Oklahoma Farm Report masthead graphic with wheat on the left and cattle on the right.
Howdy Neighbors!
Ron Hays, Director of Farm and Ranch Programming, Radio Oklahoma Ag Network  |  2401 Exchange Ave, Suite F, Oklahoma City, Ok 73108  |  (405) 601-9211

advertisements
   
   
   
   
   

Agricultural News


Efficiency is Key for Profitability in an Individual Cattle Operation

Tue, 22 Nov 2011 10:05:11 CST

Efficiency is Key for Profitability in an Individual Cattle Operation Efficiency is important to the profitability of an individual cattle operation and to the competitiveness of the industry as a whole. In times of changing output and input values, it is very important to keep in mind what efficiency is-and what it isn't. According to Dr. Derrell Peel, Oklahoma State University Extension Livestock Marketing Specialist, it is probably most common to think of efficiency in physical or technical terms, which are based on quantity of output relative to quantity of input. This includes common production values such as feed per pound of gain and pounds of calf weaned per cow. Such physical measurements often provide the rules of thumb that guide day to day decisions in an operation.


However, most producers recognize that there are limits to the extent that physical measures of efficiency are economical. What really matters is economic efficiency, which can be thought of as the value of outputs relative to the value of inputs. This results in the important distinction between maximizing production and optimizing production. This explains, for example, why we see different types of cattle in different parts of the country. In more extensive productions environments, a smaller cow and thus a smaller weaning weight is more economical than the bigger cow size that works better in other regions. Technical efficiency is part of economic efficiency but it is not the whole story. This leads to the most important point in this discussion: changing input and output values can change the economic efficiency even when the technical efficiency has not changed. And that can lead to a situation where the optimal decision changes. Relying on physical production guidelines can lead to less economical results when output and input values change.


One of the most obvious situations could be feedlot production. For many years, the relative cheapness of feed grains meant that production systems that pushed physical efficiency in terms of average daily gain and feed conversion were consistent with economic efficiency. However, when concentrate feeds are fundamentally more expensive, the most economically efficient production may be one that accepts slightly lower physical efficiency by utilizing more alternative feeds. This is not necessarily the case for any or all feedlots at the current time but the point is that the production system must be reevaluated when input costs change.


The same may be true for many decisions made by cattle producers at all levels of the industry. The most economically efficient production systems today may imply different targets for production parameters such as weaning weights, average daily gain, etc. The beef industry has a wide range of flexibility to adjust production systems using different inputs, such as relative amounts of grain versus forage. In today's changing and volatile input markets, it is critical that, as individual producers and as an industry, we examine the economic efficiency of our production systems and be prepared to modify some of the physical rules of thumb that have guided decisions in the past.


Our thanks to Dr. Derrell Peel for providing this article over efficient beef production. This article was sent out as part of the Cow-Calf Corner Newsletter which is sent out by Dr. Peel and Dr. Glenn Selk on most Mondays.



   

 

WebReadyTM Powered by WireReady® NSI

 


Top Agricultural News

  • Oklahoma Youth Expo Sale of Champions Sale Order Available Here- Sale Set for 4 PM Friday  Fri, 17 Mar 2023 04:50:54 CDT
  • Rural Voters Dominated Vote to Defeat Recreational Marijuana March 7th  Fri, 10 Mar 2023 07:13:05 CST
  • Ron Hays Talks to Israeli Ag Tour Guide Colin Lotzof About the Miraclel of Ag in Israel  Wed, 22 Feb 2023 22:11:04 CST
  • OALP Members Experience First Hand View of Cutting Edge Drip Irrigation Technology as Israel Travel Ends  Wed, 22 Feb 2023 10:51:49 CST
  • OALP Members Get First Hand View of Cutting Edge Drip Irrigation Technology as Israel Travel Ends  Wed, 22 Feb 2023 10:50:10 CST
  • Oklahoma Ag Leadership Program Sees Fruit, Beef and Dairy Production North of the Sea of Galilee in Israel  Mon, 20 Feb 2023 21:56:02 CST
  • Oklahoma Ag Leadership Program Sees Diverse Farm Operations in Jordan River Valley of Israel  Sun, 19 Feb 2023 21:17:30 CST
  • Israeli Tour Guide Mark Kedem Talks About The Cultural Aspects of What Class XX of OALP is Experiencing   Sat, 18 Feb 2023 22:17:23 CST

  • More Headlines...

       

    Ron salutes our daily email sponsors!

    Oklahoma Beef council Oklahoma Ag Credit Oklahoma Farm Bureau National Livestock Credit Ag Mediation Program P&K Equipment Oklahoma City Farm Show Union Mutual Stillwater Milling Oklahoma Cattlemen's Association KIS FUTURES, INC.
       
       
       

    Search OklahomaFarmReport.com

    © 2008-2024 Oklahoma Farm Report
    Email Ron   |   Newsletter Signup   |    Current Spots   |    Program Links

    WebReady powered by WireReady® Inc.