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Analyzing the Financial and Production Performance of the Cow/Calf Business

Analyzing the Financial and Production Performance of the Cow/Calf Business. Why Evaluate Business Performance?. Make informed decisions. Kinds of Analysis. Production Whole farm Individual enterprises Specific herds, pens, fields Financial Whole farm Individual enterprises

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Analyzing the Financial and Production Performance of the Cow/Calf Business

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  1. Analyzing the Financial and Production Performance of the Cow/Calf Business

  2. Why Evaluate Business Performance? • Make informed decisions

  3. Kinds of Analysis • Production • Whole farm • Individual enterprises • Specific herds, pens, fields • Financial • Whole farm • Individual enterprises • Specific herds, pens, fields

  4. The basis for sound analysis • Accurate records • Calculation of standard measures • Regular performance analysis • Multiple years to verify progress

  5. Production/Reproduction Data • Cattle inventory • Breeding • Pregnancy testing • Calving • Weaning (steers, heifers, bulls) • Number of females exposed • Adjustments for transfers • Death loss • Replacement rate • Date of production cycle • Entire production cycle

  6. Spring – Calving Herd Inventory Beginning Inventory Ending Inventory Bulls Cows 2-Year Old Heifers Yearling Heifers Calves Cow/calf timeline

  7. Performance Production/Reproduction Measures • Pregnancy percentage • Calving percentage • Calf death loss • Calf crop or weaning percentage • Actual weaning weights • Pounds weaned per exposed female • Breeding season length

  8. Why is Standardization Needed? Calving percent? 81 calves / 96 cows = 84.4%

  9. Financial Data • Tax reports • Financial statements • Balance sheet (cost and market) • Cash flow • Income statement (accrual) • Other financial records

  10. Financial Performance Measures • Financial cost of production per cow and per cwt • Economic cost of production per cow and per cwt • Net income • Investment per breeding cow • Return on assets • Return on equity

  11. Standardized Performance Analyses Financial Records Cash records: tax reports, financial statements, Quicken Accrual Adjustments Cow-calf SPA Production Records

  12. True or false? The most profitable farms…. • Are larger. • Have more owned land. • Have higher yields. • Use different technology. • Get higher prices for their products. What research shows: IL, KS, TX/NM/OK,

  13. Standardized Performance Analysis Financial Records Cash records: tax reports, financial statements, Quicken Accrual Adjustments Cow-calf SPA Production Records

  14. Production Performance TX-OK-NM, 2007-11, agrisk.tamu.edu

  15. Production Performance TX-OK-NM, 2007-11

  16. TX-OK-NM, 2007-11

  17. Differences between the most and least profitable herds?

  18. Weaning Percent Income Quartile TX-OK-NM, 2007-11

  19. Average Weaning Weight Pounds Income Quartile TX-OK-NM, 2007-11

  20. Pounds Weaned per Exposed Female Pounds Income Quartile TX-OK-NM, 2007-11

  21. Weaned Calf Pay Weight Price, weighted average ($/cwt) Income Quartile TX-OK-NM, 2007-11

  22. Capital Investment ($ per cow, cost basis) Income Quartile TX-OK-NM, 2007-11

  23. Cost of Production ($/cwt) Income Quartile TX-OK-NM, 2007-11

  24. Cost of Production ($/Cow) Income Quartile TX-OK-NM, 2007-11

  25. Cost of Production ($/Cow) Profit Category KS 2011

  26. Differences in production and financial statistics for small vs. large herds?

  27. Pounds Weaned Per Exposed Female Herd Size TX-OK-NM, 2007-11

  28. Production Cost by Herd Size TX-OK-NM, 2007-11

  29. Moral of the Story…. • Production is important… • Marketing is important… • Controlling costs is critical!

  30. So What?

  31. Management Process is Ongoing Planning Control Implementation

  32. Final bits of advice… • Minimize investment in depreciable assets • Monitor and control feed expenses • Match the livestock and crop enterprises to the land resource. • Adopt production practices that maximize potential for high market prices • Use sound herd health practices • Evaluate land purchases carefully • Develop an integrated system approach

  33. Final bits of advice…. • Focus on financial management as much as production performance. • Develop a record-keeping and information system that supports your decisions. • Separate business and personal expenses • Don’t spend money to save a dollar in taxes • Don’t expect too much from your cows. • Pay taxes as often as possible. • Go slowly when attempting new things. • Never stop learning.

  34. Need help evaluating business performance? • Records • agecon.okstate/edu/quicken • Budgets • agecon.okstate.edu/budgets • One-on-one farm business planning assistance • 1-800-522-3755, agecon.okstate.edu/ifmaps

  35. Need help evaluating business performance? • Agecon.okstate.edu/extension.asp • Extension publications at http://pods.dasnr.okstate.edu

  36. Beefextension.com

  37. Cow/Calf Standardized Performance Analysis Workshop • Bring financial and production data to workshop • Production cycle • Begins when all breeding age females are exposed to bulls • Ends when calves are weaned • Work privately with individual assistance to enter data in TAMU SPA software • Print out preliminary reports • Individual consultations • Discuss data follow-up needed

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