Who will be a beef industry survivor? Probably those who are already the best managers of operations, finance and marketing.
Since none of us can predict the future as well as we would like, my list of survivability traits will probably differ from those most commonly seen. Change is certain. The events of Sept. 11 changed the beef industry — perhaps permanently, most likely temporarily.
Consumers seem to be somewhat unpredictable and led by innovation and lifestyle changes. Yet, they set our direction. There will be changes in demand, technology, information, attitudes, society, politics, weather, markets, etc. We must be equipped to adapt.
These are the traits I suggest of a beef industry survivor in the cow/calf sector:
A survivor will use a systems approach to management that's both integrative and holistic. He'll try to understand all the variables and interactions in his own production system, the entire beef industry and then the national and world economy with its social, cultural and economic interactions.
Integration is our best attempt to bring together all the pieces that help in our prediction and decision-making. Enough information is always available for the good operators to survive and thrive. It's our ability to access, evaluate and use the information that separates the successes from the failures.
Knowing which information is worthy of our time is the struggle. To be holistic means to consider the effects of our decisions on the whole system in relationship to our goals and values. Any contemplated change in system structure or input use needs to be carefully analyzed to account for the good and bad that can result from the change.
Survivors will strive for continuous improvement of their key resources — land, livestock and people. To be vital, an organization of any size must be a learning, growing organization. This continuous improvement must start with people and then move to land and livestock.
Survivors will be lifelong learners and foster that throughout their entire teams or families. With quality learning as an ongoing practice, improvement in the land and livestock is almost an automatic consequence. It's hard to resist a better way to graze or manage land, or a way to improve a cowherd.
They will use good planning and decision-making tools. These tools begin with good production and financial records.
Weaned calf crop percentage, death loss percentage, pregnancy rate by age group, weaning weights and sale weights are vital to good decision making. Enterprise and support center accounting are important to know where money is made or lost.
Computers have made this much easier in recent years. A little time spent at bill paying, pregnancy checking, weaning or sale time can make lots of difference in our ability to make good decisions. Financial planning tools — such as internal rate of return, net present value, discounted cash flow, etc. — can help avoid foolish expenditures.
Just knowing your cash flow with accuracy can help avoid too much debt, which is the number-one cause of ranch failure. Combining production data and financial data with day-to-day observation can help with most decisions. The most important decisions are those that choose and size enterprises.
Survivors will wage war on unit cost of production. Whether it be a 400- or 600-lb. weaned calf, a 750-or 850-lb. yearling, a bred replacement heifer or a carcass sold into a value-added marketing alliance, the unit must be defined and the cost pushed as low as possible for the desired quality and unit size.
Competition will force us to do that. Survivors will do it better.
If land is owned or leased by the acre, profit/acre is more important than unit cost in knowing cost effectiveness. Major costs are land, fed feed and labor.
The best way to reduce land cost is to make it more productive. The best way to reduce fed-feed cost is to graze more and feed less, especially for the cow. Cheap corn may be cheaper than pasture for growing calves and yearlings. The best way to reduce labor cost is to increase cows/person. This usually requires ingenuity and reorganization.
Survivors will place strong emphasis on marketing. They will look for value-added opportunities in their own operations and in industry partnerships and alliances. Each animal, including culls, will be sold to its highest and best use. Survivors will understand risk management — both for production and market risk — and will have access to risk management tools when needed.
A manager who's developed these five attributes will be better able to predict the future and adapt to fit new circumstances. He or she will be able to make decisions that are economically and ecologically best for both the short and long term. Best of all, he will be able to stay ahead of the competition and not only survive but thrive.
Burke Teichert, PhD, is general manager of the Rex Ranch in Ashby, NE. The Rex Ranch is composed of three units (locations) in the Nebraska Sandhills. It's primarily a cow/calf operation, carrying some steers to yearling. The ranch retains and breeds a high percentage of the yearling heifers and sells bred heifers and bred cows — often to repeat buyers. The ranch also uses AI, EPDs, ultrasound, performance and progeny testing to produce its own bulls.