When given a choice, most folks generally choose not to add change to their life. Occasionally, however, tools come on the scene that convince us — regardless of the change they bring — that they're needed.
Commercial producers historically have been slower to adopt new tools and technologies; tools that have helped other segments grow their profit margins. For example:
Retailers use computer programs that calculate retail prices based on their wholesale costs and the profit margins desired.
Packers offer a myriad of grids. Yet, they know in advance, through mathematical analysis, what their average payouts will be.
And seedstock providers have relied on numbers for many years, starting with weaning weights, moving to expected progeny differences (EPDs), ultrasounds and linear measurements.
Cattlemen's Basic Tools
As commercial producers, we all work with numbers. After all, if we didn't know how many cows came up open or how many replacement heifers we need, we wouldn't be in business long. There are other numbers, however, that can greatly help us make operating decisions.
The usefulness of numbers grows with the more numbers we have. For example, knowing just three numbers — the weight of the truck empty, the weight of the truck full and the number of calves on board — allows us to figure the calves' average weight.
With three more numbers — individual cow and calf weights and a cow-calf identification number — we can determine many other facts with which to analyze our herds.
Such numbers are great for coffee break chatter. They're worthless, however, unless we use them to make culling and breeding decisions.
One of the familiar mathematical tools commercial producers use is averaging. In sorting our replacement heifers, we look for an “above-average” group. And auction barns, by sorting cattle before they enter the ring, use averaging for mutual benefit.
But there's an additional tool — similar to auction barn averaging — that impacts us every day. It's predictability.
When calves enter the auction ring, the larger the group of the same average size, the greater the opportunity for a good price. Buyers like predictability.
Average, however, doesn't necessarily mean predictable. If our calves average 500 lbs., it could mean half of them weigh 250 lbs., and the other half 750 lbs. This is where knowing the standard deviation — a tool used by other beef industry segments to increase their profit margins — can be very useful.
Standard deviation describes the predictability of a group of calves, cows or carcasses, and tells us how widespread the group is (how far and how many) from the average. This is the predictability or uniformity our buyers look for and want.
The most common use of standard deviation is to determine how close the individuals of that group are to the group average. It groups the closest 66% to the average, which leaves the other 33% of the total group as outliers.
Let's use our previous example of two groups of calves, each group with a 500-lb. average weight. The group with a weight range of 250 to 750 lbs. (red line in Graph 1) has a standard deviation of 150 lbs. That means 66% of the group resides within plus or minus 150 lbs. from the 500-lb. average.
Meanwhile, the group with a weight range of 450 to 550 lbs. (green line, Graph 1) has a much smaller standard deviation of 40 lbs. meaning that 66% of the calves fall within plus or minus 40 lbs. of the average. The other 33% are outliers.
If we seek predictability, we want a small standard deviation or a tight grouping like that of the second group (green line). An eye on such predictability can also help us identify groups of cows that consistently produce good calves or quality replacement heifers.
EPDs based on standard deviations would allow us to know which bulls can impact our cows more consistently as opposed to an average. (Think of it as a grouping from a rifle versus a pattern from No. 8 shot.)
One of the positive attributes of the current personal computer age is the basic spreadsheet capability that allows us to calculate and track standard deviations. By merely identifying the group (i.e., total calf weights) in the spreadsheet, the software can calculate the standard deviation.
Calculating the standard deviation enables us to compare our herd or products from year to year by whatever grouping we want to track. It allows us to track the group's predictability or repeatability.
Hopefully, this short, simplified view of standard deviation will encourage more of us to use what other segments of the industry are using to their advantage.
Art Brownlee is a commercial cow-calf producer who, along with wife Merry, owns and operates the Brownlee JHL Ranch in Ashby, NE. For more on their operation see “DNA Is Their Way,” (pg. 16, February BEEF) and visit jhlbeef.com.