Profit Tip: The Importance of Good Records in Feedlot Management
We've all heard that "One can only improve what is measured." Therefore, good (i.e., complete and accurate) record keeping is crucial to the success of any business. During times of high-cost inputs, this is particularly important for feedlot managers. Good records are essential to monitor measures of production and allow for informed management decisions and planning.Cattle feeders use feedlot close-out information for economic evaluation of pens. However, frequently monitoring feedlot performance and costs as cattle are still being fed not only tells you where the feedlot is currently, but also allows managers to make fast mid-course corrections as feed costs or cattle prices change. Knowing the current cost of production is essential for making timely marketing decisions and decreasing corn use (Doran and Loy, 2008).
Good records help feedlot managers to answer important questions about the operation's financial health, and effective management will depend on accurate measurement of production and financial variables. This data, compared to appropriate industry averages, helps managers to pinpoint both the strong and weak characteristics of the operations. The use of these comparisons is called "benchmarking." Benchmarking records is important to evaluate the competitiveness of a particular operation, and to allow for the comparison of a feedlot to others in the industry. This allows for management decisions and plans based on good historical data.
Information in today's world is generated quickly. Therefore, it can be challenging to manage the volume of information available in ways that make the information understandable and manageable. However, once collected, information is of little value unless it is used to monitor progress, make decisions, and evaluate alternatives (Lawrence, 2006). Feedlot managers should continue to invest in methods of managing information. The manager should also communicate the critical importance of accurate information from various input points in the feedlot (Albin, 1996).
What types of information should feedlot managers keep? When should they be reviewed? How can they compare their data with other feedlots data? Some suggestions include (Iowa Beef Center, 2008):
- Cost of gain and breakeven should be continually monitored. Feedlots should work with projected breakeven and marketing date/weight.
- Employees should be trained and should make decisions based on management input provided weekly.
- Inventory analysis should be conducted daily or weekly.
- Feed mixing and weighing of ingredients should be monitored.
- Cattle intake should be evaluated daily, and ration bunk samples should be analyzed frequently.
- Feed waste should be measured, and adjustments should be made.
- Cattle gain and performance should be estimated with the use of software. Previous closeouts and records on cattle from a specific source could be used to estimate future performance.
- Feed purchases and waste should be monitored monthly for billing or cost of feed adjustments.
- Health management program effectiveness should be evaluated annually.
- Non-feed costs should be monitored and adjusted annually using feedlot figures.
- The charge of feed costs should be based on updated fixed and variable costs.
- Databases should be maintained and reviewed regularly.
- It is important to evaluate the database of grid premiums by the type of cattle and feeding programs.
- It is helpful to feedlots to belong to a benchmarking program.
When facing difficult economic times all aspects of the operation should be evaluated. Sound economical decisions are made based on what we can measure and identify as not profitable. Accurate evaluation of all processes and reevaluation of current practices is the way progress can be achieved for an individual feedlot, and because of this, good records are essential to maximizing productivity.
For more information see:
Albin, R. C. 1996. The Manager. Pages 17-21 in Cattle Feeding: A Guide to Management. Trafton Printing, Inc., Amarillo, TX.
Dr. Judson Vasconcelos, Former Assistant Professor, Feedlot Specialist
Panhandle Research and Extension Center, University of Nebraska