A New Approach to Cost of Production Benchmarking

This is Part Three of a three-part series (see Part One and Part Two).

Editor’s note: this article is also available in French. Download the translated version here. 

When getting a clear financial picture for your operation, basic record keeping often isn’t enough. That’s why it’s essential to know your cost of production.

While many aspects of the industry are uncertain, thankfully there is the opportunity to examine what can be, for the most part, controlled – your cost of production.  As a producer, the ability to measure and manage those components of your operation that are within your control is a powerful tool. Why not take advantage of that tool by signing up to participate in an upcoming focus group?

The Canadian Cow-Calf Cost of Production Network (CDN COP Network) will develop benchmarks for specific production systems and ecoregions across the country. Scenarios will be developed for what future farms could look like utilizing the 5% Rule to identify where incremental improvements could be made around productivity, input costs, and output prices. Each production system will have its own set of limitations and opportunities where greater focus may be beneficial. Continue reading

Networks Make The Dream Work

This is Part Two of a three-part series (see Part One and Part Three).

Editor’s note: this article is also available in French. Download the translated version here. 

As the industry has been rocked by COVID-19, volatile market prices and uncertainty have occurred. There is an opportunity for producers to examine what they can control – their cost of production. During the boom years when prices are high it is easy for costs to get out of hand. You may be considering changes to your operation but are not sure where you will get the biggest bang for your buck.

The Canadian Cow-Calf Cost of Production Network (CDN COP Network) will develop benchmarks for specific production systems and ecoregions across the country. Scenarios will be developed for what future farms could look like utilizing the 5% Rule to identify where incremental improvements could be made around productivity, input costs, and output prices. Each production system will have its own set of opportunities, limitations, and areas where greater focus may be beneficial. Consider cattle operations with different production systems:

  • A beef operation in the east is considering raising dairy-beef but is uncertain about the costs and management changes needed to succeed.
  • A small, land-locked operation may be utilizing multiple income streams from multiple different commodities to manage risk. The focus is on using each acre in different ways throughout the year to generate revenue.
  • A large, specialized operation may be focused on economies of scale in purchases and sales and efficiencies in labour productivity.

When looking at competitiveness and profitability, each region needs to evaluate the limitations and opportunities unique to them. Is land, labour, or capital the limitation? Will the biggest impact for the operation come from reducing input costs, or improving productivity, or increasing price? Continue reading

Why a Cost of Production Network?

This is Part One of a three-part series (watch for Part Two and Part Three in the coming weeks).

Editor’s note: this article is also available in French. Download the translated version here. 

Canada is the sixth largest beef exporter in the world. Live cattle to the United States are also a substantial business. Cost of production and price competitiveness are key aspects to any major exporting commodity, along with regulatory environment and available resources. The beef industry must be profitable and competitive to secure land, labour, and capital otherwise those investments will go into other commodities that provide a greater return on investment.

The Canadian Cow-Calf Cost of Production Network (CDN COP Network) has been developed collaboratively with provincial coordinators and funded by the Beef Cattle Research Council. Industry has taken a lead role in coordinating the Network working with local expertise in each province. This information will support cow-calf producers as they evaluate how to evolve with new technologies and enhance competitiveness in an international marketplace. Continue reading