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Computer Software Tools to Enhance Ranch Profitability
By moniquegarcia on Wed, 07/17/2013 - 2:53pm
Enhance Economic Opportunities for Agricultural Producers
The ranching business is by nature multifaceted, with expertise required in three main management areas: range, financial, and livestock production. The success of the ranching enterprise is dependent upon the operator having skills in each of these areas. Given that many ranchers are in the ranching business because they treasure the lifestyle, financial management can often be neglected. Yet it is the area where the rancher can define the strengths and weaknesses of the operation to ensure the ranch will still be in the family for the next generation. Concerns over BSE ("mad cow disease"), price uncertainty and few pounds of product to sell during the current drought have made the need for understanding and analyzing the financial area very important for the Arizona rancher. The continued drought, coupled with last year's forced livestock liquidation from public lands and the uncertainty of restocking has made several ranchers in the state reevaluate whether they should get back in the ranching business.
Description of Action:
Cooperative Extension continues to address ranch financial management by providing hands-on computer-oriented workshops. Today's computers and software provide relatively easy tools for recording and analyzing ranch management decisions. With appropriate inputs, the computer can numerically and visually evaluate how business decisions have the potential to threaten or enhance the financial health of an operation. However, using computers can be a barrier to many who for one reason or another have never had the opportunity to learn how to use them. Three UA faculty have developed diagnostic software tools that pinpoint problems for ranch profitability and assist in record keeping, cash flow analysis, drought mitigation options, retained ownership, and evaluating the decision to restock the ranch after the animals have been removed.
Each software tool has been designed and written with the input of ranchers so that it is user-friendly and relevant to Arizona ranchers. Data used for the computer workshops was taken from production figures for the UA's V Bar V Ranch. The ranch restocking software evaluates the costs and returns associated with variations in buying replacements or waiting for replacements to come from within the herd over time. Training is conducted using a 20-machine wireless-portable computer lab. This mobile lab allows faculty to reach under-served communities that normally do not have access to computer facilities.
In 2004 the program outreach will focus on scheduling several workshops in remote communities where little, if any, hands-on ranch management training has occurred. Even though workshops were brought into their "back yards," respondents in under-served rural areas indicated that they still drove an average of 31 miles to attend the computer workshops and several drove 70 to 100 miles. One respondent who drove 80 miles had never attended a computer workshop because "one has never been offered in my community before."
Over the past three years, the Planning for Profitability curriculum, diagnostic financial spreadsheet and restocking decision tool have been taught at 22 workshops to 471 ranchers and agribusiness professionals–approximately 84 percent of the industry, based on total market sales–throughout Arizona and Utah. Program outreach has included Hopi, Navajo, San Carlos Apache, White Mountain Apache, Tohono O'Odham, Supai and Havasupai Native American communities–essentially all of the tribes involved in raising cattle in Arizona. When the workshop was presented the 16th Annual Southwest Indian Agricultural Association (SWIAA) Conference, which includes Arizona and Nevada tribes, the Nevada Tribal Agricultural Committee, representing the 26 tribes in Nevada, requested more Planning for Profitability workshops for their members.
One rancher who had never used a computer before and who had been performing all of his ranch management accounting by paper and pencil was so excited about the spreadsheet templates that he wanted to buy one of the computers in use at the workshop. A couple of elderly participants said they used to make all of their decisions with pencil and paper but the workshop convinced them that it was time to switch over to doing their spreadsheets on the computer.
"It gave me a better understanding of how and why we need to do a proposed budget for better management." –workshop participant
"Will follow expenses more closely. The workshop helped show how and what." –participant
"More effective way to see possible alternative methods and what is influencing our ranch." –participant
USDA: RMA; The Western Center for Risk Management Education; Arizona Cooperative Extension
Department of Agricultural and Resource Economics
The University of Arizona
Economics Building, 403F Tucson, AZ 85721
Tel: (520) 621-6245; FAX (520) 621-6250