The top 20% of farms are 3 times more profitable than the rest. The profit gap can be attributed to one seemingly obvious factor; leading farms make better decisions. Whether this seems too simple or too vague, it’s the one factor that all successful businesses have in common. They may not share the same production practices, management philosophy, markets, environment, or resources, but they all make profitable decisions. In business, good decisions arise from good data.
There are some critical areas where historical data are needed to gauge your management decisions for the future.
- Land Health
- Pasture performance
- Stocking rat per unit of precipitation
- Drought Management
- Feed & Forage Budgeting
- Cost per Unit of Production
Remember that your time is money, and at some point, records can become too time consuming and stop providing a positive net return on your investment (your time). It’s hard to know what data to collect. Many producers aren’t sure where to start and either collect too much information, not enough, or they aren’t sure how to analyze/interpret the data. Records (data) are useless unless they somehow inform or influence future decision making. So, if your data isn’t in a useable or referenceable format, it might as well have not been collected it in the first place.
Data interpretation can be a logistical nightmare without the right system in place and it’s easy to get too bogged down in information and unable to make sense of the numbers. This article will go over the most critical data that every livestock enterprise should be collecting, some tools that can help you analyze that data and use it to plan for the future. We’ll also go over some examples of how a bad decision, or an untimely decision, can cost you and how to avoid that situation in the future.
Land Health Data
There are a few essential land health parameters to monitor. Land health has a cascading effect on all other aspects of the livestock enterprise: meaning that if we take care of the land first, the land will take care of the animals, and the animals will take care of the financials (provided we don’t step in and muck up the system). Soil health hinges on one crucial component: carbon content or soil organic matter. The two terms are nearly synonymous, meaning that they are strongly correlated, and a high organic matter content will suggest a high carbon content and vise versa.
Species composition is another key land health indicator worth tracking. It doesn’t have to be completed on every pasture every year, but assessing composition such as the percentage of forbs, grasses and shrubs over time will help shed some light on the effect your grazing regime is having on the plant community. A diverse plant community will provide more balanced nutrition for livestock, and in turn, improve performance.
- Soil carbon
- Pasture species diversity
Pasture Performance Data
Pasture performance data, such as production per hectare/acre, allows managers to predict returns on investments in infrastructure such as fencing, water, or inputs such as seed, fertilizer, or even herding, If installing a cross-fence will allow you to harvest 20% more forage, and you know your rate of conversion to beef for each acre of grass that you grow, then it’s pretty easy to do the math and figure out how long it will take that fence to pay for itself and start making you more money.
For example, harvesting just 10% more forage by installing a fence that will cost you $1,500 across a 1,000-acre pasture, that earns you $30 per acre in saleable beef produced, will return $3,000 the first year. That’s a good investment! Without the data, though, it’s anyone’s guess what the return will be. A good recordkeeping system will allow you to track not only increases in utilization but increases production per acre as a result of longer rest periods achieved with cross-fencing pastures.
Healthy soil produces a healthy amount of biomass. Productive capacity is heavily influenced by soil type and precipitation; however, our management plays a key role in how the land performs and without careful observation, it’s easy to miss trends across the landscape whether they be positive or negative. It’s important to measure so we can then manage. Key land performance indicators include production and utilization. One of the key factors to maintaining soil health is ground cover. Your utilization percentage influences how much biomass remains to cover the soil.
So, the summary is…Data needed is
- grazing yield per pasture/paddock
- animal production, i.e. total beef/wool/etc.
- grazing utilization % (average removal per graze)
Production – Utilization = Residual.
As utilization increases, residual decreases. At some point, utilization reaches a point where there is no longer enough residual material to cover the soil surface. Many subscribe to the take half leave half rule, but there are a number of reasons why this guideline doesn’t always provide good outcomes.
Consider a scenario where a particular soil/ecosystem produces 2,000 lbs. of biomass on average and requires 1,000 lbs. of residual forage to maintain soil cover. There’s a drought year and the soil only produces 1200 lbs. of forage. If we were to take half that would only leave 600 lbs. of forage left to cover the surface. A 40% reduction in production would, hypothetically, require a 40% reduction in stocking rate.
This seems drastic and costly, but there is a cost to overgrazing. One MaiaGrazing user who carefully tracked their rainfall, stocking rate and productivity found that, “a grazier could risk forgoing production income of $127/hectare by overgrazing a paddock, after which it would take up to 33 months to recover just two thirds of its original carrying capacity.” This means that the land would have produced $127 more per hectare in forage value if they had just reduced their stocking rate at the start of the drought. You know it makes sense to sell, even if you have to buy back later, if you’re able to recoup $127/hectare over the next 3 years. In the end you’ll likely come out ahead economically and the land will be better off as well.
Stocking Rate & Rainfall Data
Consider this stocking rate chart, provided for one farm by MaiaGrazing. It shows stocking rate adjusted for rainfall. The areas in red represent a period of overstocking. Think of this situation as a liability. An already limited supply of feed is being depleted faster than it’s likely to be replaced based on the rainfall data. The time periods in blue represent an opportunity cost, or a period of being understocked and foregoing the opportunity to turn surplus forage into saleable beef. The aim of the game is to match stocking rate to forage production in order to maximize output, sustainably.
Bart Davidson, Co-founder of MaiaGrazing, says that cows sold early in good condition will always be at least 40% more valuable, than later, when sold after the feed has run out. That excludes the cost of dry matter they consumed in between, which is usually in his experience close to the value of the animal.
Many ranchers pull back at the thought of selling their cows. They’ve spent years building their genetics and selecting cows to fit their production model and/or their environment. It’s an understandable attachment. But Bud Williams always said we should love our grass and hate our cows. Responding to drought conditions early by destocking is almost always the more profitable course of action. If you’re a rancher with plenty of grass, no cash, and no cows, it’s an easy fix. There are always people looking for places to graze cattle. If you’ve got lots of grass and lots of cash, you can restock (or go on vacation!). But if you’ve got lots of cows, no cash, and no grass, you’re not just out of luck, your in serious stress!
If pastures are managed properly during times of low moisture, the effects of drought will be less severe, and pastures will rebound faster when precipitation returns. In contrast, if pastures exit the drought in poor condition, the road to recovery is much longer. Knowing the carrying capacity of a property, adjusted for rainfall received, informs producers of an appropriate stocking rate and the levels they can exceed under drought or other difficult conditions. It’s one thing to sacrifice pastures during drought, and it’s another matter altogether to be unaware of the fact and unable to manage accordingly in the aftermath.
Some producers have found that responding to drought conditions has become much easier by retaining yearlings, backgrounding or custom grazing cattle. Chester Meyer, a MaiaGrazing user in Montana, retains his calves through the winter, running them with their mothers at a low cost. He intensively rotationally grazes them the next growing season as long as the forage budget will allow. He says his drought plan is carrying a readily marketable class of livestock. Regardless of the type of stock run, early responsiveness to drought conditions is key, for both your forage budget and your financial budget.
Consider a scenario where a ranch that, under normal rainfall conditions, carries 1200 animal units (1,000 – 1,200lb. cows). The first six months of the year bring only 75% of average rainfall for that time period. A quick forage inventory assessment of all the pastures reveals they have a 25% reduction in forage as well. Average forage production is 220,000 animal days (ADA’s). But this year, at the peak of the growing season, they see they only have 75% of their average forage production or 165,000 ADA’s remaining for the next 6 months until the next growing season. They can either destock immediately or wait to see what happens.
We’ll go over each scenario and how the need to destock can escalate the longer it is put off. Each scenario shows a 25% reduction in stocking rate, but also shows how putting it off will blow your forage budget and have you coming up short on grass sooner than you’d like.
Destock Immediately – By making a data driven decision as quickly as possible, they only have to sell 283 AU’s and can stock 717 animal units for the next 6 months without overgrazing. So how many more head would they have to sell to make up for the delay (and not run out of grass too soon) if they wait 1 month, 2 months…3 months?
Wait 30 Days – If they delay destocking by only 30 days, they’ll need to sell 343 animal units.
Wait 60 Days – By waiting 60 days they’ll have to sell 433 animal units to ration out the remaining forage for 4 more months.
Wait 90 Days – If they wait 90 days to destock, they’ll have to sell 524 animal units in order to make the remaining feed last 3 more months.
No Adjustment – They end up running out of grass in 3 ½ months and need to buy 700 tons of hay to cover the remaining 54,000 ADA’s to keep the stock alive.
Cost per Unit of Production
Drought management and economic analysis are intertwined and can help make some tough decisions very clear. Economic data allows us to “think of the margin” as Tris Munsick encourages. As an economic analysis educator with the Plank Stewardship Alliance, Tris says that knowing the cost and value per unit of production allows producers to understand the true cost of their decisions.
Let’s look at the economics of destocking under drought conditions discussed in the last section. If the ranch in this scenario, knowing that their returns per cow/calf pair, after an average year, are $100/cow. The option to not destock at all and feed the cows 2.5 months longer than usual would have them feeding 0.7 tons per cow. If hay is $150/ton, their overheads jump $105 more per unit, making each cow they keep a $5 overall expense!
Even feeding the remaining cattle after a 25% destock after 60 days creates a $34/head increase in feed costs and a 44% decrease in profit per unit, which may or may not outweigh the additional costs of destocking given market conditions. But at least this ranch can compare options on the margin, and that’s really where the correct decision starts to jump off the page. We can’t control rainfall, so the focus has to be on optimizing it’s use, maximizing stocking rates when rain is sufficient, and responding as quickly as possible when rainfall is lacking.
When budgeting forage, ie, creating a grazing plan. MaiaGrazing will auto calculate key metrics to help give you a clear idea of your position given your current estimated forage inventory and herd demands. You’re also able to set target grass residual amounts to leave on the soil surface to protect it and maintain soil organic matter levels. If something changes, modifying plans is a breeze making adaptive management attainable for more producers than ever before.
Keeping an accurate budget for a resource that is always changing is a challenge. As our global marketplace has become more advanced and competative, industries have turned to software to help track long term trends and manage inventories. Whether it’s a bank, grocery store chain, advertising firm, or a restaurant, industries have recognized that competition in the market means that they have to maximize their resources, minimize waste, cut costs and streamline, Software helps them do that. The livestock grazing sector is finally following suite with MaiaGrazing, a product that allow graziers to keep detailed records and dynamically plan and adapt to ever changing conditions. MaiaGrazing makes planning grazing intuitive, adaptable and streamlined for more efficient planning and re-planning.