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Are you focused on the basics or the peripherals of profit?

by Al Rayner, 31 January 2018
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Most producers want to be more profitable, but are focusing on peripheral issues that are not the primary driver for business profitability, writes Al Rayner, principal of Tamworth-based agricultural advisory and training company RaynerAg. 

 

In the last few weeks I’ve read several articles and discussions focused on beef production.  Specifically I’ve been looking for ideas or thoughts that I can bring into practice with my clients this year.  After all, my job is to work with producers to find better ways and more efficient ways to produce beef and make money.

One of the first articles I came across highlighted the huge difference between profitable beef producers and the majority of the industry.  This article from Beef Central suggests that only 2 in 10 producers is actually making money.  Having read that, I was more struck by the fact this isn’t really news to me.

For some years now it has been clear that the large majority of producers are not making nearly enough money to operate a profitable business.  It also seems that there really isn’t anything new in the way that the profitable operators are conducting their business.   In fact the profitable producers are focused on their practices on farm to produce kilograms of beef efficiently and profitably.

So what is everyone else focusing on?  It seems the focus for the less profitable operators is on the peripheral things.

For some time I have been following an online breed discussion.  The discussion is driven by participants desire to be more profitable.   However rather than sharing ideas to implement on farm or in the business, the discussion is now around issues that don’t really make money.

These issues include: why does “no one want to buy cattle from our breed?”; “why do people overlook us in the saleyard”; “we can’t advertise the same way the big breed societies do”. I actually find reading these points a little disheartening.

It gets worse when the discussion moves towards more defensive positions.  These things include “well we had a good success in the show ring”, “our carcase competition results are always very good” and “people say my cattle are great”.

It’s generally about then that I stop reading and go away a bit depressed.  In 24 years of judging carcase competitions, I’ve never actually met anyone who has been paid because of the results of a single animal in a carcase competition.  It seems a very weak argument to put forward when discussing ideas to change and be more profitable.

Finally in one of the rural newspapers I read an article by an older cattleman who wrote about his work over many years, crossbreeding animals, and his focus on feed efficiency.  While these are both very important traits, I was a bit skeptical when it also suggested processors need to change their specifications to suit cattle producers.  I’m not really sure that any other business would think it’s a valid point to tell the customer to change what they want to suit the producer!

So what does this really mean?  I think it means many people are focusing on peripheral issues that are not the primary driver for business profitability.

In my books a profitable beef herd is a highly fertile herd.  It must have not only high conception rates, it also needs to achieve those conception rates within a defined joining period.  For many herds this really should be within 6 to 9 weeks.

Those cows should then be able to actually calve and rear that calf through to weaning.  And then be rejoined in order to produce another calf in a 12 month period.

Having worked with many producers, across regions this is the crunch point for me.  The producers who achieve these things with their cows are already achieving higher levels of productivity and profitability for their businesses.

The next key point is animal growth.  Growth isn’t just genetics.  It isn’t just nutrition.  It is the combination of genetic selection.  I think t be more specific, choosing cattle for your country!  Choosing the genetics, the breed type and the animal type that suit the environment you live.

If you get that bit right you are already on the way to making nutritional management that much easier.   After all if the cattle suit the country, your management should complement the animals ability to use your pastures efficiently.  But if your cattle don’t suit the country because their maturity pattern isn’t quite correct, or for some other reason, you will have to spend more time juggling feed and cow condition to ensure they get into calf, rear that calf and that any progeny meet market specifications.

I know fertility and growth (from both genetics and nutrition) has a direct link to business profitability.  Its pretty clear from lots of industry studies, the herds that produce more kilograms of beef per hectare are the more profitable herds.

What I don’t really get is if it is so clear, why do we ignore these areas to focus on the peripherals?

I’d get it if a producer was ticking all the boxes in fertility, in growth, in nutritional management.  If they were I would see that they were selecting animals for market specifications and selling them to capture the value those animals are worth.  In effect, if you tick all the boxes it opens up the peripherals to explore and extract a little more value.

I know some producers will be defensive when they read this.  I’ve heard it in comments such as “my cattle are fertile”;  “It’s a very fertile breed”.  My response is how do you know?  I know not everyone pregnancy tests.  I know that not everyone selects for females that go into calf early in the joining period.  I know that many cows are joined for longer than 3.5 months.

So what does it really mean?  This year I’m challenging all of my clients, old and new to look at the basics objectively and honestly.  To make sure we are ticking the boxes.  The peripherals that distract many in the industry won’t play a part in our decisions until we get the boxes ticked.  I’m actually excited by this! I’m confident it will set my clients up to either become part of, or remain well within the profitable sector of the industry.

Don’t forget if you’d like to step up and take the challenge, I’d love to hear from you!

This article was originally published on the weekly Rayner Ag blog and is published here with permission from the author. To read the original article click here



Reader's Comments


Comment
  • Russell Lethbridge January 28, 2018

    Great article All your comments are spot on and the tougher the environment the greater emphasis on timing and measuring reproductive performance, it’s quite simple and can be the difference between 5% wet rebreed rate or 70%. Adoption of these practices is to change paradigms.

  • Paul Franks January 29, 2018

    The one major point missing in this article is the weather. I have seen people seasonal mate and expect their cows to get in calf during a drought. Then pull the bulls out at the set date, it rains after this and they wonder why they have no calves. Then go and sell all the “dry” cows and and spend a lot of money replacing them with usually inferior cattle. After all no one sells their best heifers and buying store heifers is always a gamble.

    I have not yet come across the “correct” way to run your property. Everyone has different needs, wants and expectations, it is whatever floats your boat and who are we to judge so long as you do not annoy your neighbours with straying cattle and noxious weeds.

  • Carina James January 31, 2018

    Spot on Paul,
    Work with your environment/weather and be flexible – constant change seems the only predictable thing in business.

  • Prue Lee January 31, 2018

    A comment to Paul, you are absolutely right that the weather plays a part, but we need to ensure our cows are in the best condition to conceive, despite the weather, this may include choosing genetics with positive fat as well as sound grazing practises and if necessary supplementation.

  • Alice Greenup February 1, 2018

    Great article on the fundamentals and a worthwhile reminder to KISS Al.

  • James Knight February 3, 2018

    A great article reinforcing the fundamentals to running a profitable beef business. I enjoyed the read, thank you.

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