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The Grazier's Gazette

Planning for success

Farm scene with silos
Knowing what your true goals should be will help you maximize your future.

When I was in graduate school, many years ago, a very good quantitative geneticist, Dr. Tom Cartwright, stressed two points in his courses on animal breeding: keep the number of traits for which you select low in order to be able to have enough selection pressure to be effective, and do not waste time and effort selecting for traits with low hereditability.

He also mentioned without a great deal of emphasis the rather obvious point of being certain that you are selecting for the right traits. I, of course, knew what was important and spent the next ten years selecting heifers based on weaning and yearling weights and turned a herd of easy keeping, moderate framed and profitable cattle into a bunch of oversized welfare hogs that required so much in the way of inputs that they could not be routinely profitable.

I bring up the subject to illustrate a point. It is very easy to be effective in what you are doing and yet be doing the wrong thing. Most of us who have been involved in agriculture for any period of time are carrying a lot of baggage as to what we must do and what we must not do. Many of the things at the top of the baggage list relate to the confusion as to whether our goal is production or profitability.

Even if our goal is clearly profitability, the means of achieving profit are not always obvious. Conventional wisdom advocates generating more income by producing more pounds of beef, bushels of corn or tons of hay. Income is indeed important but it is only one part of the equation: profit = income (production X price) – expense.

The amount of income produced is not nearly as important as is the difference between income and expense. Going back to my own example, I got to a point where I consistently had a 90%-plus weaning percentage and 210 day weaning weights of 550 – 575 pounds with very high stocking rates. The problem was, because of high input costs, we were profitable only when the cattle price cycle was high. I was doing all the “right” things to increase production and I got production but in the process I lost profitability.

Prevailing wisdom in agriculture today stresses using “cash flow” in making production and marketing decisions. You must have cash flow (more coming in than is going out) but it is dangerous to select production techniques based solely on whether or not they will cash flow. To be valid a production practice must pay for itself but simply because it will cash flow does not guarantee that the practice should be used.

There are other considerations that need to be addressed: is the expense of the practice the best use of the money at that point in time and is your assessment of the value of the practice valid? The example that comes to mind is the research that shows that X number of dollars spent on nitrogen fertilizer will return X + Y dollars worth of grass. There are several potential problems with this analysis all dealing with how the extra grass effects profitability:

  • Is extra grass needed (and can be profitably utilized) by the operation?
  • Is the extra grass produced at a time when grass is in surplus and thus must incur storage costs?
  • How does the nitrogen fertilizer affect soil health and thus future profitability?
  • How will nitrogen effect the distribution of forage growth over time; will some species be shaded out by the sudden burst of growth or damaged by the nitrogen (legumes)?
  • Is fertilizer the best use of money at this time?

This is not an indictment of research but it does point out the problem with making management decisions that affect an entire operation based on research that is focused on one part of the total enterprise. It is a dangerous (and expensive) endeavor to manage with the idea of using only "best management" practices.

Managing a grazing program requires attention to all aspects (ecological, financial, and human) of a complex situation that is always changing and the understanding that all parts of the program are interrelated and interdependent. The best way I know to do this is through planning.

Plan the grazing; how much stock (and wildlife) will be where – when –why and how will they be handled?

Plan the finances; understand the income to expense ratios and the degree of financial risk of each enterprise in the operation and allocate resources accordingly.

Plan the human aspects of the operation; knowledge, energy, time, and passion are all inputs necessary for success.

Finally, use all available information and make the best plans possible but understand that these plans will have faults. Monitor the plans with the purpose of finding faults and change the plan as soon as problems are identified. Many cow people are afflicted with a malady that makes sitting at a desk thinking and planning extremely painful but trust me! The results are worth the pain.

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