A Different Way Of Thinking
DR. ANDREW P. GRIFFITH
KNOXVILLE, TENN.
How many people brush their teeth with the same hand every morning? Do they use the other hand when they brush their teeth at night? The answer for most is a resounding no. However, if they worked on their flexibility, they could probably brush their teeth with one of their feet holding the toothbrush, which would free up their hands to do something else. That sounds ridiculous, and maybe it is. Everyone has heard the saying “there is no reason to reinvent the wheel.” That is a correct statement in that wheels are round, but there have been some major modifications to the wheel over the past several centuries.
Think of how the wheel progressed from a piece of wood that contacted the ground, to a piece of metal that we put a tire on that can either be inflated or solid. People still maintain the use of wood wheels on horse drawn buggies, inflatable tires dominate the road way and many tractors, but solid rubber tires are becoming more common on rotary mowers. Did innovation make the wheel better?
Routines provide comfort and stability in a person’s life. It is much easier or maybe just more convenient to be repetitive in actions and thoughts than it is to think of a new way to achieve a task. Many people may even say, “if it is not broken then don’t fix it.”
This is a common way for people to think and approach different aspects of life. However, something may not be broke, but that does not mean it cannot be made better. Can livestock producers improve production, management, and marketing of livestock, or is the status quo all there is?
This article stems from a beef cattle producer meeting held in September where the discussion focused on all the decision points of marketing male and female cattle. One can market cattle from weaning through finishing, or the animals can be marketed as reproductive animals. Each decision point carries its own risks and rewards, but the struggle is in doing something different or simply thinking a different way. Where is profit being made in the operation and where are losses occurring? Identifying these two points can guide a producer in making decisions to potentially improve the bottom line of the operation, which may or may not result in increased satisfaction with the effort.
For instance, most cattle operations utilize hay in some form or fashion to feed cattle. Some people purchase hay while others produce their own and still others purchase some and produce some. The first thing to recognize is that hay is an input to the cattle business, which means the hay business is a separate enterprise. Thus, for those who produce their own hay, they should charge their cattle business for what they could sell the hay for. This allows a person to calculate the profitability of both the hay business and the cattle business. If the hay business is making money and the cows are not then maybe the hay should be sold and the cow herd reduced such that hay is not necessary to meet their needs. Alternatively, if the hay business is losing money then maybe hay should be purchased instead of produced.
Another aspect considered during the meeting was marketing young bred cows. For instance, assume a five-year old bred cow that could be sold for $1,500 today. In five years, she may receive a cull value of $700, which means she has a depreciation expense of $800 over that period.
That is not a cash cost that most people recognize. What that means is that the five calves she produces between age five and ten must overcome the cost of carrying the cow plus the depreciation. The question is if she could be sold today to capitalize on her value before she depreciates in value and replace her with a younger animal.
How the specific cattle operation is set up must be considered to determine what one should do. This is not a statement saying everyone should start selling five-year old bred cows, but it is meant to stretch the mind and push for more thought. ∆
DR. ANDREW P. GRIFFITH: Assistant Professor, Department of Agricultural and Resource Economics, University of Tennessee