| | Times are good in the cow-calf industry! But as surely as fall turns to winter, we know that calf prices will peak and eventually head the other way; we just don’t know when.
Cattle cycles are difficult to predict with any accuracy, but becoming a "low-cost producer" can help you prosper during the high prices and at least hold your ground during the lows. At a recent conference I attended, Topper Thorpe, an ex-CEO of Cattle-Fax, showed us that over the past 20 years, American cow-calf producers just broke even. Of course there have been good years and bad years, but when you average it all out, income has equaled expenses and there has been no profit.
However, when Mr. Thorpe considered low-cost and high-cost producers separately, he found that there was a $100 per head difference. He also showed that this difference was consistent through good years and bad. Low-cost producers were profitable through all but the lowest prices while their high-cost cousins consistently suffered losses. Alberta results show the same pattern, with low-cost producers becoming profitable in 1997 while high-cost producers were still in a loss position in 1999.
Before you can become a low-cost producer, you have to figure out your current cost of production, and the CowProfit$ software helps you do just that. It’s designed to work from your financial and production records to calculate your costs per cow wintered and per pound of calf produced. It analyzes your cow-calf enterprise as well as those enterprises that play a supporting role, like forage and pasture. The end result is a new and clearer financial picture of your whole farm operation.
Once you’ve calculated your own costs, the next step is figuring out how to drive them down. Cost of production benchmarks are available from AAFRD’s Economics Unit. They’re readily available on the Internet.
Reports generated from the CowProfit$ software follow the same format as the benchmark data, making direct comparisons easy. Measuring your costs over several years and studying the trends, can lead to even better cost-cutting information. What better time to start the process of becoming a low-cost producer, so that when the cycle turns you’ll be able to stay profitable longer?
The CowProfit$ software was released last summer. AAFRD’s Beef, Forage and Farm Management Specialists are familiar with it and would be happy to discuss how it might work in your operation. As well, we’re planning information sessions and hands-on workshops in most regions of the province. They’ll start in November and continue through the winter. Contact your nearest AAFRD district office for information about sessions in your area. If you’d like more information about the software itself, try downloading the free demo on Ropin the Web . A full working version costs $150 plus GST.
For more information contact:
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Jeff Millang
Beef Specialist
Olds, AB
(403) 556-4220
| Ted Darling
Farm Management Specialist
Airdrie, AB
403-948-8524
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We’d like your comments and questions about the articles featured in this newsletter. Suggestions for future issues are also welcome. Please contact me at:
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E-Mail:
Phone:
or, by mail, at: | Dale Kaliel
780-427-5390
302, 7000-113 Street, Edmonton, Alberta T6H 5T6 |
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AgriProfit$ | .
If you’d like to learn more about and/or participate in our research program, please contact me at the above.
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Cow Profit$ | .
If you’re interested in the CowProfit$ software, training or seminars, contact:
Ted Darling at 403-948-8524, or Jeff Millang at 403-556-4220 |
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