ANNOUNCER: Welcome to the latest “Block Talk ” podcast, brought to you by CRYSTALYX Brand protein supplements. There’s a lot of talk in the beef industry about beef cow-calf production costs and returns. So what is the most effective way to reduce the unit cost of production? Jon Albro, Western Region Sales Manager with CRYSTALYX Brand Supplements, says that cost control and revenue generation are key to ongoing success, but it’s a matter of figuring out the most effective way to do it.
Jon: Well, I think a lot of people when they get into a discussion about beef cattle production, or any agricultural enterprise, I think the first thing they want to do is figure out how to do it for less money, how to do it cheaper…a good CRYSTALYX supplement program.
ANNOUNCER: And going beyond the nutshell, there’s a lot of variability in factoring all this in, isn’t there?
Jon: Yeah there is. And when you read a lot of the different articles by the various extension publications, or to USDA numbers or other organizations that compile and interpret a lot of data out there…a lot of things go into that equation that make it highly variable.
Related article: Reducing unit cost of production, the CRYSTALYX way
ANNOUNCER: The USDA’s come up with a number at least for the average cash cost per cow for the year, and that is an average, I suppose, right?
Jon: Yes it would be. I think a lot of producers, you know, look at an average cost of around seven or eight hundred dollars. I think a lot of livestock producers, a lot of beef cattle producers, would tell you that their numbers are similar to that. Some of the high numbers that you might look at…a lot of subjective debate, I think, in looking at these real costs of production. Every ranch is going to have their number, and they just need to make sure that they put that to work the best they can to maintain profitability.
ANNOUNCER: So there’s something called the unit cost of production, or UCOP. Why is that important to know what that is?
Jon: That’s a number, and that term, actually, I don’t know where to give credit for that term. I actually got to attend a course last winter that was put on by the University of Nebraska Extension, and it was all about this subject. And so maybe I’m stealing the term from them a little bit or from other extension organizations, other universities. But, that unit cost of production, basically is just defined the ratio of the overall cost by the units produced. And the units in this case are pounds of calf you can reduce costs on the top part of that ratio and improve the units, or the amount produced on the bottom part of that ratio, the bottom part of that fraction, that’s going to give you an overall reduced unit cost of production.
ANNOUNCER: So what’s the greatest part of production costs, Jon?
Jon: Look at all the different costs of growing to produce a pound of calf, I think everybody would agree that feed is going to be number one. Feed can be broken out in a lot of different segments. It can be broken out into, maybe hay, the cost of hay, whether you produce it or have to go out and purchase it. Or the cost of pasture, pasture rents...supplement programs get their fare share of blame, or maybe even more as far as making that number pretty big, but at the same time, supplements can also reduce the amount of fed feed that needs to be purchased through better utilization of forage and, say, better pasture management.
ANNOUNCER: Reducing feed costs or increasing the output on the other end, are there some smart supplement decisions that can help with that?
Jon: Definitely. You look at a CRYSTALYX program for example, one of the key reasons that it is used in a lot of feed cow operations in the fall and the winter time is to better utilize forages that are out there, and thus improving condition of cows and if you have good healthy cows at calving time, you’re going to have better reproductive efficiency…the CRYSTALYX supplement decision is really there to help improve the production or remove costs elsewhere, whether it be medicine or whether it be labor or equipment.
ANNOUNCER: There are some studies with the number 15 percent. What’s the 15 percent all about?
Jon: We’ve got some data that we’ve presented or that we can report. Some stuff we’ve done at various universities on forage utilization improvement. How much fiber did we increase in digestibility? How much more intake of a low quality roughage can we drive through a cow with proper supplementation of CRYSTALYX? And, those numbers, 15 percent is actually a pretty conservative number…all that come back to what we were talking about earlier about improving production on the other end. Which helps lower the overall cost of production.
ANNOUNCER: And there’s health factors and there’s also labor and equipment that fit in there too, right?
Jon: Absolutely. And I don’t know of very many ranchers in the northern Plains or the western United States that would tell you they have plenty of labor and that they got enough cheap labor. Those are real factors. Every time you have to start a piece of equipment, or store a large amount of a commodity feed, you’ve got costs involved…but CRYSTALYX can do a lot more than just provide those nutrients. It can have a positive effect on overall performance and reduce labor, reduce equipment, improve grazing distribution. One of those ranches that we did a lot of that work on in Montana years ago, was quoted as saying, the value of CRYSTALYX supplementation is really three things. I mean, you get better nutrition, you get better grazing distribution and you get a benefit from less labor and less equipment. And he said that two of those three things will pay for the supplement. And the third thing is a bonus. The third benefit is just a bonus. And that was real live economic evaluation by a pretty large ranch in Montana.
ANNOUNCER: That’s it for this Block Talk podcast, brought to you by CRYSTALYX Brand protein supplements, an easy way to provide affordable protein, trace minerals, vitamins and phosphorus in a low-moisture supplement block that’s available 24/7. Learn more about all that CRYSTALYX has to offer by going to www.crystalyx.com. It all adds up to Results By the Barrel!