This week I talked with a feedyard manager who was studying some recent closeouts. They weren’t reading real well. If the cattle had not outperformed projections both in the feedyard and on the rail, it would have actually been pretty bleak. What was interesting, however, was his comment about the value of studying closeouts. He loves that part of the business, because it is like getting a report card. For him, it’s a great way of keeping score.
And so it is for all of us. Ultimately, we all focus on the bottom line, because it is the ultimate way of not only keeping score but measuring progress. For feedyard managers, it is a great way to see how you compare with your projections; whether or not average daily gains, cost of gains, conversions and the like are above, below or right at expectations, and whether or not you’re making progress. For cow-calf producers, it is an indication of whether or not the genetics and management we are putting into the cattle are truly creating value and meeting market demands and expectations.
Then there’s the good news which we enjoy but don’t always analyze; instead, we focus on problems because they tend to highlight areas where work or improvement is needed. My son just finished the basketball season and it is interesting that they, too, tended to spend more time focusing on the shots they missed or the turnovers they made, rather than analyzing the shots they made or the turnovers they forced the opposition to create.
Feedlots have a major advantage over cow-calf operations in that they get hundreds, even thousands of scorecards each year, where cow-calf operations tend to get very few. It isn’t surprising that a feedyard’s metrics, analytics, and business measures are usually more sophisticated, more readily available and studied harder than they are at the cow-calf level. However, I suppose it could be argued that they are much more important at the cow-calf level. In part, that is what made the whole SPA/IRM concept so rewarding—it allowed a rancher to create a closeout of sorts for his operation.
A long time ago, a cattle feeder mentioned that he identified and corrected shortcomings and opportunities nearly every day in his feedyard, but only about once a year for his cow-calf operation.
I never thought much about that statement until now. Part of this is just simply the difference in turning over inventory. The pork and poultry industries have made far more genetic progress than the cattle industry largely because of this very reason. Also, the cow-calf industry has always operated in such diverse environments that it becomes far less meaningful to benchmark an individual ranch against the average of other operations.
It is no wonder that we are as tradition bound as we are; that tradition is largely the collective knowledge of so many past generations. Mistakes are expensive and they take a long time to identify and fix.
The industry has put a lot of time and effort into creating its long-term strategic plans, which has proven invaluable. But one has to ask why the industry has not spent more time focusing on the long-term results from a broader perspective? I doubt that we would be spending so much time on issues like GIPSA or COOL if we were focused on the real causes of lack of profitability and a shrinking industry.
The industry as a whole continues to struggle with the same dilemma that most individual cow-calf producers do. We are so busy reacting and adapting to outside forces, and striving to maintain viability/profitability, that we have little time to take advantage of opportunities that present themselves or to change major structural issues that prevent us from capitalizing on them. Until we do, we will find ourselves caught up in the same old populist rhetoric where legitimate solutions to real problems are not addressed, but instead where someone is to blame.