Unit cost of production workshop gives ranchers tools to know their costs
May 30, 2018
Ranchers need information to make effective business decisions.
Many factors are beyond their control: cattle market, regulations, precipitation, property taxes and more. But one thing ranchers can control, which is key, is knowing the cost of production.
Enterprise analysis and unit cost of production (UCOP) are tools that can help ranchers identify where value is being created on the ranch, where costs are occurring and what changes could be made to improve ranch profitability. A rancher who completed the UCOP workshop said, "Every decision affects value in the operation. Every aspect needs to be assigned a value."
Nebraska Extension will conduct a workshop June 27 and 28 at the Panhandle Research and Extension Center at Scottsbluff to teach principles for understanding and using UCOP. Both days are hands-on and interactive for participants, with sessions running from 8:30 a.m. until 4:30 p.m. each day.
Cost is $50 per person and covers meals for both days. Please pre-register one week prior for a meal count. Payment is due the day of the workshop. The workshop is limited to 30 people. Contact Aaron Berger at (308) 235-3122 with questions or to register.
Workshop participants will work through a sample ranch to determine the profitability of four common ranch enterprises: cow-calf, breeding heifers, hay and land. Participants will go through the steps of calculating what it costs to produce a unit of product for each enterprise. They will also learn how to identify how changes could improve ranch profitability.
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For ranchers, UCOP will vary with each enterprise. The cow-calf herd UCOP is figured as cost per pound of weaned calf. Developing a bred heifer requires a UCOP per head. The haying enterprise UCOP is calculated on a per ton basis. The UCOP for stockers and yearlings is the cost to put on a pound of gain. On a ranch, all these enterprises work together and the numbers provide valuable information for the ranch manager.
It takes time to set up and calculate a UCOP, but the benefits are:
· Knowing what present costs are;
· Projecting future unit cost of production;
· Identifying marketing opportunities to improve profitability;
· Using information to make management and marketing decisions.
Hands-on, group activities, and examples of how to calculate key numbers will help participants through the process. Participants will receive access to Excel spreadsheet templates that can help analyze cost of production for their own operation. Extension Educators Aaron Berger, Jay Jenkins and Bethany Johnston will be available for follow-up after the workshops.