Lower production costs mean more profit

A common question among agricultural producers is, “How can I reduce my costs without sacrificing my production?”

While there is not a cookie cutter answer, there are some areas where producers may be able to make improvements and adaptations that can result in reduced costs.

Soil and Forage Tests: Experts at the Noble Research Institute in Oklahoma highly recommend producers engage in soil and forage testing, as this is an area that can help achieve higher production with efficient cost. If soil pH is “wrong” for the crops and forages you want to grow, producers can easily be sacrificing 30 percent of production potential. In addition, the nitrogen, phosphorous and potassium, applying a “wrong” pH scenario is a wasted expense. A producer study in Arkansas concluded that testing hay, on average, led to a $16-per-cow reduction in annual costs. In a program attempting to grow cattle for profitable gain, a hay test is likely worth even more in cost savings, improved production or both.

Consider Hay Sources: Some operations are raising both hay and cattle to feed it to, and some producers choose to buy hay. University of Missouri Extension Agricultural Business Specialist Brent Carpenter and Livestock Specialist Gene Schmitz recently released a winter feed cost dashboard as a resource for producers. The dashboard includes a look at how the quality of hay impacts production costs. The cost of raised hay is set to $62 per ton, based on MU Extension production budgets, and Carpenter said producers who grow their own hay should strive for high quality, since the costs to grow poor-quality and high-quality hay are the nearly the same. The realized cost of feeding good-quality raised hay is about 59 cents less than comparable purchased hay. Feeding poor-quality raised hay actually cost the producer about 16 cents more each day than buying comparable hay. This difference is even higher in years of surplus hay supplies. Carpenter went on to explain that using current market prices, producers who buy hay save about 64 cents per cow per day by feeding the low-priced, low-quality hay even though it requires a higher level of supplementation.

Even though this seems unorthodox, Carpenter explained “that is how the math works. The idea is not to feed junk, but to keep hay costs low even if it means spending more on supplement.”

Cull Unproductive Animals: Keeping animals that are old, open and ornery or otherwise unproductive is a drain on financial resources. Cows that aren’t thrifty or exhibit poor mothering skills need to move on down the road.

The most important factor to calf health and calf performance is having a healthy mother with good mothering instincts. Cows that transfer inferior genetics to their calves and cows with inadequate milk production should be considered cull animals. Production conditions can also influence the best time to remove cows from the herd During drought or other conditions where forage and feed resources are limited, culling deeper into the herd is often appropriate. While the decision to cull animals can be difficult and often emotional, making appropriate decisions based on good record keeping will help lower production costs.

Pursue Sound Business Management: Some cost reduction strategies happen in the office. Commit to business management, where specific financial and production goals are measured and monitored, advised the Noble Research Institute. Careful record keeping and accounting can help producers clearly see where the money is going and whether production and cost reduction goals are being achieved.


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