Cost of production – you have the power

By Carol Davis

What is the one thing, other than the weather, you can’t control as a producer? Price! Therefore, concentrate on what you can control – your cost of production (COP).

If I knew what drives your COP I would tell you but my fairy godmother wand has run out of batteries, so it is up to you to identify and build on your strengths – and address your weaknesses. For those who believe they have it all sorted, one thing I have learned in 40+ years in agriculture is you are never too old to learn.

Improving your COP requires attention to detail and, encouragingly, it is affected by lots of things you can change. Each of them need continual monitoring and review.

Cattle

• Animals born or sold per year – if you don’t have them you can’t sell them. Overall measures have a number of key elements and depend on your system but include: calves born per 100 cows per year; mortality rates; weight for age; purchase price (per liveweight kg). Success in any of these areas is affected by underlying factors, including fertility, successful AI, measuring weights and good husbandry.
• Feed is important, but there is a significant variation in the performance of cattle DLWG (daily liveweight gain). Is your feed, be that concentrates or forage, fit for purpose?
• Are you targeting the right animals with the right feed types?
• Price does not ensure quality but you need to ensure you compare quality, availability and cost per DM kg and match types of feed to animals fed. If you’re home-mixing, are ingredients analysed so you mix the rations your nutritionist devised?
• Co-products can vary and finding animals haven’t grown is ‘closing the door after the horse has bolted’ and costly.

Sheep

• Feed is also important, but there is a significant variation in performance of lambs DLWG (daily liveweight gain). Is your feed, be that concentrates or forage, fit for purpose?
• Are you targeting the right animals with the right feed types?
• What are your target lambing dates and consequently lamb selling periods?
• Ensure you compare feed quality, availability and cost per DM kg and match types of feed to animals fed. If you’re home-mixing, are ingredients analysed so you mix the rations your nutritionist devised?
• Are you making the best use of grass and other forages available to you?

More generally

• Prevention is better, and less costly, than cure. Proper health and biosecurity plans are essential, including appropriate vaccine and antibiotic use, correct dosage and timing – always involve your vet.
• Collect the right data and use software that captures your records and produces meaningful reports. It can mean updating systems and perhaps investing in new technology. Running old software on even older computers takes the fun out of everything.
• Look at your market specification: what does your buyer want? Weight? Fat cover? Confirmation? What are the penalties?
• Identify weaknesses, which could be general problems and/or individual animals due to genetics, systems, housing, ventilation, people, equipment, cleaning, animals out of specification.
• Identify strengths – build on these, and perhaps roll them out across the business. Good genetics, particular housing, particular people?
• Plan any capital investments so that you identify why, when, where and how. Don’t just do what you have always done, seek advice. Budget for the investment; you may need to save in your ‘piggy bank’.
• Good relationships with your people are key to success. Whether employees or family members, listen, ask for ideas, train, reward, keep them motivated – in a positive way. Say thank you!

You can do something about all the points above irrespective of market price.

The AHDB website is full of helpful information. Use Farmbench to assess how well you are doing; engage in AHDB KE events – face-to-face and virtual; join a discussion group. Our beef and sheep Knowledge Exchange Managers (KEMs) are here to help.

Get moving, get measuring and lower your COP. Make sure your business is efficient and lean.

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