Cow-Calf Benchmarking

If you compare a group of farms for profitability , there will always be those that are more profitable than others. So what is it about those top farms that allow them to consistently outperform others? Is it in the production system, either better yields or farm size? Or is it advanced marketing savvy? Or perhaps it's on the cost side with better cost management?

Getting answers to these types of questions is the objective of a cow-calf benchmarking study being done by OMAFRA and the Food, Agriculture and Resource Economics Department at University of Guelph. The Ontario Cattlemen's Association is assisting with the study and the Agricultural Management Institute has provided funding.

45 Ontario cow calf producers contributed their time and information to the cow-calf benchmarking project. There was good geographic and herd size representation in the group. The farms came from a cross section of Ontario and the herd size ranged from 25 cows to 350. The average herd size for the group was 110 cows.

So what have we learned so far? One of the overall observations was that you did not have to be big to make a profit, but it helped. The high profit group had 74 more cows than the low profit group. There were some smaller farms in the high profit group but they needed to excel in all or most of the key performance areas to get there. Of the twelve high profit farms, four had herds less than 100 cows, with one below 50. The larger herds could do less well in one area and still have positive results. They were better able to spread their costs over more production.

The study is focused on gaining insight into what the key performance indicators are. What are the top performing herds doing differently that puts them at the top?

Starting on the revenue side, the first indicator was a big variation in the returns per calf sold. The range within the group for dollars received per calf sold was $390 - $800. Exploring this a little further revealed there was not one single marketing avenue that came out a clear winner. What was clear was that those farms that put management time and effort into deciding how they were going to market their calves, in whatever form that took, were rewarded.

The second area was in feeding management. The total feed package (purchased plus home-grown feeds), cost the high profit group 24 percent less than the low profit farms. This was closely related to pasture management. Those that used rotational or intensive grazing reduced their pasture acreage requirement and fed less. What was interesting was that the high profit farms spent more on purchased feeds. They tended to use more alternate/by product feeds in their rations. Feeding management needs some further investigation to determine if this was related to feed wastage, a question of feed quality, or an issue of feed inventory tracking.

It would seem to go without saying that keeping calves alive will result in better profits. There was enough variation in mortality that this was a key to success. Having a herd health prevention program, full time people on the farm and access to barn facilities all appear to be factors contributing to reduced mortality.

While the project has shed light on some of the questions, plans are underway to collect another year of data to help confirm these findings and explore more key performance indicators. More participants are always welcome. If you are interested in participating please contact John Molenhuis at: (613) 475-9472 or john.molenhuis@ontario.ca.

The financial summary of the cow calf benchmarking study is posted at the Financial Analysis Section of the OMAFRA Agricultural Business Management website: www.ontario.ca/agbusiness