Crunching numbers is a part of the livestock industry, but how producers process that data varies.
Numbers can range from traditional features such as feed costs to mandatory price reporting data, says Lee Schulz, Extension livestock marketing economist with Iowa State University.
“We have mandatory price reporting because of the hog market collapse in 1998,” he says. “There are several new reports out there, and that helps with transparency. Everyone gets the exact same data at the same time.”
Most of the data comes from the USDA. Schulz says analysts rely on that information to provide producers with marketing advice.
“We have the ability to compare data in a more transparent manner,” he says.
Longstanding USDA reports such as Hogs & Pigs and Cattle on Feed continue to be bellwethers for livestock producers.
“They are very important to those markets and to a producer’s individual situation,” Schulz says. “That data remains very much relevant today.”
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At the end of the day, he says producers need to know how much it costs to feed animals, how much it costs to take care of them, and many other numbers.
“Benchmarking remains as relevant today as it ever was, maybe even more,” Schulz says.
Producers need to be willing to use the data, says Elliott Dennis, Extension ag economist with the University of Nebraska. That can be a challenging decision to make, he says.
“Numbers that are farther from the actual choice made are easier to rationalize,” Dennis says. “Think heifer retention decision to sell finished steer — almost three years pass by before we know whether that heifer produced a ‘good’ steer. Marketing is the other extreme, I know today whether I got a ‘good’ price.”
Dennis says some producers remain skeptical when it comes to numbers.
“Producers and numbers are a hard mix,” he says. “They don’t tend to like each other. In my experience, it is more about putting together an advisory team that helps you get the best information possible that helps inform and advise on the numbers collected, or numbers you could collect.”
Once that team is assembled, producers must put it to work.
“For example, imagine you get your banker and machinery dealer to sit at the same table and discuss the need for replacement, etc.,” Dennis says. “These are competing views — bankers are concerned about solvency and the dealer is concerned about the sale and repairs. By putting them in the same room you can reason and plan out the needed expenses and cash flows.
“The point is, the ‘numbers’ are not isolated but rather how those ‘numbers’ fit within the entire system of production. Producers talk to these individuals separately and then run interference between them and have to go with one or the other — or both. This takes more of a corporate mindset to running a business rather than a consultant’s view.”