| | Harlan Hughes recently did a tour of producer workshops in Southern Alberta, finishing off as a feature speaker at the Western Canadian Grazing Conference in Red Deer. The focus of his presentations in Alberta was the economics of the cow/calf business on the prairies and his vision of the industry into the future.
Based upon his many years of experience working with northwestern US cow/calf producers, Harlan identified some evolving industry characteristics. In the not too distant future, the industry will:
- be driven by unit production costs,
- have information-driven management systems,
- involve a high degree of management intensity, and
- be information-based.
Within this context, Harlan described four basic management systems he observed in cow/calf operations. These revolve around creation and use of production and economic information for management. Information collected at each level was included in the next level. The following chart shows the relationship between management intensity and unit production costs.
The first level of management, Harlan described as "I just run cows". Sales receipts were the extent of records kept.
The second level was, "I weigh calves". In addition to sales receipts, records of calf weights (average or individual) were kept.
The third management level was "manage by cows", cows", ie. cows were individually identified. Production information was compiled and used to measure and rank cow productivity over time.
Harlan’s fourth management level was "managing by unit cost of production". Records are maintained, analyzed and used in management decisions -- driving at managing costs per cwt. of calf produced, both at an individual cow and herd level.
The key messages from Harlan’s material are:
- producers tend to get locked in at a "management level", not recognizing that the "next step" is to increase the information they collect and use in their management,
- as intensity of management and herd knowledge increases, management control increases,
- cost identification leads to reduction in unit costs of production, and
- low cost herds are typically high profit herds.
Darren Chase
Livestock Market Analyst
Phone: 780-422-4056 Fax: 780-427-5220
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