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More Ways to Improve Productivity

Tracking Labour

Labour is one of your biggest input costs. Value stream mapping is a lean tool used to look at a process to identify waste, including labour waste.  To identify labour waste, think about the entire process to produce one calf on your farm.  Include time spent purchasing new cattle, loading and unloading, transport, tagging, administration of animal health products, etc.  There are hundreds of steps and processes, with feeding and calving being the most intense uses of labour in managing a cow-calf operation and the areas with the most potential to have an impact. Weather during traditional calving months can add considerable labour of caring for newborn calves. Changing calving time could help cut labour.

 

You don’t know how much time you are spending on tasks until you keep track of it. If your labour is worth $15/hour, it pays to have a closer look at where you are spending your time.

The best way to systematically reduce loss and waste and minimize non-productive activities is through a five step Lean process:

  1. Identify Value: Identify the key activities or processes on your cow-calf operation where value is created. What is a GEMBA Walk?
  2. Map the Value Stream: Identify all steps in the value stream for this activity or process so that you can fully understand how your farm is operating today.
  3. Create consistent flow: Count or measure what is involved in every step of the process in the value stream map or process list.
  4. Identify Solutions: Use Lean tools to assess key processes on your farm and identify solutions to remove loss, remove waste, reduce time and improve safety.
  5. Strive for Perfection: Sustain the gain and strive for a continuous improvement culture.

Use the Worksheet to apply this five step process to your farm.

Investment decisions

When making the decision whether to expand your cow-calf operation, there are a number of key things to consider.

According to Bruce Viney, a business development and risk specialist with Alberta Agriculture and Rural Development, a new or expanded cow-calf enterprise must have a reasonable chance of providing the business with an acceptable level of profit 1.  At the same time, possible risks need to be assessed and should not place the assets you already own at undue risk.  It’s important to first look at how much profit can be expected from an expansion.  “Estimating future profitability requires an assessment of potential costs and returns. These are made up of selling prices, feed prices and other production costs”.

When considering an expansion, it’s important to first know your current production costs and how changes in commodity prices and major inputs can affect them.  Estimate your production costs for five years into the future to get a reasonable forecast of cash flow and profits.

Use the Beef Farmers of Ontario Profitability Calculator:
http://www.ontariobeef.com/markets/profitability-calculator.aspx

Expanding can either increase or decrease efficiency.  Per-unit overhead costs may decrease due to more efficient use of capital assets.  On the other hand, herd expansion can cause an increase in the unit cost of production or break-even selling price. Large additional capital costs or increases in labour expenses should be weighed against their impact on unit cost of production.

Beef Farmers of Ontario Break even calculator is a helpful tool:
http://www.ontariobeef.com/markets/break-even-calculator.aspx

Once you have a good understanding of expected production increases and unit costs, the next key factor is future selling prices. Viney says, “It is generally agreed that while no one can accurately predict future market prices, having the best available information is extremely important and will give confidence to your own price estimates.”

Do your research and have risk management strategies in place so that you are prepared when market prices fluctuate.

 

1https://www.albertafarmexpress.ca/2014/10/08/thinking-of-expanding-your-cattle-herd-heres-a-to-do-checklist/

“Reproduction is the #1 key to a cow-calf operation.”
– Don Badour, Owner
DBM Land & Cattle

“We start calving between August 15-20 and try to wrap up by end of September. If we have 5 cows left to calve by mid-October, those calves will never catch up to the others when they are shipped. This is a difference of hundreds of dollars between the late calves and the others.
Your expenses are the same because you still have to feed the cows for the whole season.”
– Don Badour, Owner
DBM Land & Cattle

Additional Resources:

http://www.beefresearch.ca/economicmodel/pregnancy-detection.cfm

http://www.canfax.ca/samples/Preg%20checking%20April%202017.pdf

http://igrow.org/livestock/beef/measuring-cow-herd-performance/

Canfax: http://www.canfax.ca

Cattle Buyers Weekly: http://www.cattlebuyersweekly.com

Further reading:
https://www.canadiancattlemen.ca/2016/12/23/an-industry-in-crisisis-there-a-way-back-cow-calf-producers-hold-the-key/