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Agricultural News

Derrell Peel Explains the Technical and Economic Measures Needed to Maximize Cow-Calf Efficiency

Mon, 08 Jan 2018 14:39:47 CST

Derrell Peel Explains the Technical and Economic Measures Needed to Maximize Cow-Calf Efficiency Mondays, Dr. Derrell Peel, Oklahoma State University Extension Livestock Marketing Specialist, offers his economic analysis of the beef cattle industry. This analysis is a part of the weekly series known as the "Cow Calf Corner" published electronically by Dr. Peel and Dr. Glenn Selk. Today, Dr. Peel explains the technical and economic measures needed to properly manage a cow/calf operation for maximum economic return.

"Cow-calf producers use a variety of efficiency measures to help manage production systems. Many of these are technical efficiencies that capture physical measures of output and input use and range from very specific measures to more broad-based values that incorporate a range of production components. For example, pregnancy percentage focuses on breeding efficiency and highlights management of cow body condition and can indicate reproductive failures in cows and bulls. Calving percentage incorporates pre-natal calf mortality in additional to pregnancy percentage while weaning percentage adds calf mortality to calving percentage.   

"Weaning weights are a basic measure of productivity while pounds of calf weaned per exposed female is a much more robust measure of reproductive and nutritional efficiency. Better yet, pounds of weaned calf per acre also adds in forage management and stocking rate. Technical efficiency measures are very useful to monitor and manage particular components of production systems. However, excessive focus on technical measures, especially very narrow ones, can misdirect management attention. Technical efficiency measures tend to emphasize maximums (such as weaning weights) or minimums (such as death loss). Often times, maximums and minimums are not optimal in terms of economic outcome. Data certainly shows, for example, that the most profitable cow-calf operations often do not have the highest weaning weights.

"Economic efficiency measures go beyond technical efficiencies to include values of inputs and outputs as well. Economic efficiencies demonstrate that efficiency can change due to changes in output and/or input values even when physical efficiency is unchanged.   A good example is least cost feed rations where ration composition can change, not because the nutrient contribution of feedstuffs changes, but simply due to changing values of feed ingredients.

"Economic efficiency measures tend to focus on optimal levels rather than physical maximums and minimums. For example, dollars of return per cow will reign in excessive focus on weaning weights by recognizing that some means of increasing weaning weights, such as increasing cow size, may be very expensive and not efficient at some point. For many cow-calf operations the land investment is the biggest component and the final assessment of economic efficiency is returns per acre. This incorporates physical animal components related to reproductive, nutritional, and health productivity along with feed and forage management plus output values and input costs.

"Typically, a combination of technical and economic efficiency measures are needed to manage an operation for maximum economic returns. Technical efficiency measures are critical to understand physical productivity and identify weaknesses or failures in production systems. However, excessive focus on technical efficiency can be detrimental. Economic efficiency measures focus on optimal use of inputs relative to the value of outputs. However, changes in output values or input costs can lead, for example, to improved returns due solely to changing market conditions while masking stagnant or even declining physical productivity. It takes both to ensure that the operation is moving in the right direction. The first step is to measure productivity and input use in a good record system. Then put those records to use."



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