Many aspects in measuring cow-calf production efficiency

Friday, January 19, 2018

While economic efficiency measures focus on optimal use of inputs relative to the value of outputs in cow-calf operations, changes in output values or input costs can lead to improved returns due solely to changing market conditions while masking stagnant or even declining physical productivity.

“It is important to remember it takes both to ensure that the operation is moving in the right direction,” said Derrell Peel, Oklahoma State University Cooperative Extension livestock marketing specialist. “The first step is to measure productivity and input use in a good record system. Then put those records to use.”

Cow-calf managers use a variety of efficiency measures to help manage production systems. Many of these are technical efficiencies that capture physical measures of output and input use and range from very specific measures to more broad-based values that incorporate a range of production components.

For example, pregnancy percentage focuses on breeding efficiency and highlights management of cow body condition and can indicate reproductive failures in cows and bulls. Calving percentage incorporates pre-natal calf mortality in additional to pregnancy percentage while weaning percentage adds calf mortality to calving percentage.

“Weaning weights are a basic measure of productivity,” Peel said. “Pounds-of-calf-weaned-per-exposed-female is a much more robust measure of reproductive and nutritional efficiency. Better yet, pounds-of-weaned-calf-per-acre also adds in forage management and stocking rate.”

Technical efficiency measures are very useful to monitor and manage particular components of production systems. However, excessive focus on technical measures, especially very narrow ones, can misdirect management attention, warns Peel. Technical efficiency measures tend to emphasize maximums, such as weaning weights, or minimums, such as death loss.

“Often maximums and minimums are not optimal in terms of economic outcome,” Peel said. “Data certainly shows most profitable cow-calf operations often do not have the highest weaning weights.”

Economic efficiency measures go beyond technical efficiencies to include values of inputs and outputs as well. Economic efficiencies demonstrate efficiency can change because of changes in output or input values even when physical efficiency is unchanged. A good example is least-cost feed rations where ration composition can change, not because the nutrient contribution of feedstuffs changes, but simply because of changing values of feed ingredients.

Peel said economic efficiency measures tend to focus on optimal levels rather than physical maximums and minimums. For example, dollars-of-return-per-cow will rein in excessive focus on weaning weights by recognizing that some means of increasing weaning weights, such as increasing cow size, may be very expensive and not efficient at some point.

“For many cow-calf operations land investment is the biggest component and the final assessment of economic efficiency is returns per acre,” Peel said. “This incorporates physical animal components related to reproductive, nutritional and health productivity along with feed and forage management plus output values and input costs.”

Typically, a combination of technical and economic efficiency measures are needed to manage an operation for maximum economic returns. Technical efficiency measures are critical to understand physical productivity and identify weaknesses or failures in production systems, although excessive focus on technical efficiency can be detrimental.

Oklahoma is the nation’s fifth-leading producer of cattle and calves, according to USDA National Agricultural Statistics Service data.