Cattle Economics

High Cost Put Producers At A Decided Disadvantage

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Dumb luck can overwhelm knowledge and rational strategy in the short term. For the long haul, though, there is no substitute for wisdom, that unique and hard-won byproduct of knowledge and experience.

“A lot of producers do the big things really well,” says Rick Rasby, University of Nebraska Extension beef specialist. “What separates those who are most successful is their attention to details, such as accessing research and technology and then figuring out how to manipulate it to their unique situation and resource base.”

Consider the various studies over time that illustrate the fortune's worth of gap between high-return and low-return cow-calf producers. Many of these are defined through the Standardized Performance Analysis (SPA) program.

For instance, when you look at the Southwest SPA data maintained by Stan Bevers, Texas A&M University Extension ag economist, you'll see the average breakeven cost for 2000 to 2009 was $116.93/cwt. ($136.19/cwt. when weighted for the number of breeding females in the herd). For producers in the top 25%, it was $97.15/cwt.; it was $201.92 for the producers in the least profitable quartile. That's a difference of $104.77/cwt.

As striking as the cost breakdown is the difference in price received by the producers with the highest returns, compared to the ones with the lowest. Those in the top 25% received an average weaned pay-weight price for steers/bulls of $111.66/cwt. Those in the lowest quartile received $98.82/cwt. Basis a calf weighing 550 lbs., that's a difference in weaned calf revenue of $70.40/head.

What makes this gargantuan differential so extraordinary is that it continues to occur at a time when information — one of the most reliable equalizers in business — is available to more people, more completely.

Of course, finding meaningful answers to specific questions can be more frustrating than the neighbor's ill-trained dogs at the annual gather.

First, there's the raw volume of stuff out there. Type your wonderment into an Internet search engine. Apparently everything known to mankind — lots of it no one should ever know — is just idling in cyberspace waiting for you to hint at it in an Internet search.

Next is filtering all of that stuff for credibility.

E-extension (www.extension.org), a relative newcomer to the data cache clamoring for attention, addresses both of these challenges in spades. The site is a collaborative effort between 74 land-grant universities and their Extension services, and houses practical, cherry-picked, science-based research and education in one spot.

“It's not meant to replace the good things Extension accomplishes locally and on the state level; it's meant to complement them as another tool,” Rasby explains. He directs the efforts for the beef cattle portion of the site (www.extension.org/beef%20cattle).

As you'd suspect, there's a world of research and fact sheets concerning the general topics of reproduction, breeding and genetics, herd health, management, nutrition, pasture and forages. But there are also webinars to view at your leisure.

Plus, you can pose specific questions, which are assigned to Extension experts. Rasby says they aim to return an answer within 48 hours. These answers also become part of the site's database.

“The site is also another way of building relationships with producers, which is what Extension is all about,” Rasby says. “One of our goals in the next six months is to broaden our expertise through the number and variety of experts.”

Proof of the need and concept of E-extension comes with the fact that use of the overall site is growing, as is use of the beef-specific area.

Proof of the need for continuing education, battling with more knowledge, continues to be seen in the vast difference in financial success among producers.

Luck and Mother Nature can win the odd battle, but knowledge borne by experience — and vice versa — wins the war.

What's Cattle Economics?

Wes Ishmael provides tightly focused analysis and commentary on specific beef quality and marketing issues of practical importance to beef producers.

Contributors

Wes Ishmael

Among the industry’s most insightful thinkers, Wes Ishmael concentrates on industry price and market perspectives for BEEF magazine. Along with his monthly “Cattle Economics” column...

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