It's nearly impossible to go to a cattlemen's meeting nowadays and not hear about the need to cut input costs. Indeed, as cattlemen look for ways to survive high fuel and feed costs, as well as the pressure on calf and feeder-cattle prices, the input side of the ledger is being scrutinized as carefully as a college kid's credit card bill.

However, simply burning the midnight oil and wearing down a few sharp pencils isn't enough. A detailed review of ranch operations — the breeding program, supplemental feeding, labor and even family expenditures — should be made. And for that analysis to be most effective, it should start with an independent appraisal of all a ranch's management practices.

To most, letting an outsider peek into your business is a saddle sore. But it's needed, says Ron Gill, beef cattle specialist for Texas AgriLife Extension in Stephenville.

Gill, along with other Extension beef specialists and economists from Texas A&M and New Mexico State universities, offer various tips for identifying more efficient ranch practices and ways to make them happen.

A practical and effective way of monitoring herd management and production is through the Standardized Performance Analysis (SPA), Gill says. SPA offers a complete, integrated financial, production and marketing analysis of an entire operation using financial statements and other data.

“With SPA, producers can be better informed to meet their business and marketing objectives,” Gill says. “After costs are allocated, you can develop a ranch-management plan that allows you to admire the past, but attack the future.”

Plans can take both a strategic and tactical approach, and involve everything from cutting back on feed-truck trips to shifting your calving season to take better advantage of grass and other forage.

According to the SPA database, found at: http://agrisk.tamu.edu/irmspa.htm, the total cost in 2006 to maintain a female in a herd was $571.73/female, while the cost per cwt. of calf weaned was $121.61.

Numerous operating expenses reside within those totals. However, average expenses for a typical cow-calf operation from 2003-2006 shows that more than 40% of the costs are in four areas:

• 15.1% for total depreciation,

• 13.6% for feed purchases,

• 11.1% for hired labor and management and

• 4.9% for family-living withdrawals.

While these four areas may appear to be hard to scratch, you can make some improvement, says Ted McCollum, Texas AgriLife Extension beef cattle specialist in Amarillo.

“Consider a short-term action plan that looks at your individual inputs, what you do with them, and how much they cost,” he says. He notes that while costs have always gone up, they're likely more apparent now as margins tighten.

“You have to chip away at those inputs. See if you can extend the life of a depreciating asset (like vehicles), better manage your feeding program and more efficiently use labor. Little things like a cell phone, which I call ‘parasites,’ add to the cost of raising cattle. Can you reduce the costs of things like that? What may seem to be small costs can add up.”

Cut costs carefully

Cutting feed supplements can help reduce costs, but must be managed so production doesn't suffer. “Look at seasonal feed prices,” McCollum says. “Supplements such as cottonseed might be 20% less if contracted in the off-season. Determine if you can feed supplements like ‘cake’ once a week instead of twice.”

An easy way to reduce fuel, labor and long-term equipment depreciation is to make fewer trips to the pasture to deliver feed. “It sounds elementary, but it's a practical way to reduce costs,” he adds.

Fuel expenditures averaged 4.7% of total operating costs in the '03-'06 period. Since then, fuel prices have jumped at least 50%, adding even more urgency to finding ways to reduce trips to the pasture without losing productivity.

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