What happens when you increase weaning weight?   Cow size and maintenance requirements increase.   Consequently, stocking rate decreases and the cost of production increases.   It does not matter how big your cattle are if they are not profitable!

The two things we have the most control over – cost of production and stocking rate – are also the two things that have the greatest effect on our profitability – or lack thereof.   I truly believe most ranchers can easily double their profits once they STOP focusing on the wrong things.