Key Performance Indicator #3: Nutrition Base Expense as a Percent of Total Expenses — Between 30.0 and 45.0 Percent

What does it take to have a profitable operation? There are many ways to arrive at that answer, but Stan Bevers, a long-time economist with Texas A&M AgriLife Extension Service and popular speaker at Cattle Raisers Conventions, has identified 13 of what he calls Key Performance Indicators (KPI) for Beef Cow-calf Operations.

We have looked at KPI 1 and 2 already this year. This month, we address KPI 3, nutrition base expense as a percent of total expenses.

According to Bevers, “because reproduction is the most important factor in ranch productivity, proper herd nutrition is imperative. Yet, no two ranches have exactly the same resources to grow, purchase and maintain the nutritional base required by the breeding herd. Thus, we need to identify three types of nutritional expense:

1. Expenditures for purchasing forage, protein supplement, salt, and minerals
2. Expenses for producing raised feed, such as hay production
3. Costs to maintain and improve grazing for the herd

“Those familiar with the Beef Cow-calf SPA analysis will recognize these as the Raised/Purchased Feed Expense and the Grazing Expense. To calculate this KPI, start with the total expense of the ranch including owner labor and depreciation. Then, identify the nutritional costs. Most successful ranchers keep nutritional expenses at 30 to 45 percent of total expenses.”

Bevers recently launched Ranch KPI, a ranch management consulting business, specializing in building ranch management information systems that allow for ranch accounting, analysis, and finding efficiencies measured as Key Performance Indicators. In order to have useful analysis, the data must be accurate, while also being simple in the data entry process. To find more information about KPIs, what it takes to be a successful rancher, or to schedule a consultation, visit ranchkpi.com. ❚