A Guide to Keeping Records That Help Make Profitable Decisions

The start of a new season and year is the perfect time for beef producers to look back on what went well and think ahead to what can be improved.

Do you feel like you have a good understanding of your farm’s profit and production? Do you have goals for the upcoming season?

You can learn a lot about your farm when you make the effort to collect and take a look at your financial and production data. Perhaps you assumed an area of your operation was performing better than it truly was and records demonstrate improvement is needed. On the other hand, analyzing data may point to improvements that you didn’t realize occurred.

Good farm records are useful to provide the data needed to understand your farm performance and will help take the guesswork out of management decisions. Research shows that when producers set goals and keep records, they can achieve up to 60 more pounds of calf weaned per cow exposed. Benchmarking also helps producers be prepared for challenging times such as drought and other environmental disasters, and will maximize the benefits of your annual VCPR (Veterinary Client Patient Relationship) visit with your herd veterinarian. Continue reading

Every Farm Has Different Goalposts – Setting Goals and Defining Success

What does a “successful” Canadian beef farm look like? How do you define success on your farm?

Canfax and the Beef Cattle Research Council recently released the results from their Canadian Cow-calf Cost of Production Network. The project collected data from 115 beef producers across Canada and summarized production benchmarks such as cow size, weaning weight and calf mortality. The network also looked at profit and expense benchmarks like feed costs, cow depreciation, enterprise revenue and more. A detailed summary of these results can be found here.

Interested in the Canadian Cow-Calf Cost of Production Network?

Producers receive:

  • Opportunity to learn from and share experience with other similar producers
  • $500 honorarium
  • Farm summary of production system including physical performance indicators
  • Summary of the whole farm, cow-calf enterprise and retained ownership enterprise, with 2020 baseline and five years of historical indexing
  • Summary of future farm scenarios

Sign up at: https://www.canfax.ca/COPNetwork.aspx

While profit and production numbers are often touted as measures of success, participants in the Cost of Production Network pointed out that fiscal targets are not their only focus. Success looks different for every farm because individual goals and values vary. Some producers may put a spotlight on strategies to increase revenue and reduce costs while other farmers view success as working well with family members or having less overall stress. All definitions are important and worth striving for.

Andre and Katie Steppler were named Manitoba Region’s Outstanding Young Farmers (OYF) in 2020. They manage the cattle division of Steppler Farms, where they run purebred and commercial Charolais herds as well as the recent addition of a registered Black Angus herd.

While winning the OYF award may be the very definition of success for most farmers, Steppler, who works alongside his three brothers, their families and his parents near Miami, Manitoba, is quick to point out that there is no single goal or target that makes their multigenerational farm work. “It’s about shared visions and goals and it’s a revolving thing,” he says. “You can’t stand still.” Continue reading

Improving your vision for the 2020 production year: New tools for on-farm record keeping in cow-calf operations

Are you curious about which areas of your operation are excelling? Or which areas of your operation that might need some work?

Are you interested in record keeping but not sure where to start?

Successful farm management begins with accurate and up to date records. The process of record keeping allows the farm manager to collect and save data so it can be analyzed and used to make better decisions and turn information into actions.

It is important for producers to identify what information is needed to support you in making management decisions. While collecting, maintaining, and analyzing records requires an investment in time, the ability to make decisions based on a known history of your particular farm is valuable. Dr. Harlan Hughes’ analysis of North Dakota cow/calf operations showed that those actively using their own farm data tended to have lower unit costs of production per pound of calf weaned. The operations that were using their own data were also the most profitable over time. The more information producers gather on their operations, the more efficient the knowledge and management of your herd becomes.

Continue reading

Good records help guide efficient production and profitability say producers

Editor’s note: The following is the second in a two part series. See part one about the value of benchmarking and record keeping for all cattle operations. 

Keeping proper and useful beef herd production records is essential if you believe in the adage “you can’t manage what you don’t measure”. Records don’t have to be overly complicated, but do need to be thorough, say producers who rely on them for a lot of their management decisions.

Setting up a record keeping system properly will take a bit of time, but once the format is established keeping records current really isn’t that onerous — updating records is something that can even be done in front of the computer while having an early morning coffee, or taking a few minutes here and there during the month as new information comes along. Continue reading

Making farm decisions easier

Keep good records and refer to benchmarks to help successfully manage your cattle business

Editor’s note: The following is the first in a two part series on the value of record keeping and benchmarking. In part two, you’ll hear from producers on how and why they keep detailed records.

Keeping records and doing comparisons takes time and effort, and most of us prefer to be outside getting things done than being inside doing paperwork. Your time is limited so you want to be sure added paperwork has advantages and helps you focus on maintaining or improving the important things outside. Keeping detailed records and benchmarking does.

Producers who use benchmarking have higher production with an average of 60 more lbs of calf weaned per cow exposed (Manglai, 2016). Assuming a herd with 100 exposed cows, this is the equivalent to an additional 6,000 lbs weaned for the herd (+11%) valued at $13,200 per year in a high price environment (550 lb calf at $220/cwt), and $9,600 at long-term average prices ($160/cwt).

Producers who use benchmarking have higher production with an average of 60 more lbs of calf weaned per cow exposed (Manglai, 2016). That’s worth $9,600 for every 100 cows (based on 550 lb calf at the long-term average price of $160/cwt).

It has been noted by economists that a major challenge facing North American cow-calf producers is the development, understanding, and use of their own farm production cost and returns information. It is critical for producers to keep records and use their ‘own farm facts’ in making knowledgeable business management decisions.

Whole Farm Financials

Whole farm financials only provide a starting point on the overall financial health of the operation. This high level view of your farm’s financial situation can be evaluated with four major statements:

  • Net Worth Statement – Summarizes the property and financial assets owned, the debts owed, and the net worth of the business at a point in time
  • Net Income Statement – Summarizes the income generated, the expenses incurred, and the net income earned by the business during a period of time.
  • Statement of Cash Flows – Summarizes all the sources and uses of cash by the business during a period of time.
  • Statement of Owner Equity – Shows how net worth changed from the beginning to the end of the year.

It is useful to look at the rate of return to farm equity (ROE) which represents changes in your retirement fund and capacity to finance farm expansion and/or improvements. If ROE is low, you may have to ask whether your operation can support your retirement and/or improvement plans.

Whole farm financials can tell you if there is a problem, but they provide limited direction on where to focus efforts in the coming year. For example, they don’t offer direction on which enterprise (cow-calf, replacements, backgrounders, grassers, hay, pasture, etc.) you should focus on reducing costs or improving productivity in order to reach a higher ROE.

Per Unit Cost of Production

Economists stress the importance of calculating the per unit cost of production. For example, cow-calf producers should divide total input costs by the total pounds of calf weaned to yield the unit cost of production or break-even price on calves. 

Calculating per unit cost of production requires having both your financial and production data on hand.

Knowing per unit cost of production helps in developing a marketing and risk management plan. Sitting down and making a plan now can make decisions during the busy production season easier and gives peace of mind. Although agriculture in general has a hard time getting exact numbers throughout the production year because things are constantly in flux, estimates are better than no data at all so don’t let the inability to determine exact numbers stop you from calculating an approximate per unit cost of production.

Having per unit cost of production data also ensures that you take into account the cost of achieving higher productivity for any one measure. Sometimes you have to spend some money to make more money, but you’ll want to be careful your extra investment pays off. Chasing productivity benchmarks without the financial picture can be detrimental. For example, if increasing reproductive productivity by 2% costs 3% per cow, the net increased revenue may be positive, but if it costs 4% more per cow, the net return may turn negative (see the example in Table 1 below). You need to record and consider both financial and productivity information.

Table 1. Gain/Loss of Improved Reproductive Efficiency

Assumptions: # of cows = 100, weaning weight = 550 lb

Calving Rate Extra Cost Cost of Production ($/cow) Calf prices($/lb) Total Net Return Change in Net Return
90% $684 $2.10  $35,550 (90 calves)
92% 3% $705 $2.10 $35,760 (92 calves) $210
92% 4% $711 $2.10 $35,160 (92 calves) -$390

Is this important now?

Those who take advantage of high priced years to improve their operations and strengthen their balance sheets reap the reward by being more resilient during low price years.

When markets are stable, and finances are well in the black, it can be tempting to “coast” and not critically analyze your information and decisions. Keeping costs under control during high priced years takes discipline and careful monitoring, but those who take advantage of high priced years to improve their operations and strengthen their balance sheets reap the reward by being more resilient during low price years. Record keeping and benchmarking can help in that objective.

What is it?

Record keeping and benchmarking help a producer identify productivity gaps and make management changes to improve profitability.

Record keeping includes:

  1. Production records – cattle inventories, pregnancy rate, birth date, birth weight, weaning weight, weaning rate, pounds weaned per cow exposed, death loss, culling rate, pasture or feed usage, feed inventories, animal health treatment records, treatment rates, etc.
  2. Operational records – overhead, unpaid labour hours, etc.
  3. Financial records – expenses, revenue, assets, liabilities, etc.

When making management decisions, it is important for producers to identify the information they need, and tailor their record keeping system to suit their needs. A complete set of detailed records ensures that as issues from today are addressed and new ones come up in the future, you have your own set of comparisons on-farm to look back on. Many of the records are also useful or necessary in programs like Verified Beef Production Plus.

Benchmarking is the practice of comparing one’s own operation numbers (productivity and financial) against other farms with similar enterprises; this can use a regional or provincial average.  A common set of cow-calf production benchmarks are the “GOLD” indicators:

  • Growth,
  • Open cows,
  • Length of calving season, and
  • Death loss of calves.

Results from the 2014 Western Canadian Cow-Calf Survey provide the following GOLD benchmark targets:

  • Growth measured as a percentage of pounds weaned per mature cow weight at 43%[1] or better,
  • Open cows to be less than 7%,
  • Length of calving to be 63 days or less, and
  • Death loss of calves to be less than 7%.

How does your operation’s GOLD indicators compare to these 2014 Western Canadian averages? Comparing to more regional benchmarks would be even more beneficial. Provincial averages that take numbers from operations at opposite ends of the province with winter feeding periods ranging from 100 to 160 days can create difficulties in making comparisons, but even if there is no benchmark available for a particular measure, keeping records is still beneficial for monitoring your own operation year over year so you can see improvements or areas that are slipping.

Remember that oftentimes a focus on production maximums (like reproductive efficiency) and minimums (like death loss) do not result in optimal profitability because of trade-offs with per unit costs. Production measures should always be evaluated in terms of overall profitability.

Who is keeping records?

In June 2015, a small survey of 67 cattle producers in the prairie provinces found that more than 90% of the respondents recorded birth dates and kept individual ID, calf IDs linked to dam ID records, and culling/death loss records; and 86% of respondents kept health records. However, only 41-48% of the respondents kept records on birth weight, weaning weight, or had more detailed record keeping.  The survey reported that only 40.6% of respondents keep detailed production records and only 36.7% indicated that they were familiar with and used benchmarking (Manglai, 2016).

The survey reported that only 40.6% of respondents keep detailed production records and only 36.7% indicated that they were familiar with and used benchmarking.

Producers who were more likely to use and keep detailed production records had more years of experience, were older, set production goals and were learning oriented (open-minded and committed to learning). Learning orientation and the use of a banker/accountant also positively impacted the use of benchmarking.

The survey also found that Saskatchewan and Manitoba producers were less likely to use detailed record keeping than producers in Alberta; Manitoba producers were more likely to use benchmarking.

The reason behind these regional differences could be explained by differences in extension programs that are available in each province. Extension programs provide resources and support in developing record keeping systems that covers the needs of today as well as into the future.

It is not surprising to find a low proportion of producers in the prairie provinces use benchmarking as the availability of benchmarks has largely disappeared outside of AgriProfit$, which is a free-of-charge program run by Alberta Agriculture and Forestry. Participating in surveys and extension programs will help ensure that benchmarks are developed and available.

How to get started:

Explore www.cowprofits.ca

Other resources 
If you’re in Alberta, participate in AgriProfit$, which is a free-of-charge program run by Alberta Agriculture and Forestry.

Texas A&M Key Performance Indicator Targets for Beef Cow-calf Operations. Fact Sheet. Image.

Farm Financial Statements. https://www.extension.iastate.edu/agdm/wholefarm/html/c3-56.html

Farm Financial Ratios. https://www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/econ2198


Manglai (2016). Examining Record Keeping and Benchmarking Effects on the Production and Performance of Cow-calf Farms in Canada. Master’s Thesis, Department of Agricultural and Resource Economics, University of Saskatchewan. https://ecommons.usask.ca/bitstream/handle/10388/7283/MANGLAI-THESIS.pdf?sequence=1&isAllowed=y, accessed on Jan 25, 2018

Millang, J, Key Success Factor in Cow Calf Enterprise Profitability http://www1.foragebeef.ca/$foragebeef/frgebeef.nsf/all/ccf120/$FILE/keysuccessfactors.pdf, accessed on September 6, 2017

The Beef Cow-Calf Manual. Alberta, 2008.

[1] Alberta Agriculture, 2013-15 average

Read part two, “Good records help guide efficient production and profitability, say producers“.

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