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Managing yardage — The silent profit killer

I was running rations on Cowbytes beef management program the other day, which is an interesting and important process around our ranch. Through proper feed testing and ration balancing I can correct and solve potential dietary deficiencies ahead of time and also have enough lead time to find least-cost solutions to one of our largest expenses, feeding cattle.

This process also helps me to set some expectations of performance in both our cow herd and our retained calves that I can use to measure the plan versus the actual animal response as we are feeding. Further, knowing our animals are properly fed and cared for helps me to sleep at night.

Through the process I also like to calculate my yardage out for different feeding options and planning future scenarios. There is a pretty good yardage module in the program, but yardage is not really that difficult. It can be defined as every cost of feeding cattle that does not include the cattle or the feed. Yardage is labour, fuel and electricity to heat the water bowl, parts to fix the tractor, depreciation on equipment and facilities, the cost of building and fixing corrals and the cost of cleaning corrals. If it is not the feed or the cow, it is yardage.

It’s a profit killer

Yardage is a highly dangerous profit killer for a variety of reasons, including:

  • Yardage happens every day. A few pennies a day over a few head of cattle, over a few days all of a sudden becomes significant if you are feeding cows all winter. For easy math, if we took a 100-head cow herd working on $0.75 per head per day for yardage for a 200-day feeding period, we would be looking at $15,000. That is a big number, and what is even more intimidating is that realistically many operations have yardage costs that are well over $1 without even paying the operator for their time. If you can find a mere $0.05 per day savings in this situation you have just saved $1,000.
  • It can be hard to track yardage because of the nature of the costs. For example, the initial construction cost of facilities may be several thousand dollars, but the cost is really spread out over all the years you can use the facility. We just have to remember that we have to include repair costs as well. That new bundle of slabs also counts towards yardage.

Another good example would be corral cleaning. This may occur long after cattle are out of a feeding facility, but it is a cost that is incurred by feeding the cattle.

Part of the fuel bill, the electric bill and interest costs may all contribute to yardage costs. To give an example of how quickly a small seemingly insignificant expense can tack onto yardage, consider a single 1,500-Watt floating tank heater. If the heater is plugged in for 200 days and you are buying electricity at $0.08 per kilowatt hour that single heater costs $2.88 per day or $576. If you can water from one trough, instead of two and use a single heater, you have saved nearly $600. On our 100-cow herd that is $6 a cow.

  • Yardage costs are often not readily visible; this is particularly true with depreciation, which sneaks up on us. We don’t notice too closely when the new fence starts to weather, until one day the wind blows it down. It is one big replacement cost that has happened quietly over time. Machinery depreciation is another good example. However the very best example is unaccounted for operator labour.

So what do we do about it?

The first thing to do about yardage is to accept that it is important and work to understand it both at a higher level and for your specific operation. Without having any idea of what your costs are, it is tough to say if you are making progress or backsliding. The importance of being cautious with yardage is that in times of good markets it is often one expense we let slip by. But it is a cost that bites into profit and may make us unprofitable when markets move downward.

One of the most obvious ways to reduce yardage is to feed more cattle with the same resources. This is how modern feedlots work and part of why many of them have grown so large. For example, a $20,000 tractor spread over 100 cows is significantly more than if that same tractor is used to feed 200 cows. If we are feeding 20,000 the math changes again.

While this seems obvious, just getting more cows may not be the solution for everyone. Some options could be neighbours or family pooling cow herds in the winter so that one set of equipment and facilities feeds more cows. By trading labour it is even possible that each cow herd owner gets a “winter holiday.”

Different feeding systems can also work wonders. One winter when we lived in town while my father was recovering from surgery. We fed calves weekly by putting feed into three different pens and closing gates. That way we could run the tractor once a week for a couple of hours and in five minutes every two days we could feed the calves. The amount of yardage it saved by preventing an hour of road travel and two hours of tractor time every day amounted to a huge sum.

To really combat yardage we need to continually look at alternatives to the “way we always do it.” While not always an option some of these solutions may also include alternative grazing systems such as swath and bale grazing which greatly reduce the need to move both feed and manure and can dramatically drop costs including labour and machinery costs.

As a personal example, I can place approximately 100 bales an hour in the fall for bale grazing and will not touch them again all winter. We track all of our labour and last winter we fed nearly 400 head averaging just over four hours a week in labour, without running the tractor. There is no corral cleaning cost.

If you want a good start on information about yardage, do a quick Google search for livestock or feedlot yardage. To make real inroads though, simply work on tracking your expenses at home. To find the Cowbytes program visit the Alberta Agriculture website.

About the author

Contributor

Sean McGrath is a rancher and consultant from Vermilion, Alta. He can be reached at [email protected] or (780) 853- 9673. For additional information visit www.ranchingsystems.com.

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