Tips to evaluate ranching records highlight Northeast Colorado Cattlemen Days

As producers wait for a rally in the cattle market, it may be a good time to evaluate financial records to find the strengths and weaknesses in the operation.

Speakers during the Northeastern Colorado Cattlemen Days provided producers with some tips to help evaluate the profitability of their operations.

Expense evaluation

Robert Tigner, an Extension educator with the University of Nebraska, asked producers what their highest expenses are and how they compare to others with the same type of operations. 

“If we measure it, we need to be able to determine how to reduce it,” he explained. “Also, make sure to compare the same type of operation to the benchmarks we are using.”

Tigner encouraged stockmen to sit down with some paper and a calculator and determine their total costs.

“Don’t forget to include fixed costs in these calculations,” he stressed. “If we don’t include everything, we may not be making enough to reinvest in our operation.”

Producers also need to consider depreciation.

“It can get us in trouble, especially if we pay too much for anything,” he said.

Tigner said producers should also evaluate if their assets are earning their way and how well capital assets are being used to generate gross revenues.

Example analysis

As an example, he questioned whether an 18-year-old cow is paying her way. She may still be generating a calf each year, but what does that calf wean?

Tigner shared some results of some ranching operations that were analyzed based on management. This research showed a $400 difference in returns over direct expenses between ranches operating in the top 35 percent of their peer group versus those in the bottom 20 percent. The difference is $80,000 for a rancher with 200 cows.

Numbers like these are what makes financial evaluation so important. If producers can pinpoint areas they can improve upon, they can move that bottom line, he said.

“Evaluate whether management changes can allow us to move into a higher profitability group,” Tigner said.

Hay – don’t waste it

Tigner said feed and pasture costs still remain the number one expense in cattle production. He talked to producers about a recent study looking at how to reduce hay loss.

Hay waste can account for 25 to 45 percent of feed loss.

“Cattle do not need excess feed,” Tigner said.

Overfeeding causes trampling and over consumption, and cattle defecate on the uneaten feed or using it for bedding.

Hay losses can be minimized by feeding more often and in a well-designed bale feeder. Feeding hay in bunks can keep losses at three to 14 percent, while solid panel hay feeders will have losses of three to 10 percent

“Large bales fed free choice can result in losses exceeding 45 percent,” he said.

Tigner urged producers to feed cows daily and according to their dietary needs.

“A quarter more hay is needed when a four-day supply is fed versus a one-day supply,” he explained. “A dry cow will eat up to 15 to 20 percent more hay than her needs, which is almost 500 pounds per cow over a four-month period.”

For 100 cows, that is 24 tons, and at $90 a ton, this could amount to a savings of $2,160.

Supplement

Chris Shelley, Colorado State University Extension educator, discussed the importance of supplements in a feeding program.

“Our production goals will define our supplement requirements,” he said. “It is also important to consider the microbes and the impact the supplements will have on their requirements.”

“The microbes need to be targeted for what they need because they are important to the digestion of feed,” he explained.

Producers need to remember the seasonal influence on grass production.

“Grass nutrition will change based on time of year,” Shelley said. “As a producer, we need to understand what is out there and if it still meets the cattle’s dietary needs.”

There is still plenty of energy in grass even when it is dormant, Shelley said, but producers may need to supplement the cattle with some protein to unlock that energy. A lot of range has either unlimited or slightly limited forage during the winter, but the protein is less than five percent, Shelley said.

“Some ranchers will purchase alfalfa because it is high in energy and protein to supplement their cattle,” he explained.

Protein is high in nitrogen, which is important for a ruminant.

“Ruminants will recycle nitrogen back through the rumen, rather than excrete it,” he explained. “Energy supplements don’t work the same way because ruminants cannot recycle energy through the rumen.”

Economics

Any time producers choose to supplement their cattle, Shelley said they need to put a pencil to finding the best supplement at the best price.

“Supplementation costs can also be reduced by frequency. If producers can reduce how often they put out supplement, it can reduce the cost significantly without having much impact on the cows,” he said.

Shelley shared some data that showed cattle that were supplemented three times a week showed no difference in performance, weight or body condition score than those that were supplemented seven days a week.

However, supplementing three days a week can mean big savings in labor, vehicle and maintenance costs.

“It could be up to a 60 percent reduction in costs,” Shelley stated.

Gayle Smith is a correspondent for the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.