A few thoughts by John Nalivka: Positive change in the industry and on the ranch
January 10, 2019
There is no doubt that increasing production efficiency is critical to the sustainability of any business. The beef industry is no exception. From a macro perspective, beef production per cow, often cited as an indicator of production efficiency, increased nearly 50 percent over the last 30 years from 539 pounds in 1988 to 656 pounds in 2018. More impressive, the figure showed a 98 percent increase since 1960. That's great and it is important to the industry if it is to progress over time and remain competitive. However, the other question is how are you doing as an individual producer? Measuring and monitoring your ranch performance is as important to you as measuring and monitoring industry performance is to me as an analyst. And the best part, if the government shuts down, you still have data!
We talk about industry trends and I have more than enough industry data going back to the early 1900s to create charts forever. The trends are important but those long term trends are not nearly as important to where the industry is headed as what has occurred in the industry over the last 5 years.
I have said it often over the last several months, but liquidating the nation's cattle numbers to a 60 year low in 2014 took the bottom 1/3 of the cattle out of the inventory. These were the lowest performing cattle making little or no contribution in terms of quality and consistency. The cattle that remained became a solid foundation for setting the industry on a path for the future in terms of performance – from every perspective. And, producers carried the ball, paying top dollar for better genetics. The end result – cattle that consistently grade 80 percent to 85 percent choice which in turn has led to growing demand for U.S. beef, both at home and in global markets.
The ball is still in your court to take this positive change and continue moving forward. If you have not done so already, make 2019 your starting point to begin measuring and monitoring various production parameters on your ranch. View and analyze your ranch production relative to your financial performance. You may be amazed at the wealth of information that you create and how that information can help you to assess your production and marketing options. Industry performance is important for your long term success but it's YOUR decision-making based on sound data and risk management that ultimately affect YOUR success.