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Benchmarking-More producers are cuilding efficiency through this measurement tool

A 1% change doesn't sound very significant. But, in a 10,000-head feedyard, a 1% increase in sale price on $69 fed cattle means an extra $8.28 per head. A 1% change in daily gain, from 3.214 to 3.246, can mean an extra $5.87 per head. Extrapolate those figures over 10,000 head of cattle, and you're talking big money.Those improvements are certainly possible without record keeping and analysis. But,

A 1% change doesn't sound very significant. But, in a 10,000-head feedyard, a 1% increase in sale price on $69 fed cattle means an extra $8.28 per head. A 1% change in daily gain, from 3.214 to 3.246, can mean an extra $5.87 per head. Extrapolate those figures over 10,000 head of cattle, and you're talking big money.

Those improvements are certainly possible without record keeping and analysis. But, without reference points to measure from, how does a manager decide where to fine tune?

A growing number of cattle feeders are turning to benchmarking for those reference points. They want a better handle on what all the performance and carcass numbers they're collecting mean. Where is improvement needed? They also want some measure of how they're doing against the competition.

As a result, they're subscribing to such services as Professional Cattle Consultants (PCC) of Weatherford, OK; and VetLife's Benchmarking program of West Des Moines, IA. Within a few months, Cattle-Fax is expected to move into the market with its Discovery program for feedlots.

On the cow/calf side, SPA (Standardized Performance Analysis) is a program developed by the Integrated Resource Management (IRM) committee of the National Cattlemen's Beef Association.

A Long History Benchmarking is a concept with a long history. Ancient surveyors used "benchmarks" - usually marked by a permanent stone - as reference points in their topographical surveys. Using these reference stones, a surveyor could establish accurate boundaries on a parcel of land.

It's that same concept at work here - determining and using reference points to guide moves and determine progress. The appeal of these services is not only the analysis, but the breadth and depth of data collected from a multitude of participants.

Benchmarking has taken the poultry and pork industries by storm. The pork industry has even published a set of production and financial standards for the industry as a way to position itself for competitiveness and profitability.

In the cattle industry, benchmarking is far more established in the feedlot segment. Fewer players, larger concentrations of cattle and greater standardization in management allow for deeper, more consistent gathering of quality data.

"The beef industry collects a tremendous amount of data, but it's not much good if it can't be used effectively," says Allen Trenkle, coordinator of research in beef cattle nutrition at Iowa State University. "You need to convert that data into information through analysis. It then becomes knowledge that can be used to make predictions and effective decisions."

PCC, for instance, is a 25-year-old company with performance data on a total of 100 million head of feedlot cattle. That number grows by another 500,000 to 750,000 head each month.

The PCC Program The information collected each month is used to provide subscribers with a comprehensive monthly comparative analysis, exclusive to that subscriber's yard. The report compares their costs and performance to other yards in their region, other regions and the nation.

It also provides data for the current month, previous month and year-to-date, as well as benchmarks on their and the industry's performance the previous year. The service includes monthly updates on industry profitability, as well as information on placements, fed cattle supplies and hay and grain prices.

PCC also provides subscribers with two annual surveys. The first is used to determine feed markup and yardage levels and to measure salaries for 11 key feedyard positions. The second measures costs incurred in the operation of a modern feedyard.

As margins get tighter in the cattle feeding industry, managers are finding such services indispensable, says Joe Young, PCC president.

"In a lot of respects, data and computer systems have been traditionally viewed as necessary evils, particularly in commercial feedlots," Young says. "But a new group of managers is emerging in the feeding industry today. These are people who embrace data more aggressively. They're people who have spent most of their working careers using data and computers to validate their decisions."

Lee Borck is president of the Ward Feedyard, a 25,000-head feedyard based in Larned, KS. He's also a 15-year member of PCC.

"You can't improve something if you can't measure it. These benchmark type of programs are one of the most important tools in measuring results in our feedyard," Borck says. "It's not just a matter of average daily gain, conversion and cost, but in-depth studies as to what effects certain actions have on outcome performance of cattle and the carcass," he adds.

Cal Siegfried, marketing manager for Premium Feeders in Scandia, KS, agrees. "Our biggest reason for getting involved in the VetLife program was to track performance and carcass data. It's been very helpful to a lot of our customers," Siegfried says.

Categories And Subsets Where PCC claims to offer the most comprehensive source of customized data for commercial cattle feeders, the VetLife program is more focused. VetLife is a three-year-old company that markets its implants via customized implant programs. As a result, its data collection and analysis services focus almost exclusively on tracking and analyzing comparative data on implant use - both feedyard and carcass performance - for its customers.

That information is presented in a multitude of classes and subsets. Standard performance measures such as average daily gain, conversion, days on feed, medicine cost, carcass performance, outliers, etc., are further broken down into scores of subsets directed by sex, weights, in and out weights, mortality, season, quality/yield grade, quarter, month of placement, breeding, ration type, and implant products and strategies used.

Using the data, VetLife works with its subscribers to customize implant programs to specific groups of cattle. In two years, VetLife's subscriber list has grown to 180 feedlots (Feb. 1) with a one-time capacity of 3.8 million head. And, it's growing at a rate of 1-11/2 million per quarter. Its database currently consists of more than 5 million feedlot cattle, with carcass data available on 2 million of them.

The cattle market has been a large factor in spurring VetLife's growth, says Kevin DeHaan, VetLife manager of technical services. But it's not as simple as just tight feedlot margins.

"More and more folks are selling fed cattle on a carcass basis," DeHaan says. "They want to learn more about what they're producing and which management practices and products affect quality."

Subscribers report their feedlot and carcass data on a monthly basis. In turn, they receive detailed individual and group data analysis on a quarterly basis, and an annual summary, as well as one-on-one consultation.

"Benchmarking consists of defining your business, characterizing your opportunities, setting objectives, measuring progress and then repeating the process," DeHaan says.

Coming From Cattle-Fax Cattle-Fax's Discovery, due out this spring, will be an automated tool for feedyard use, says Topper Thorpe, director of Cattle-Fax. The program is currently finishing up beta testing, working out bugs that come with computer entry and retrieval.

It will be available to both Cattle-Fax members and non-members on a per-head-marketed basis. Reports will be provided on a daily, weekly or monthly basis, according to the level of the subscription.

Discovery's aim is to provide feedyard owners, managers and customers with timely and accurate comparative cost and performance information for use in making operational, marketing and management decisions. Eventually, the program will serve the cow/calf and stocker segments as well, Thorpe says.

Just The First Step Benchmarking at the production level is vitally important, but it's just the first step, says Iowa State's Trenkle. The evolution of the process could eventually follow the example of highly consumer-oriented industries.

"The beef industry needs to look at the production and marketing process in total," he says. "If we were able to collect data, for instance, at the checkout counter and establish which cuts of beef consumers buy, and what they'll pay on which days or weeks of the year, it could be fed through the chain.

"From that, we could determine if our production process - ranch through feeder - is in tune with how the consumer uses our product. Perhaps it means a shift in the calving season. Those are the kind of determinations consumer-focused industries make," Trenkle says.