Most of us tend to do the same things over and over and expect things to get better when it rains and prices improve. It’s like we are in a hole and we are convinced that the way out is to dig deeper faster. “Let’s get back to work,” we say. “We must not be working hard enough.” Our actions say, “This hasn’t worked in the past so let’s do more of it.” If some one were to tell us they were going to do more of something that hasn’t worked and expect things to turn around, we’d say they were crazy. But actions speak louder than words.
What is it that makes us think that continuing to work harder in our businesses to increase production efficiency will increase profit and strengthen our businesses? It hasn’t worked in the past. It won’t work in the future.
“Business as usual” usually means focusing on production, not profit. I was part of a committee interviewing graduate students in animal science for a livestock industry scholarship. One of the questions I asked was, “What is more important, production or profit?” I thought the question was too simple on its own, so, after they gave the obvious answer, profit, I had planned to ask each student a follow-up question: “Please describe which of these you feel our industry has focused on and give an example to justify your answer.” I was so dumbfounded by their answer to the first question that I never asked the follow-up. Every student said they felt that production was more important than profit. When the committee sat down for our deliberations and to make our selection I said “Can you believe how they answered my question?”
“What question?” someone asked.
“The one where I asked them what is more important, production or profit. They all said production!” I responded.
The group gave a collective “So? What’s wrong with that?”
At that point I realized how spoiled I had become by my association with Ranching For Profit School alumni. The production focus is pervasive.
A KIT Day (Keeping In Touch day) is a field day held on a Ranching For Profit School alumnus property for other alumni. Participants learn about the challenges facing the business and learn about the changes that have been made. They see what’s working and what’s not and then offer their suggestions for improvements. People who aren’t alumni are also invited to attend as long as they come with an alumnus who can explain some of the principles being applied to their guest. That way we can work at a deeper level than if we just opened the door to everyone.
We held a KIT day on an Executive Link member’s ranch that had shifted to June calving and had built about 50 paddocks. The host explained that performance took a bit of a dip at first, but has since come back up. The dip surprised me because the more usual experience is that conception rates are very high the first year because of the longer post-partum period. After tweaking the supplement program, the conception rate of this EL member’s cows came up to 92-94 per cent in their 45-day breeding season. That seemed pretty good to me, especially given the minimal inputs they gave their cattle and the tough environment in which these cows achieved this performance.
But someone attending the KIT day who hadn’t been to the school, commented that the conception rates seemed a little low. They said that the conception rate for their 500-cow herd was typically 98 per cent. I didn’t say anything but I wondered if that level of performance was profitable. The problem is that in order to increase the conception rate by one per cent, from 97 to 98 per cent, they had to provide more inputs than 97 per cent of the animals needed. I wondered, “Did the production from the additional five pregnant cows cover the input costs for the 485 cows that didn’t need those inputs to get pregnant and the 10 cows (the last two per cent of the cows) that didn’t get pregnant even with those inputs?”
While a conception rate of 98 per cent is high, it doesn’t mean that those cows are efficient. Truly efficient cows would have high production without any inputs. To select efficient, low-input, high-output cows, the herd needs to be challenged. Some cows have to fail the test in order to select the ones that meet the challenge.
The person attending the KIT day with the 98 per cent conception rate claimed to have very good cattle. I wondered, “How can you tell?” To me the good ones are the ones that would be productive without any inputs. Under the current management scheme which relied on supplemental feed and other inputs, it would be impossible to identify the good ones (the profitable ones). Until the inputs are taken away, our good cows are indistinguishable from our bad cows.
North American ranchers lead the world in production per animal unit, and we continue to increase production. But has this strategy increased your profit? Has it put you in a stronger financial position, improved the health of your land or made it easier to bring your next kids into the business? Has it improved the quality of your life? If the answer to any of these is “No,” then what makes us think that continuing to increase production will have any different results in the future?
Our industry has hit the production bull’s eye, but we’ve been aiming at the wrong target. Instead of aiming for maximum production, which rarely results in maximum profit, we should be aiming at optimizing production to maximize profit. What is the optimum level of production? It differs from environment to environment, but the late reproductive specialist, Jim Wiltbank, recommended a target of 95 per cent conception in a 60-day breeding season, with 75 per cent conception rate in the first three weeks. That’s probably a reasonable standard for most rangeland environ-