Farm406

n simple terms there are two main divisions of cost in evaluating a beef herd. The one that receives a lot of attention is feed utilization, and rightly so, as it can be 30% to 35% of the total cost. This means 65% to 70% is not feed associated and should be examined very carefully. An indication that the farm is properly balanced financially is to have an operating expense ratio of 65% or less. The operating expense ratio is a measure of what it costs to operate your farm compared to the income it generates. The operating expense ratio is calculated by dividing the farm operating expense by its gross operating income. Using this number lets you compare your farm performance to similarly sized operations. Any figure over 65 % is a red flag. If the operating expense ratio is out of line, its time to examine costs, including those of intermediate and long term assets, and compare them to industry standards to find and fix any areas of over expenditure. The long term financial health of your farm depends on monitoring and managing expenditures to bring them in line with industry standards. Care and attention here ensures 65% of the cost of operating is under control. Several opportunities exist for improving efficiency in feeding that didn't exist five years ago. Recent technological advances in forage processing are delivering a lower cost ration while still meeting nutritional requirements. Not only does the bottom line improve for producers, but the advancements in precision chopping and blending of forages and grain is more efficient and much faster than traditional mix wagons. When balancing The emphasis is on controlling cost in advance, not cutting cost after the fact. I 37 farm406

• Cover