Final Report for LS96-074

Project Type: Research and Education
Funds awarded in 1996: $163,642.00
Projected End Date: 12/31/2001
Region: Southern
State: Oklahoma
Principal Investigator:
Damona Doye
Oklahoma State University
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Project Information

Abstract:

Integrated resource management (IRM) techniques and tools equip producers to survive in a globally competitive environment. The overall objective of this project was to develop a research and education program to strengthen family farms and improve beef production systems. Objectives included:
1.) Through research, develop case studies to document existing IRM practices and identify factors critical to successful IRM.
2.) Identify technological tools supporting IRM and incorporate them into ongoing educational efforts to teach beef producers how to use the tools for better decision-making
3.) Build on previous programs to identify IRM research and education needs and continue to increase awareness of IRM concepts.

Case Studies
Case studies were summarized in a thesis, “Evaluation of Integrated Resource Management Skills of Beef Cattle Producers Using the Case Study Method” (Tesconi). The case studies confirmed that producers, due to differences in soil resources, managerial expertise, or capital constraints, have different limiting factors. Interdisciplinary teams visited farms, helped participants assemble financial and production data, and discussed potential changes in practices. Details about management structure, goals, enterprise mix, information system components, personal characteristics of farm managers, inventory of farm resources and production levels, and the manager’s perception of farm risks were noted. Case study data were examined to identify production and information practices which could benefit other farms.
An IRM index was developed to evaluate the producers’ adoption and use of management practices advocated by specialists in the areas of animal science, financial management, forages, and herd health. Disciplinary specialists evaluated the case study information. Using their professional judgment, they rated each producers’ adoption of recommended management practices within their respective disciplines. Analysis of the discipline-specific management indices and an overall management index with net income, feed costs, grazing costs, other costs and the total cost of production indicated that forage management practices are highly influential to net income and that feed costs had a strong negative impact on net income. Producers with the highest overall management index used and maintained more extensive financial and production records. However, the profitability of producers relative to indices was inconclusive.

IRM Tools
A bibiliography cataloged printed material, software and video materials supporting IRM at the beginning of the project. A survey of software vendors was used to develop a publication listing software and features of cow/calf record-keeping software. This publication has been a popular resource for comparing available software. Other software to facilitate IRM analysis and decision making was evaluated, demonstrated, and sometimes developed when gaps in tools available to support decision-making were identified. New software to evaluate affordability of part-time ranching, livestock leasing alternatives, new grazing management practices, and enterprise budgets for forage, stockers, and cow/calf enterprises were developed.
A software tool to identify profit-maximizing forage/livestock systems was developed (Smith). The model continues to be demonstrated to educators with feedback used to further its development. The software promises to be useful in evaluating profit potential for different land bases, forage mixes and beef enterprises, given data appropriate to a specific geographic region. The solutions provide food for thought for producers evaluating forage alternatives, land base expansion, and stockers relative to cow/calf operations.
Another tool solves for least cost winter feeding plans (Marshall). This study indicated savings in winter-feed costs significantly reduce annual maintenance costs, and thus improve the profitability of cow-calf operations. If for example, producers changed from feeding twenty-five pounds of high-priced and mean-quality fescue hay per head per day to feeding twenty-five pounds of mean-priced and high-quality fescue hay to their wet cows, the savings could be as much as $61 per head. For a 50-cow herd, savings of $61 per head would reduce cow-calf cost of production by $3,050. These dollar amounts whether expressed per head, per cow herd, or for a region are important.

Building on IRM programs
Educational programs included intensive “hands on” workshops, demonstrations, publications, and materials posted to the WWW. Educational materials were modified to reflect lessons learned through field experience. Cow-calf Standardized Performance Analysis (SPA), Integrated Farm Financial Statements (IFFS), and Quicken® software were among the tools used with producers and agricultural professionals. Step-by-step instructions for using Quicken® for farm records were updated annually.
SPA workshops provided the participants a chance to dig into their own production and financial numbers with professional guidance. They began to understand the need for data that is collected and summarized in a consistent manner and recognized shortcomings in their existing information systems. At the same time, through the production and financial performance measures calculated, they began to identify strengths and weaknesses in their operation. During the course of the project, more than 100 ranchers identified potential cost-saving measures of an estimated $3,000 annually each.
Quicken workshops and materials demonstrated to producers that they did not need to spend a large sum of money to computerize their financial records. Hundreds of producers received assistance in getting a better handle on their financial situation. More informed decisions enhance prospects for profitability. Producers who have participated in workshops indicate that they gain new skills as well as confidence in using the computer in their business. They begin to think about sorting their income and expenses by enterprise to identify profit (and loss) centers on the farm.
Information exchanges were conducted periodically. The forums allowed participants to share ideas and experiences concerning various aspects of integrated resource management. Producer information exchanges focused on a limited number of topics identified in advance. The emphasis was on participants learning from each other and researchers learning from participants. The forums suggested research and education needs and served as a basis for future dialogue. Similar formats were used for exchanges among veterinarians and accountants. Increased awareness of tools available to assist in financial record-keeping, analysis and planning as well as IRM concepts makes them better prepared to assist their clients.
Both producers and educators voiced a need for a publication to provide prospective beef producers with realistic expectations of resource and management needs. A bulletin, “So, You Want to Be a Rancher”, was published.
A new educational initiative focused on accountants working with cow/calf producers. Case studies and other experiences of investigators suggested that accountants who were simply filing tax returns for clients could provide additional valuable services by summarizing records to support managerial decisions. Hence, plans were developed for a series of managerial accounting workshop using input from accountants, advisors and producers. The expected long-run impact is that producers, by working with their accountants to improve their management information systems, can improve financial performance.
Investigators capitalized on ongoing, related efforts through cooperatively planned activities to benefit all beef producers, small and large, with integrated, interdisciplinary programs and materials. In addition, agricultural advisors such as accountants and veterinarians were offered training to familiarize them with concepts and tools outside their traditional areas so that they can better assist producers. This project promoted the development of management skills and improved resource management practices, thus building human capital. Outcomes of the project included improved on-farm information systems, increased likelihood of farm profitability, and more direct feedback to researchers on high priority needs.

Project Objectives:
  • The overall objective was to develop a research and education program to strengthen family farms and improve beef production systems. Objectives include:
    1.) Through research, develop case studies to document existing IRM practices and identify factors critical to successful IRM.
    2.) Identify technological tools supporting IRM and incorporate them into ongoing educational efforts to teach beef producers how to use the tools for better decision-making
    3.) Build on previous programs to identify IRM research and education needs and continue to increase awareness of IRM concepts.

Introduction:
Paragraph Blurb

Case studies documenting producer’s selection and application of IRM practices and decision-support tools were developed. These case studies plus periodic producer and educator or consultant information exchanges identified educational needs and research topics. Findings from one-on-one work with producers were shared in a variety of forums. Software tools and publications to assist with decision-making were identified. New tools to solve for profit-maximizing forage/livestock systems and for least cost winter feeding systems were developed. Through targeted educational programs, veterinarians and accountants and tax preparers were introduced to IRM concepts and tools for assisting producers. (LS96-74)

Damona Doye, Agricultural Economics, Oklahoma State University, Ph: (405)744-9813, e-mail: ddoye@okstate.edu.

Abstract

Integrated resource management (IRM) techniques and tools equip producers to survive in a globally competitive environment. The overall objective of this project was to develop a research and education program to strengthen family farms and improve beef production systems. Objectives included:
1.) Through research, develop case studies to document existing IRM practices and identify factors critical to successful IRM.
2.) Identify technological tools supporting IRM and incorporate them into ongoing educational efforts to teach beef producers how to use the tools for better decision-making
3.) Build on previous programs to identify IRM research and education needs and continue to increase awareness of IRM concepts.

Case Studies
Case studies were summarized in a thesis, “Evaluation of Integrated Resource Management Skills of Beef Cattle Producers Using the Case Study Method” (Tesconi). The case studies confirmed that producers, due to differences in soil resources, managerial expertise, or capital constraints, have different limiting factors. Interdisciplinary teams visited farms, helped participants assemble financial and production data, and discussed potential changes in practices. Details about management structure, goals, enterprise mix, information system components, personal characteristics of farm managers, inventory of farm resources and production levels, and the manager’s perception of farm risks were noted. Case study data were examined to identify production and information practices which could benefit other farms.
An IRM index was developed to evaluate the producers’ adoption and use of management practices advocated by specialists in the areas of animal science, financial management, forages, and herd health. Disciplinary specialists evaluated the case study information. Using their professional judgment, they rated each producers’ adoption of recommended management practices within their respective disciplines. Analysis of the discipline-specific management indices and an overall management index with net income, feed costs, grazing costs, other costs and the total cost of production indicated that forage management practices are highly influential to net income and that feed costs had a strong negative impact on net income. Producers with the highest overall management index used and maintained more extensive financial and production records. However, the profitability of producers relative to indices was inconclusive.

IRM Tools
A bibiliography cataloged printed material, software and video materials supporting IRM at the beginning of the project. A survey of software vendors was used to develop a publication listing software and features of cow/calf record-keeping software. This publication has been a popular resource for comparing available software. Other software to facilitate IRM analysis and decision making was evaluated, demonstrated, and sometimes developed when gaps in tools available to support decision-making were identified. New software to evaluate affordability of part-time ranching, livestock leasing alternatives, new grazing management practices, and enterprise budgets for forage, stockers, and cow/calf enterprises were developed.
A software tool to identify profit-maximizing forage/livestock systems was developed (Smith). The model continues to be demonstrated to educators with feedback used to further its development. The software promises to be useful in evaluating profit potential for different land bases, forage mixes and beef enterprises, given data appropriate to a specific geographic region. The solutions provide food for thought for producers evaluating forage alternatives, land base expansion, and stockers relative to cow/calf operations.
Another tool solves for least cost winter feeding plans (Marshall). This study indicated savings in winter-feed costs significantly reduce annual maintenance costs, and thus improve the profitability of cow-calf operations. If for example, producers changed from feeding twenty-five pounds of high-priced and mean-quality fescue hay per head per day to feeding twenty-five pounds of mean-priced and high-quality fescue hay to their wet cows, the savings could be as much as $61 per head. For a 50-cow herd, savings of $61 per head would reduce cow-calf cost of production by $3,050. These dollar amounts whether expressed per head, per cow herd, or for a region are important.

Building on IRM programs
Educational programs included intensive “hands on” workshops, demonstrations, publications, and materials posted to the WWW. Educational materials were modified to reflect lessons learned through field experience. Cow-calf Standardized Performance Analysis (SPA), Integrated Farm Financial Statements (IFFS), and Quicken® software were among the tools used with producers and agricultural professionals. Step-by-step instructions for using Quicken® for farm records were updated annually.
SPA workshops provided the participants a chance to dig into their own production and financial numbers with professional guidance. They began to understand the need for data that is collected and summarized in a consistent manner and recognized shortcomings in their existing information systems. At the same time, through the production and financial performance measures calculated, they began to identify strengths and weaknesses in their operation. During the course of the project, more than 100 ranchers identified potential cost-saving measures of an estimated $3,000 annually each.
Quicken workshops and materials demonstrated to producers that they did not need to spend a large sum of money to computerize their financial records. Hundreds of producers received assistance in getting a better handle on their financial situation. More informed decisions enhance prospects for profitability. Producers who have participated in workshops indicate that they gain new skills as well as confidence in using the computer in their business. They begin to think about sorting their income and expenses by enterprise to identify profit (and loss) centers on the farm.
Information exchanges were conducted periodically. The forums allowed participants to share ideas and experiences concerning various aspects of integrated resource management. Producer information exchanges focused on a limited number of topics identified in advance. The emphasis was on participants learning from each other and researchers learning from participants. The forums suggested research and education needs and served as a basis for future dialogue. Similar formats were used for exchanges among veterinarians and accountants. Increased awareness of tools available to assist in financial record-keeping, analysis and planning as well as IRM concepts makes them better prepared to assist their clients.
Both producers and educators voiced a need for a publication to provide prospective beef producers with realistic expectations of resource and management needs. A bulletin, “So, You Want to Be a Rancher”, was published.
A new educational initiative focused on accountants working with cow/calf producers. Case studies and other experiences of investigators suggested that accountants who were simply filing tax returns for clients could provide additional valuable services by summarizing records to support managerial decisions. Hence, plans were developed for a series of managerial accounting workshop using input from accountants, advisors and producers. The expected long-run impact is that producers, by working with their accountants to improve their management information systems, can improve financial performance.
Investigators capitalized on ongoing, related efforts through cooperatively planned activities to benefit all beef producers, small and large, with integrated, interdisciplinary programs and materials. In addition, agricultural advisors such as accountants and veterinarians were offered training to familiarize them with concepts and tools outside their traditional areas so that they can better assist producers. This project promoted the development of management skills and improved resource management practices, thus building human capital. Outcomes of the project included improved on-farm information systems, increased likelihood of farm profitability, and more direct feedback to researchers on high priority needs.

Report Introduction
  • A criticism often leveled at farmers and ranchers is that they do not fully utilize available technology to increase their competitiveness. Livestock producers traditionally focus their time and energy on the production dimension of ranching with which they are most comfortable (e.g. beef breeding, cattle nutrition, or pasture management). Consequently, they often overlook the impacts of a specific decision on related activities and neglect information management. A 1991 survey of commercial farm operators focusing on management information systems found that 75% of the operators spent less than 10 hours/month keeping and analyzing farm records (Batte). On average, five percent of the operators surveyed reported keeping no records, although the rate in some states was as high as 17% (Doye and Walker).
    On-farm records form the foundation for informed decisions in sustainable farm operations. Records allow producers to document plant and animal production practices as well as environmental impacts to use in the control function of management. Maintenance and analysis of comprehensive records systems, though not guaranteeing profitability, is expected to increase the farmer’s awareness of cause and effect relationships and sensitize them to the value of conserving resources. Effective information systems position producers to take advantage of economic opportunities and be pro-active rather than reactive to changes in the operating environment. Impressive developments in communications and analytical tools support the information emphasis for those willing to accept the challenge.
    In the southern region of the U.S., many farmers and ranchers maintain cow herds, mostly small ones of fewer than 50 cows. Beef prices received by producers decline dramatically during some periods of the cattle cycle. The lowest average U.S. calf prices occurred in 1996 at $58.40 per hundredweight which was a 40% market price decline from 1991. Recent research estimates average cost of beef production at approximately $85 per hundredweight (Doye and McGrann), meaning losses for many producers with above average costs during much of the typical cattle cycle.

    Literature Review

    Integrated Resource Management
    Integrated Resource Management (IRM) is a systematic approach of managing resources to achieve a specified goal in beef cattle operations. It is used to assess the availability of resources-financial, production, and environmental-and their efficient use in the decision-making process (Ward). IRM seeks to understand, measure, and account for direct and indirect effects from each production, marketing, and financial decision. Researchers and educators who apply the IRM concept attempt to better understand producers’ real world decision-making (Doye and Northcutt, 1996).
    IRM is interdisciplinary in nature, integrating knowledge from several interrelated disciplines with a focus on resource use within a system. According to Ward, IRM began as Integrated Reproduction Management in the early 1980’s and later was broadened to incorporate the interrelated nature of all production and financial decisions. Other similar concepts currently being used in agriculture include Integrated Pest Management, Holistic Resource Management, Whole-Farm Planning, and Total Quality Management (Ward).

    Standardized Performance Analysis
    The IRM philosophy gained industry support through the National Cattlemen’s Association (now the National Cattlemen’s Beef Association). The Cow-Calf Standardized Performance Analysis (SPA) guidelines were developed by producers, Extension staff, and the National Cattlemen’s Beef Association Integrated Resource Management Committee. Texas A&M University was commissioned to develop computer software to address the management information needs of beef producers. The resulting software, Standardized Performance Analysis (SPA), is used as a tool in IRM educational programs, as it integrates production and financial data into key performance measures that aid in managerial decision-making.
    SPA is used as a decision-making tool for producers who wish to improve financial and production efficiency by more effectively using current resources.
    The SPA analysis is based on fiscal year production and financial data. SPA uses the financial statement formats, terminology, and performance measures recommended by the Farm Financial Standards Council (Texas Agricultural Extension Service, Oct. 1995). It facilitates the comparison of an operation’s performance between years, producers, production regions, and production systems.
    SPA producer reports are a valuable tool in identifying the strengths and weaknesses of an individual operation. SPA provides managerial information such as performance and cost reference points for the individual farm/ranch operation. For the producer, the most significant use of SPA is to monitor statistics such as cost of production and pounds weaned per exposed female (Doye and Northcutt, 1996). The summary reports generated by SPA include joint financial and production measures: investment per breeding cow, debt per breeding cow, total raised/purchased feed cost, gross cow-calf enterprise operating cost, percent return on enterprise assets, and unit cost of production or break-even price. Such measures allow producers to analyze existing practices and their impact on performance. The analysis may also prompt improvements in record keeping systems and practice.
    National SPA data show that least cost producers spend as much or more on pasture, bulls, and herd health than do the highest-cost producers. Knowing where to cut (costs) and where not to, is a key to increasing efficiency (Roybal). McGrann asserts the most important factor associated with low-cost, high performance producers is they spend more time managing and analyzing their situation to work smarter. Further, if any task is beyond their capabilities, the least-cost producers seek out the expertise necessary by making use of accountants and veterinarians. Other conclusions from the national results include:
    · Low cost producers have less invested per cow, particularly in machinery and equipment
    · High cost producers carry higher debt levels per cow
    · The most significant difference in total cost of production between low- and high-cost producers is in feed and grazing costs.
    · On average, cost of production is highest for herds with less than 50 cows, lowest for herds with 500-999 cows.
    · Average weaning weight and profitability are not correlated.
    SPA measures may be more useful in directing managers to ask the right questions than in providing solutions to the financial problems of the business. The SPA analysis is also used to develop and/or adopt tools to decide what to do. Such tools include financial and production records, a complete set of financial statements (cash flow statement, income statement, balance sheets), budgets (cash flow and enterprise) and reports comparing actual to budgeted values.

    Financial Management
    Plumley and Hornbaker note that the farm sector economic environment encountered has placed increased emphasis on the role of finance in farm management. Simply learning about recommended financial management principles does not insure that a person will be a more effective financial manager. The knowledge must be applied to improve the financial well-being of the individual or business (Gorham, DeVaney, and Bechman). Examples of recommended financial practices include record keeping, goal setting, spending plans, funds for emergencies, wise use of credit, regular savings, insurance, retirement plans, and investments. Their research also shows that consumers believe that financial management practices like budgeting and saving are valuable.
    Characteristics of those who adopt recommended management practices have been the topic of previous research. In terms of using formal budgets, research found that young, married, well-educated households with high demand on available resources were more likely to adopt the practice of written budgets (Gorham, DeVaney, and Bechman). Income level did not appear to significantly affect the practice of budgeting. Further, more families who budgeted their money, compared to families who did not budget, believed that they could increase their satisfaction with financial management by planning expenditures.
    Even though financial management practices have been proven to increase net worth and satisfaction with financial resources, consumers fail to adopt such practices (Gorham, DeVaney, and Bechman). Although audiences indicate a high interest in a topic, few take action on their beliefs. Lack of time and knowledge were the two reasons most often given for not using recommended practices of budgeting, record keeping, comparing records to the budget, and preparing a balance sheet. As perception of personal financial competency increased, the number of adopted financial practices increased. Gorham, DeVaney, and Bechman found that the older the participant, the greater the number of financial management practices adopted. The discretionary time, urgency, and need for adopting financial management practices are likely to be greater as one ages.

    Profitability
    According to the 1992 United States Census of Agriculture, from 1974 to 1992, the size of beef cow herds changed by less than one percent, from 40.3 cows to 40.5 cows. Although the size of the average beef cow herd has not changed dramatically, profitability remains widely variable among producers (Featherstone, Langemeier, and Ismet). It is widely recognized that the majority of cow-calf producers do not generate a profit (McGrann and Parker). In a capitalistic system profitability serves as a guide to allocate resource use and aid decision-makers on what, when, and for whom they produce.
    Profit in agriculture may be measured using accrual adjusted financial statements (Farm Financial Standards Council). These statements account for inventory change: valuation of raised breeding livestock, payables, receivables, depreciation, accrued interest, and tax. Cash based financial statements, out of pocket expenses, income tax reports, cash flows, and partial budgets do not measure business or enterprise profitability. McGrann, Parker, Michalke, Neibergs, and Stone report that the cow-calf sector has very few producers developing annual financial statements that measure profit, that business financial performance analysis is a shortcoming in the sector, and that this is true even for those producers that depend on the enterprise for a living.
    The difference in profitability between the top quartile and bottom quartile of producers (United States beef cow herds) is over $285 per cow (Featherstone, Langemeier, and Ismet). Differences in profitability may be due to economies of scale or to production inefficiency, input usage, sale weights, death loss, and marketing and financing differences.

    Farm Information Systems
    In the farming industry, the use of information in the decision making process has become more important. Jarvis states that the management of diverse information is central to sound decision-making. In making decisions to allocate limited resources, producers rely on information obtained from many sources, such as personal experience and records, other producers, magazines, newspapers, consultants, researchers, and Extension personnel. All farmers/ranchers manage information as they observe crops and livestock, talk to neighbors, and read. Farmers maintain financial records for several reasons including report filing, planning, and resource management (Gustafson, Nielson, and Morehart). Each farmer must decide how much of his/her information is formalized into a written or computerized system. Lazarus, Streeter, and Jofre-Giraudo state that prior to the wide use of computers, generally farmers kept only written financial records as was required by law. Today, many producers still limit their data collection to the legal minimum.
    Batte, Jones, and Schnitkey hypothesize that increased education should increase understanding of the complexities of production and financial relationships and therefore increase the demand for information. Increased education likely corresponds with an increased awareness of computers as well as an improved ability to judge their usefulness in the business environment.
    Batte, Schnitkey, Rister, and Frank conducted a study to evaluate the farmers’ use of information and the adoption of modern information systems. For this study, the population was directed at commercial size farmers with annual sales greater than $100,000. Among the beef farms, production records were the primary focus of record keeping. Researchers found that relative to dairy and farrowing operations, fewer of the cow-calf producers kept records of when the pregnant animals were due. However, more of them kept weight of offspring. Further the study showed that only 54 percent of the cow-calf producers kept records of feed fed to animals, apparently feeling that it is much less critical success factor compared with the other operations. Analysis of livestock enterprise systems indicates few differences across the various size operations. More than 80 percent of the cow-calf operators reported using manual record systems. Producers of larger herd sizes reported adoption of self-designed computer programs in addition to manual records. This study also indicated the most important uses of farm records in cow-calf herds were in regards to culling decisions, for tax planning, and for evaluating the profitability of the herd. Compared with other breeding animals (dairy and pork) in the study, cow-calf producers found records less important for determining feed rations and when to breed animals, but reported records to be more important for decisions about expanding or contracting herd size.
    Small and intermediate herd operators use the computer most for tax computation, business planning, and crop production, while the larger operators used computers for business correspondence, herd production, and marketing/price analysis (Batte, Schnitkey, Rister, and Frank). When compared to other farm types in the study, few cow-calf producers had adopted computer information systems. The researchers indicated this may be due to few existing computer information systems that address the information needs of beef producers.
    Additionally the study reported, in the use of professional services, only three services were reported by more than 50 percent of the cow-calf operators. These services are the tax preparer, county Extension agent, and veterinary consultant. The tax preparer and the veterinary consultant were reported as being quite useful. The larger herd operators reported a higher frequency of use of an accountant or financial advisor when compared with the other cow-calf operators. Otherwise, little differences exists with respect to the percentage of operators using various professional services across herd size.
    In this study, 52 percent of the cow-calf producers owned less than 100 cows. Relative to the other farm types, cow-calf producers were least apt to use only computer-based record systems. Most used a combination of manual and computerized systems. The results of the study indicate that farmers vary widely in the maintenance and use of farm records. Further, this study suggested that the use of farm records has increased in recent years (Batte, Schnitkey, Rister, and Frank).

    Preferences in Decision-Making
    Lambert notes that production and marketing decisions are ongoing, are conditional upon past actions, and made in light of current and expected future prices and animal performance. The business success of farm/ranch operations is as dependent on human resources as on physical and financial resources. Psychological characteristics of farm and ranch operators affect business decisions and the business ability to respond effectively to change (Jose and Crumly). Psychological characteristics play an essential role in the decision-making process as well as in organizing the production processes. According to Jose and Crumly, business goals that are based on personal strengths and preferences can increase both personal satisfaction and financial stability.
    Jose and Crumly conducted a study of Nebraska farm families participating in an Extension education program coordinated by the Nebraska Cooperative Extension Service and the Agricultural Economics Department from the University of Nebraska-Lincoln. The purpose of the study was to gain insight into the interaction between psychological perception and the economic decision preferences of farm operators. Specifically one of the objectives was to identify the influence of psychological type on management objectives. The Myers Briggs Type Indicator (MBTI) was selected to study the farm managers based on its ability to distinguish a number of psychological characteristics related to business management.
    Jose and Crumly concluded that the group studied was a different typological type when compared to the general population because of a high incidence of “introverted, sensing” types. The group preferred judgment over perception in their association of work habits and lifestyle. Along with this, personality characteristics of the sensing judging (SJ) types are not as receptive to rapid changes in their environment. The SJ’s prefer to have ample time to evaluate a situation and also seek the opinions of their peers when a change occurs such as a new technology or regulation is imposed.
    According to the study by Jose and Crumly, the difference between thinking and feeling individuals was apparent in the respondents’ preferences for the use of farm profits. Sensing feeling (SF) types preferred family and personal consumption while the sensing thinking (ST) types preferred to purchase capital items. Further the researchers found that the ST type accumulated more debt and more assets and also had a higher propensity to spend leisure time off the farm conducting farm business. The researchers indicated that very pragmatic, family-oriented producers dominated the group studied. Usually such producers are reluctant to integrate complex computer models, commodity futures trading, and long-term financial and family goals into their decision-making model. However, for this group the participants implemented all the tools except futures trading. According to the researchers, there was still a strong preference for practical, orderly solutions.
    Jose and Crumly indicate that Extension faculty often feel compelled to convey a large amount of information in a short period of time. Sensing/judging (SJ) types prefer to teach and learn in a methodical, well-organized, manner without textbooks and formal lectures. Almost two-thirds of the producers in the study indicated that they preferred sequential techniques and practical, decisive information dispersed in a manner that produces clear conclusions. Jose and Crumly concluded that Extension programs that use a systematic approach to production, financial, and family goals will be more readily adopted. They also note that a limitation for the adoption of Extension education may be the premise that income maximization is the main goal of the family farmers.

    Technology Adoption
    Many new technologies have been developed for agricultural production. As adoption is often associated with risk, many variables contribute to a new technology’s rate of adoption. Such variables include the perceived attributes of the innovation, characteristics of the individual, and the means of communication used to diffuse information about the innovation (Rogers, Jarvis). Literature on diffusion of innovations suggests strong relationships between technology adoption patterns and individual and business characteristics (Batte, Jones, and Schnitkey).
    According to Rogers, the visibility of an innovation and its apparent relative advantage influence its rate of adoption. Individuals in a social system adopt innovations at different rates over a period of time. Individuals can be classified into adopter categories (innovators, early adopters, early majority, late majority, and laggards) according to when they first begin to use a new idea. Rogers defined innovativeness as the degree to which an individual is early in adopting new ideas relative to other members of the social system. Some notes on socioeconomic characteristics between earlier adopter and later adopters are 1.) earlier adopters are not different from later adopters in age, 2.) earlier adopters have more years of education than later adopters, 3.) earlier adopters have larger sized business units than later adopters, and 4.) earlier adopters have more specialized operations than later adopters (Rogers).
    Feder, Just, and Zilberman found that larger farmers adopted innovations with higher fixed costs at a higher rate. Innovations which were neutral to scale were eventually adopted by all classes of farmers, but larger farmers were typically among the early adopters. Also, similar innovations experienced different adoption patterns in different areas with different farmers. Factors that may serve as constraints in the rapid adoption of innovations include lack of credit, limited access to information, aversion to risk, inadequate farm size, inadequate incentives associated with farm tenure arrangements, insufficient human capital, absence of equipment to relieve labor shortages (thus preventing timeliness of operations), chaotic supply of complementary inputs, and inappropriate transportation infrastructure.
    Yaron, Dinar, and Voet cited numerous studies that suggested larger farms/ranchers were more likely to adopt innovations. This was due to the inability of small farms to cover the fixed cost of a new technology such as financing, learning a new application, and developing new markets. Off-farm income could also affect the rate of adoption by providing a source of cash flow to buffer the risk associated with new agricultural practices (Feder, Just, and Zilberman). Other factors that could limit the adoption technology include the absence of an adequate support system such as credit, transportation, and marketing channels.
    According to Shapiro, Brorsen, and Doster, farmer characteristics such as education and experience could enhance allocative efficiency and be positively related to adoption of new technologies. Since experimentation may decrease with age and experience, these factors could be negatively related to adoption of new technology. These researchers cited considerable evidence that education may have enhanced allocative ability and efficiency in the instability caused by the introduction of new technology. Since the farmers knew less about the distribution of returns associated with new technology, subjective beliefs about the profitability and risk were expected to be important factors in the decision-making regarding the innovation.
    Shapiro, Brorsen, and Doster conducted an adoption study where the objective of the farmers was assumed to be utility maximization. One reason for a farmer to adopt a new technology may have been to reduce risk through diversification. The researchers found that off-farm income could be negatively related to the adoption of a new technology because it could substitute for other diversification strategies. Off-farm employment could also take time away from farming that may be needed to achieve the degree of timeliness that would make adoption profitable. Conclusions made by Shapiro, Brorsen, and Doster were consistent with other researchers in that differences in the perception of the new technology may be more important than differences in risk preferences when trying to determine the behavior of farmers.
    Jarvis states that computer technology is different from production technology as it may require new skills leading to high learning costs and changes in management. The success of computer use within a business depends on the human capital of the manager while the success of production technology is fundamental in the innovation. Also, Jarvis indicated that a positive relationship exists between the number of peers using computers as well as of producer’s children experience with computers. Both could offer insight into possible enhancement of computer usage. Jarvis further concluded that in times of increasing complexity in farm management, computer adoption may reflect producers’ attempts to better incorporate and apply information to their operations.
    Computer adoption rates vary with operator and business characteristics. Batte, Jones, and Schnitkey findings were consistent with previous research in that the rate of adoption for computer use was inversely related to farmer age and positively related to higher education and larger business size. Many older farms have a shorter time horizon to recapture learning costs; thus computer technologies may not be judged to be profitable. Farmers spending above average amounts on farm information (subscriptions, consulting feed, and computer software) are more likely to own computers. Increased expenditures for information may be associated with a willingness to add computer technology to the farm’s information system. These same researchers concluded that with a natural turnover in farm operators, computer adoption would likely accelerate.

    Feeding Costs
    The need for cost-effective winter supplementation is well known. Kunkle, for example, provides some guidelines for effective forage production, showing ways to reduce costs associated with beef production. Though percentages vary from farm to farm, feed costs are the greatest expenditure second to the original purchase price of the cattle. Feed costs range from 26-50% of total beef production expenditure, depending on farm location and type of operation (Redmon 1996a; McGrann and Walter; Lalman, Gill, and Johnson). In late 1997, feed costs ranged from $.42 to $.84 per day for a 1000 pound lactating cow, and ranged from $.38 to $.73 per day for a 1000 pound dry cow (Dunford). Feed costs vary directly with the price of hay.
    According to Redmon (1996a), the four most common mistakes producers make in feeding their cattle include:
    · Use of hay that is low in nutritive value,
    · Feeding hay for an extended period of time,
    · Too much dependence on concentrate feeds,
    · Too little use of forages (stockpiled or growing) for winter feeding.
    Neither Russell and Huhnke nor Redmon (1996a, 1996b) believe hay should be eliminated from feed programs, but do believe hay needs to be well managed to optimize its use. Russell and Huhnke discuss the basics of proper hay management. They emphasize the importance of proper hay storage, hay moisture levels, bale size, and bale density in reducing dry matter and digestible dry matter losses. The basics of hay maintenance can be achieved with little planning. However, agronomists stress the fact that the key to an optimal low-cost feed program is planning. Planning involves knowing livestock maintenance required throughout the production cycle and knowing the nutrients available from alternative forages throughout different stages of forage growth/production, as well as the costs associated with forage production. To efficiently use forages, they must be budgeted according to expected daily growth (Lile and George).

    Forage Versus Grain Feeding
    Until recently, feedlots have fed grain based rations to accomplish a higher grade of meat. However, with improved pasturing techniques, feeding beef cattle at all stages of production on grass is becoming a more feasible option. Research shows that grass-fed beef is highly competitive with grain-fed beef in taste and grade (Nickel). However, Griebenow, Martz, and Morrow’s research found that grass-finished beef results in poor grade quality, and sometimes has a grassy flavor. They explain that the poor grade quality may be a result of poor forage selection and that the grassy flavor has only been detected by trained taste-test panelists. Griebenow, Martz, and Morrow discussed several studies that as a result of excreta remaining on the pasture from grazing livestock there is increased soil fertility and forage production. They concluded that a good combination of grass- and grain-feeding (grain-on-pasture) can overcome the problems of poor grade quality and grassy flavor, and is more profitable than drylot feeding at all levels studied.
    One concern producers have about shifting to a strictly grass-based feeding program is fear of adopting a new technology. Though most producers want to produce at a higher return, many are afraid of eliminating methods they already know and of learning and adjusting to new methods. Hanson, Taff, and Klair evaluated individual farms for the implications of shifting to grass-based feeding. They first developed whole-farm budgets to use in FINPACK, a financial analysis system developed at the University of Minnesota. The budgets show the effects of adopting a variety of grass-based feeding alternatives. The different alternatives were tested for plausibility on three study operations. The current farm management programs and alternatives were compared on an individual farm, as well as across farms. Hanson, Taff, and Klair conclude that, without an external income supplement, the current management practices result in higher incomes than the alternative grass-based feed systems.

    Animal Science and Agronomy Perspectives in Modeling
    Forage management studies are usually done from the perspective of the animal scientist or the

Literature Review

Literature Review

Integrated Resource Management
Integrated Resource Management (IRM) is a systematic approach of managing resources to achieve a specified goal in beef cattle operations. It is used to assess the availability of resources-financial, production, and environmental-and their efficient use in the decision-making process (Ward). IRM seeks to understand, measure, and account for direct and indirect effects from each production, marketing, and financial decision. Researchers and educators who apply the IRM concept attempt to better understand producers’ real world decision-making (Doye and Northcutt, 1996).
IRM is interdisciplinary in nature, integrating knowledge from several interrelated disciplines with a focus on resource use within a system. According to Ward, IRM began as Integrated Reproduction Management in the early 1980’s and later was broadened to incorporate the interrelated nature of all production and financial decisions. Other similar concepts currently being used in agriculture include Integrated Pest Management, Holistic Resource Management, Whole-Farm Planning, and Total Quality Management (Ward).

Standardized Performance Analysis
The IRM philosophy gained industry support through the National Cattlemen’s Association (now the National Cattlemen’s Beef Association). The Cow-Calf Standardized Performance Analysis (SPA) guidelines were developed by producers, Extension staff, and the National Cattlemen’s Beef Association Integrated Resource Management Committee. Texas A&M University was commissioned to develop computer software to address the management information needs of beef producers. The resulting software, Standardized Performance Analysis (SPA), is used as a tool in IRM educational programs, as it integrates production and financial data into key performance measures that aid in managerial decision-making.
SPA is used as a decision-making tool for producers who wish to improve financial and production efficiency by more effectively using current resources.
The SPA analysis is based on fiscal year production and financial data. SPA uses the financial statement formats, terminology, and performance measures recommended by the Farm Financial Standards Council (Texas Agricultural Extension Service, Oct. 1995). It facilitates the comparison of an operation’s performance between years, producers, production regions, and production systems.
SPA producer reports are a valuable tool in identifying the strengths and weaknesses of an individual operation. SPA provides managerial information such as performance and cost reference points for the individual farm/ranch operation. For the producer, the most significant use of SPA is to monitor statistics such as cost of production and pounds weaned per exposed female (Doye and Northcutt, 1996). The summary reports generated by SPA include joint financial and production measures: investment per breeding cow, debt per breeding cow, total raised/purchased feed cost, gross cow-calf enterprise operating cost, percent return on enterprise assets, and unit cost of production or break-even price. Such measures allow producers to analyze existing practices and their impact on performance. The analysis may also prompt improvements in record keeping systems and practice.
National SPA data show that least cost producers spend as much or more on pasture, bulls, and herd health than do the highest-cost producers. Knowing where to cut (costs) and where not to, is a key to increasing efficiency (Roybal). McGrann asserts the most important factor associated with low-cost, high performance producers is they spend more time managing and analyzing their situation to work smarter. Further, if any task is beyond their capabilities, the least-cost producers seek out the expertise necessary by making use of accountants and veterinarians. Other conclusions from the national results include:
Low cost producers have less invested per cow, particularly in machinery and equipment
High cost producers carry higher debt levels per cow
The most significant difference in total cost of production between low- and high-cost producers is in feed and grazing costs.
On average, cost of production is highest for herds with less than 50 cows, lowest for herds with 500-999 cows.
Average weaning weight and profitability are not correlated.
SPA measures may be more useful in directing managers to ask the right questions than in providing solutions to the financial problems of the business. The SPA analysis is also used to develop and/or adopt tools to decide what to do. Such tools include financial and production records, a complete set of financial statements (cash flow statement, income statement, balance sheets), budgets (cash flow and enterprise) and reports comparing actual to budgeted values.

Financial Management
Plumley and Hornbaker note that the farm sector economic environment encountered has placed increased emphasis on the role of finance in farm management. Simply learning about recommended financial management principles does not insure that a person will be a more effective financial manager. The knowledge must be applied to improve the financial well-being of the individual or business (Gorham, DeVaney, and Bechman). Examples of recommended financial practices include record keeping, goal setting, spending plans, funds for emergencies, wise use of credit, regular savings, insurance, retirement plans, and investments. Their research also shows that consumers believe that financial management practices like budgeting and saving are valuable.
Characteristics of those who adopt recommended management practices have been the topic of previous research. In terms of using formal budgets, research found that young, married, well-educated households with high demand on available resources were more likely to adopt the practice of written budgets (Gorham, DeVaney, and Bechman). Income level did not appear to significantly affect the practice of budgeting. Further, more families who budgeted their money, compared to families who did not budget, believed that they could increase their satisfaction with financial management by planning expenditures.
Even though financial management practices have been proven to increase net worth and satisfaction with financial resources, consumers fail to adopt such practices (Gorham, DeVaney, and Bechman). Although audiences indicate a high interest in a topic, few take action on their beliefs. Lack of time and knowledge were the two reasons most often given for not using recommended practices of budgeting, record keeping, comparing records to the budget, and preparing a balance sheet. As perception of personal financial competency increased, the number of adopted financial practices increased. Gorham, DeVaney, and Bechman found that the older the participant, the greater the number of financial management practices adopted. The discretionary time, urgency, and need for adopting financial management practices are likely to be greater as one ages.

Profitability
According to the 1992 United States Census of Agriculture, from 1974 to 1992, the size of beef cow herds changed by less than one percent, from 40.3 cows to 40.5 cows. Although the size of the average beef cow herd has not changed dramatically, profitability remains widely variable among producers (Featherstone, Langemeier, and Ismet). It is widely recognized that the majority of cow-calf producers do not generate a profit (McGrann and Parker). In a capitalistic system profitability serves as a guide to allocate resource use and aid decision-makers on what, when, and for whom they produce.
Profit in agriculture may be measured using accrual adjusted financial statements (Farm Financial Standards Council). These statements account for inventory change: valuation of raised breeding livestock, payables, receivables, depreciation, accrued interest, and tax. Cash based financial statements, out of pocket expenses, income tax reports, cash flows, and partial budgets do not measure business or enterprise profitability. McGrann, Parker, Michalke, Neibergs, and Stone report that the cow-calf sector has very few producers developing annual financial statements that measure profit, that business financial performance analysis is a shortcoming in the sector, and that this is true even for those producers that depend on the enterprise for a living.
The difference in profitability between the top quartile and bottom quartile of producers (United States beef cow herds) is over $285 per cow (Featherstone, Langemeier, and Ismet). Differences in profitability may be due to economies of scale or to production inefficiency, input usage, sale weights, death loss, and marketing and financing differences.

Farm Information Systems
In the farming industry, the use of information in the decision making process has become more important. Jarvis states that the management of diverse information is central to sound decision-making. In making decisions to allocate limited resources, producers rely on information obtained from many sources, such as personal experience and records, other producers, magazines, newspapers, consultants, researchers, and Extension personnel. All farmers/ranchers manage information as they observe crops and livestock, talk to neighbors, and read. Farmers maintain financial records for several reasons including report filing, planning, and resource management (Gustafson, Nielson, and Morehart). Each farmer must decide how much of his/her information is formalized into a written or computerized system. Lazarus, Streeter, and Jofre-Giraudo state that prior to the wide use of computers, generally farmers kept only written financial records as was required by law. Today, many producers still limit their data collection to the legal minimum.
Batte, Jones, and Schnitkey hypothesize that increased education should increase understanding of the complexities of production and financial relationships and therefore increase the demand for information. Increased education likely corresponds with an increased awareness of computers as well as an improved ability to judge their usefulness in the business environment.
Batte, Schnitkey, Rister, and Frank conducted a study to evaluate the farmers’ use of information and the adoption of modern information systems. For this study, the population was directed at commercial size farmers with annual sales greater than $100,000. Among the beef farms, production records were the primary focus of record keeping. Researchers found that relative to dairy and farrowing operations, fewer of the cow-calf producers kept records of when the pregnant animals were due. However, more of them kept weight of offspring. Further the study showed that only 54 percent of the cow-calf producers kept records of feed fed to animals, apparently feeling that it is much less critical success factor compared with the other operations. Analysis of livestock enterprise systems indicates few differences across the various size operations. More than 80 percent of the cow-calf operators reported using manual record systems. Producers of larger herd sizes reported adoption of self-designed computer programs in addition to manual records. This study also indicated the most important uses of farm records in cow-calf herds were in regards to culling decisions, for tax planning, and for evaluating the profitability of the herd. Compared with other breeding animals (dairy and pork) in the study, cow-calf producers found records less important for determining feed rations and when to breed animals, but reported records to be more important for decisions about expanding or contracting herd size.
Small and intermediate herd operators use the computer most for tax computation, business planning, and crop production, while the larger operators used computers for business correspondence, herd production, and marketing/price analysis (Batte, Schnitkey, Rister, and Frank). When compared to other farm types in the study, few cow-calf producers had adopted computer information systems. The researchers indicated this may be due to few existing computer information systems that address the information needs of beef producers.
Additionally the study reported, in the use of professional services, only three services were reported by more than 50 percent of the cow-calf operators. These services are the tax preparer, county Extension agent, and veterinary consultant. The tax preparer and the veterinary consultant were reported as being quite useful. The larger herd operators reported a higher frequency of use of an accountant or financial advisor when compared with the other cow-calf operators. Otherwise, little differences exists with respect to the percentage of operators using various professional services across herd size.
In this study, 52 percent of the cow-calf producers owned less than 100 cows. Relative to the other farm types, cow-calf producers were least apt to use only computer-based record systems. Most used a combination of manual and computerized systems. The results of the study indicate that farmers vary widely in the maintenance and use of farm records. Further, this study suggested that the use of farm records has increased in recent years (Batte, Schnitkey, Rister, and Frank).

Preferences in Decision-Making
Lambert notes that production and marketing decisions are ongoing, are conditional upon past actions, and made in light of current and expected future prices and animal performance. The business success of farm/ranch operations is as dependent on human resources as on physical and financial resources. Psychological characteristics of farm and ranch operators affect business decisions and the business ability to respond effectively to change (Jose and Crumly). Psychological characteristics play an essential role in the decision-making process as well as in organizing the production processes. According to Jose and Crumly, business goals that are based on personal strengths and preferences can increase both personal satisfaction and financial stability.
Jose and Crumly conducted a study of Nebraska farm families participating in an Extension education program coordinated by the Nebraska Cooperative Extension Service and the Agricultural Economics Department from the University of Nebraska-Lincoln. The purpose of the study was to gain insight into the interaction between psychological perception and the economic decision preferences of farm operators. Specifically one of the objectives was to identify the influence of psychological type on management objectives. The Myers Briggs Type Indicator (MBTI) was selected to study the farm managers based on its ability to distinguish a number of psychological characteristics related to business management.
Jose and Crumly concluded that the group studied was a different typological type when compared to the general population because of a high incidence of “introverted, sensing” types. The group preferred judgment over perception in their association of work habits and lifestyle. Along with this, personality characteristics of the sensing judging (SJ) types are not as receptive to rapid changes in their environment. The SJ’s prefer to have ample time to evaluate a situation and also seek the opinions of their peers when a change occurs such as a new technology or regulation is imposed.
According to the study by Jose and Crumly, the difference between thinking and feeling individuals was apparent in the respondents’ preferences for the use of farm profits. Sensing feeling (SF) types preferred family and personal consumption while the sensing thinking (ST) types preferred to purchase capital items. Further the researchers found that the ST type accumulated more debt and more assets and also had a higher propensity to spend leisure time off the farm conducting farm business. The researchers indicated that very pragmatic, family-oriented producers dominated the group studied. Usually such producers are reluctant to integrate complex computer models, commodity futures trading, and long-term financial and family goals into their decision-making model. However, for this group the participants implemented all the tools except futures trading. According to the researchers, there was still a strong preference for practical, orderly solutions.
Jose and Crumly indicate that Extension faculty often feel compelled to convey a large amount of information in a short period of time. Sensing/judging (SJ) types prefer to teach and learn in a methodical, well-organized, manner without textbooks and formal lectures. Almost two-thirds of the producers in the study indicated that they preferred sequential techniques and practical, decisive information dispersed in a manner that produces clear conclusions. Jose and Crumly concluded that Extension programs that use a systematic approach to production, financial, and family goals will be more readily adopted. They also note that a limitation for the adoption of Extension education may be the premise that income maximization is the main goal of the family farmers.

Technology Adoption
Many new technologies have been developed for agricultural production. As adoption is often associated with risk, many variables contribute to a new technology’s rate of adoption. Such variables include the perceived attributes of the innovation, characteristics of the individual, and the means of communication used to diffuse information about the innovation (Rogers, Jarvis). Literature on diffusion of innovations suggests strong relationships between technology adoption patterns and individual and business characteristics (Batte, Jones, and Schnitkey).
According to Rogers, the visibility of an innovation and its apparent relative advantage influence its rate of adoption. Individuals in a social system adopt innovations at different rates over a period of time. Individuals can be classified into adopter categories (innovators, early adopters, early majority, late majority, and laggards) according to when they first begin to use a new idea. Rogers defined innovativeness as the degree to which an individual is early in adopting new ideas relative to other members of the social system. Some notes on socioeconomic characteristics between earlier adopter and later adopters are 1.) earlier adopters are not different from later adopters in age, 2.) earlier adopters have more years of education than later adopters, 3.) earlier adopters have larger sized business units than later adopters, and 4.) earlier adopters have more specialized operations than later adopters (Rogers).
Feder, Just, and Zilberman found that larger farmers adopted innovations with higher fixed costs at a higher rate. Innovations which were neutral to scale were eventually adopted by all classes of farmers, but larger farmers were typically among the early adopters. Also, similar innovations experienced different adoption patterns in different areas with different farmers. Factors that may serve as constraints in the rapid adoption of innovations include lack of credit, limited access to information, aversion to risk, inadequate farm size, inadequate incentives associated with farm tenure arrangements, insufficient human capital, absence of equipment to relieve labor shortages (thus preventing timeliness of operations), chaotic supply of complementary inputs, and inappropriate transportation infrastructure.
Yaron, Dinar, and Voet cited numerous studies that suggested larger farms/ranchers were more likely to adopt innovations. This was due to the inability of small farms to cover the fixed cost of a new technology such as financing, learning a new application, and developing new markets. Off-farm income could also affect the rate of adoption by providing a source of cash flow to buffer the risk associated with new agricultural practices (Feder, Just, and Zilberman). Other factors that could limit the adoption technology include the absence of an adequate support system such as credit, transportation, and marketing channels.
According to Shapiro, Brorsen, and Doster, farmer characteristics such as education and experience could enhance allocative efficiency and be positively related to adoption of new technologies. Since experimentation may decrease with age and experience, these factors could be negatively related to adoption of new technology. These researchers cited considerable evidence that education may have enhanced allocative ability and efficiency in the instability caused by the introduction of new technology. Since the farmers knew less about the distribution of returns associated with new technology, subjective beliefs about the profitability and risk were expected to be important factors in the decision-making regarding the innovation.
Shapiro, Brorsen, and Doster conducted an adoption study where the objective of the farmers was assumed to be utility maximization. One reason for a farmer to adopt a new technology may have been to reduce risk through diversification. The researchers found that off-farm income could be negatively related to the adoption of a new technology because it could substitute for other diversification strategies. Off-farm employment could also take time away from farming that may be needed to achieve the degree of timeliness that would make adoption profitable. Conclusions made by Shapiro, Brorsen, and Doster were consistent with other researchers in that differences in the perception of the new technology may be more important than differences in risk preferences when trying to determine the behavior of farmers.
Jarvis states that computer technology is different from production technology as it may require new skills leading to high learning costs and changes in management. The success of computer use within a business depends on the human capital of the manager while the success of production technology is fundamental in the innovation. Also, Jarvis indicated that a positive relationship exists between the number of peers using computers as well as of producer’s children experience with computers. Both could offer insight into possible enhancement of computer usage. Jarvis further concluded that in times of increasing complexity in farm management, computer adoption may reflect producers’ attempts to better incorporate and apply information to their operations.
Computer adoption rates vary with operator and business characteristics. Batte, Jones, and Schnitkey findings were consistent with previous research in that the rate of adoption for computer use was inversely related to farmer age and positively related to higher education and larger business size. Many older farms have a shorter time horizon to recapture learning costs; thus computer technologies may not be judged to be profitable. Farmers spending above average amounts on farm information (subscriptions, consulting feed, and computer software) are more likely to own computers. Increased expenditures for information may be associated with a willingness to add computer technology to the farm’s information system. These same researchers concluded that with a natural turnover in farm operators, computer adoption would likely accelerate.

Feeding Costs
The need for cost-effective winter supplementation is well known. Kunkle, for example, provides some guidelines for effective forage production, showing ways to reduce costs associated with beef production. Though percentages vary from farm to farm, feed costs are the greatest expenditure second to the original purchase price of the cattle. Feed costs range from 26-50% of total beef production expenditure, depending on farm location and type of operation (Redmon 1996a; McGrann and Walter; Lalman, Gill, and Johnson). In late 1997, feed costs ranged from $.42 to $.84 per day for a 1000 pound lactating cow, and ranged from $.38 to $.73 per day for a 1000 pound dry cow (Dunford). Feed costs vary directly with the price of hay.
According to Redmon (1996a), the four most common mistakes producers make in feeding their cattle include:
Use of hay that is low in nutritive value,
Feeding hay for an extended period of time,
Too much dependence on concentrate feeds,
Too little use of forages (stockpiled or growing) for winter feeding.
Neither Russell and Huhnke nor Redmon (1996a, 1996b) believe hay should be eliminated from feed programs, but do believe hay needs to be well managed to optimize its use. Russell and Huhnke discuss the basics of proper hay management. They emphasize the importance of proper hay storage, hay moisture levels, bale size, and bale density in reducing dry matter and digestible dry matter losses. The basics of hay maintenance can be achieved with little planning. However, agronomists stress the fact that the key to an optimal low-cost feed program is planning. Planning involves knowing livestock maintenance required throughout the production cycle and knowing the nutrients available from alternative forages throughout different stages of forage growth/production, as well as the costs associated with forage production. To efficiently use forages, they must be budgeted according to expected daily growth (Lile and George).

Forage Versus Grain Feeding
Until recently, feedlots have fed grain based rations to accomplish a higher grade of meat. However, with improved pasturing techniques, feeding beef cattle at all stages of production on grass is becoming a more feasible option. Research shows that grass-fed beef is highly competitive with grain-fed beef in taste and grade (Nickel). However, Griebenow, Martz, and Morrow’s research found that grass-finished beef results in poor grade quality, and sometimes has a grassy flavor. They explain that the poor grade quality may be a result of poor forage selection and that the grassy flavor has only been detected by trained taste-test panelists. Griebenow, Martz, and Morrow discussed several studies that as a result of excreta remaining on the pasture from grazing livestock there is increased soil fertility and forage production. They concluded that a good combination of grass- and grain-feeding (grain-on-pasture) can overcome the problems of poor grade quality and grassy flavor, and is more profitable than drylot feeding at all levels studied.
One concern producers have about shifting to a strictly grass-based feeding program is fear of adopting a new technology. Though most producers want to produce at a higher return, many are afraid of eliminating methods they already know and of learning and adjusting to new methods. Hanson, Taff, and Klair evaluated individual farms for the implications of shifting to grass-based feeding. They first developed whole-farm budgets to use in FINPACK, a financial analysis system developed at the University of Minnesota. The budgets show the effects of adopting a variety of grass-based feeding alternatives. The different alternatives were tested for plausibility on three study operations. The current farm management programs and alternatives were compared on an individual farm, as well as across farms. Hanson, Taff, and Klair conclude that, without an external income supplement, the current management practices result in higher incomes than the alternative grass-based feed systems.

Animal Science and Agronomy Perspectives in Modeling
Forage management studies are usually done from the perspective of the animal scientist or the agronomist. Combining a forage production component as well as a livestock production component into one study is very complicated because of the array of factors involved in such a production system. Many animal science studies consider management practices or techniques that could be used given certain available resources and what effect those practices have on livestock. Such studies are usually designed around stocking rate decisions. A major complaint about most stocking rate models is their lack of dynamics. However, Torell, Lyon, and Godfrey developed a multi-period stocking rate model and compared it to a single-period stocking rate model. They concluded that the multi-period aspect had little effect on the results. Based on their conclusions, expected benefits from a multi-period model would be less than expected costs of building one.
Many agronomy studies have considered the management of one or a few specific forages. Emmick and Fox thoroughly describe the elements of production that an efficient manager should consider for planning a successful prescription grazing method on Virginia pastures. They discuss maintenance of forages as well as livestock stocking methods, and the tradeoffs to each in finding the optimal mix. They explain that the general pattern of forage production is fairly predictable and grazing management is the single most important element in the efficient utilization of pasture.
Mattox discusses general management techniques for southern Oklahoma and northern Texas, emphasizing rotational grazing and grazing pressure. Grazing pressure is the practice of using rotational grazing to force livestock to harvest forages before it diminishes in quality. Mattox states that late spring to early summer and, also, early fall is typically the optimum grazing period to harvest summer forages during active forage growth. Grazing pressure requires more intensive livestock management, but more efficiently uses the available forages.
Rawlins addressed the problem of decision making under uncertainty in beef-forage production systems in eastern Oklahoma. Rawlins used MOTAD and Target-MOTAD models to determine the risk efficient allocation of resources for a

Cooperators

Click linked name(s) to expand
  • Terry Lehenbauer
  • Curtis and Brenda Schulz
  • Glenn Selk
  • Bill and Joy Stoner
  • Steve Swigert

Research

Materials and methods:

Case Studies

To better understand producers integrated resource management practices, exploratory case study research was initiated. Case studies are the preferred research strategy when “how” or “why” questions are posed and there are events of interest within real-life contexts (Yin, 1994). A strength of the case study is its ability to deal with a variety of evidence. As a research strategy, it goes beyond data collection and research design to understand complex social phenomena. The investigator’s objective is to develop theories through analytic generalization, not to generalize from statistical analysis. The case study for this project was both exploratory and descriptive in nature. The exploratory portion investigated the specific management practices of each producer, with the descriptive portion documenting other dimensions of the operations to lend to understanding and insights. Multiple case studies were used to document the same phenomena with a variety of cow/calf operations. The cases were specifically selected for differentiating characteristics in an effort to predict similar results or produce contrary results but for predictable reasons.
To ensure reliability in the process (data collection could be repeated with the same results), a case study protocol and filing standard were developed. Based on the literature review and professional experience, data collection was proposed on variables shown or perceived to be important. Through periodic meetings, researchers discussed theory, formed hypotheses, and deliberated on information to be collected. The interview protocol (Appendix 1) delved into the following areas: production and reproduction; forage and nutrition; environmental, conservation, and waste management; personal data, goals, opportunities, resources, and financial issues; and wildlife and other enterprises. A pilot case suggested refinements in the protocol. The filing standard included computerized files, copies of tax records, hand written notes from on-farm visits/phone conversations and Standardized Performance Analysis reports.
Operational measures used to ensure quality research data included using multiples sources of evidence, establishing a chain of evidence, and having key informants review draft case study reports. Multiple sources of evidence included interviews with participants, direct observation by the IRM specialists, participant observation, and collection of production and financial data. Following each meeting with each producer, the information collected was catalogued, routed for review and further comment to investigators, updated and mailed to producers for final comments and corrections.
The unit of analysis was the management team on farms perceived to have innovative or successful management systems. Cases were selected with input from county educators and area specialists with an attempt to include variability in size and geographic location. Interviews were conducted by interdisciplinary teams through on-site visits. One or more interviews were conducted for each case. In the initial interview, primarily descriptive information such as management structure, goals, enterprise mix, and description of the farm information system was collected. The survey instrument was completed and detailed data about the current state of the farm/ranch operation was compiled. During the second interview, a Standardized Performance Analysis (SPA) was completed. SPA data included archival records such as tax forms, livestock, feed and financial records. Further data was conducted addressing sources of information for farm decisions and new practices or changes implemented. Additionally, producers identified critical success factors. Field visits provided the opportunity for observation of relevant behaviors and environmental conditions. Direct observations included observation of pastures and cow herd, producer behavior, and organization of office and records.
Data analysis consisted of summarizing, tabulating, categorizing, and recombining the evidence to address the propositions of the study. The propositions were based on research questions and literature review. Propositions included:
1. Producers who use and maintain more extensive financial and production records, as well as use external information, are more likely to generate a profit.
2. The more profitable producers are more likely to have relatively high levels of adoption of IRM practices in all areas (animal science, financial management, forage management and herd health)

Technological Tools

To identify existing IRM resources, a national survey was conducted. Printed material, software, and video materials were cataloged. The bibliography was published (Prevatt) and information was made available through a website in the OSU Animal Science department. A survey of cow/calf record-keeping software vendors was used to develop a publication listing software and features of the software. Several gaps in available tools were identified and because of their perceived value in answering questions raised by case study participants, software development initiatives were undertaken in three areas: budgeting and partial budgeting decision aids, least cost winter-feeding programs, and profit-maximizing beef/forage enterprise combinations.

Budgeting and partial budgeting tools
A budgeting program, “Can You Afford a Part-Time Ranch?” was developed to allow producers to summarize investment requirements, estimate depreciation, enter expected cow/calf revenues and costs, record repayment terms, and evaluate alternative situations. A number of budgeting decisions aids previously developed at Texas A&M were modified to suit part-time ranches: a part-time cow/calf budget, bid price for beef cows, replacement heifer budget, investment analysis of beef heifer and cow replacement, herd bull inventory, annual herd bull cost projection, preconditioning/backgrounding cost worksheet, cattle marketing plan, stocker cattle price risk calculator, range and range improvement budget, perennial forage budget, annual forage budget, wheat budget, own or custom hire versus harvest and haul, hay storage cost evaluator, hay value, feed inventory reconciliation calculator, cattle inventory spreadsheet, fencing cost estimator, pickup and trailer cost analysis, deer hunting enterprise budget, and quail hunting enterprise budget.

Least cost winter-feeding program
Linear programming was used to find the least-cost winter-feeding programs for two different types of cow herds, fall-calving cows and spring-calving cows. Twelve feedstuffs were evaluated for inclusion in the winter-feeding program: corn, cottonseed hulls, cottonseed meal, whole cottonseed, fescue hay, stockpiled fescue, standing ryegrass-wheat mix, soybean meal, soybean hulls, and two combinations of soybean hulls and broiler litter. One of the mixes contains 80% broiler litter and 20% soybean hulls and the other mix contains 70% broiler litter and 30% soybean hulls. These twelve feedstuffs are commonly used on cow-calf operations in North Alabama. They are relatively abundant because of the nature of agriculture in the northern part of the state.

Profit-maximizing beef/forage enterprise combination
Linear programming was also used in software to identify profit-maximizing enterprise combinations using crude protein (CP), dry matter (DM) and total digestible nutrients (TDN) to match beef cows and stockers’ nutritional needs to forage production. Animal unit months (AUMs) have traditionally been used to define the carrying capacity of pasture. But, the quantity produced and quality of different forages vary significantly over a year. Cool season grasses such as fescue are increasingly being promoted as a component of a forage system to lower costs of beef production. Cool season forages are capable of providing nutrients at a lower cost than purchased supplements at times when warm season forages such as tall grass prairie, bluestem, and bermuda are not growing or are poor quality.
Forage data were collected from various experiment station reports authored by agronomists and animal scientists, from personal contacts with faculty in both departments, from Natural Resource Conservation Service (NRCS) files and contacts, and from Noble Foundation reports and scientists. Monthly averages of forage total digestible nutrients (TDN) and crude protein (CP) were estimated along with monthly dry matter (DM) production for wheat for forage, dual purpose wheat, bluestem, bermuda, fescue, and native pasture.
Livestock nutritional needs depend on the type, size and gender of the animal. For breeding livestock, timing of peak needs depends on the breeding season for cows. National Research Council (NRC) equations were used to estimate beef cattle nutrient requirements, specifically TDN, CP, and DM, and bounds on livestock intake.
A mixed integer program was developed to determine the profit-maximizing use of the land resource (Smith). Initial acreage (cropland, improved pasture, native range) is specified by the user, and additional blocks of land may be rented. Rental rates are specified by type of land. Product price, operating costs (excluding cost of livestock nutrients) and operating capital are entered for each enterprise, as are labor requirements by month. Maximums on owner-supplied capital and borrowed capital are needed along with an interest rate. Available owner/operator hours are specified by month; a maximum number of hired labor hours per month can be entered. A minimum number of acres of a specific forage type may be specified. Annual forage production levels are specified and used with monthly distributions developed from data collected. Harvest efficiencies as well as the percentage of dry matter retained in month-to-month transfers of unused forage may be specified by the user. Unused native pasture and bermuda can be baled and sold. Solutions allow cropland to be transferred to pasture.
Fall and spring calving cows and up to six stocker enterprises are included. For the cow/calf enterprise, average cow weight, body condition score, milk production, calf birth weight, month calves are born and sold, percent calf crop, percent kept for replacements, and weaning weights for steers and heifers must be specified. For each of six potential stocker activities, the user may specify the purchase date and weight, sale date, expected average daily gain, death loss, and shrink percentage. Livestock nutritional requirements may be met either through forage utilization or purchased supplements.

Building on IRM Research and Education

Several IRM initiatives that had begun pre-SARE project were continued: “hands on” Quicken workshops to introduce producers to inexpensive software for financial records, written materials on adapting Quicken for farm/ranch use updated annually for new releases, a quarterly newsletter with Quicken and financial management tips, and Cow-calf Standardized Performance Analysis (SPA) workshops to assist producers in summarizing production and financial information in performance measures. As these programs had proven valuable to producers of all sizes and enabled producers to track enterprise costs and returns, publications and software were continuously updated throughout the project. New software that appeared likely to facilitate IRM analysis and decision-making was evaluated and/or developed and added to workshops when appropriate. Educational programs included intensive workshops, demonstrations, publications, media, and an IRM Internet home page. Educational materials were modified to reflect lessons learned through field experience and case studies.
Beef producer information exchanges patterned after a series of successful forums in Texas were held. The forums allowed producers the opportunity to share ideas and experiences concerning various aspects of integrated resource management. The 1 to 2 day information exchange focuses on 3 to 5 topics–for example, marketing alternatives, income diversification, waste disposal and environmental concerns, forage-grazing management (both introduced species and native plant communities), herd health practices–identified in advance using the Delphi approach with invited producers. The emphasis was on producers learning from each other and researchers learning from producers. The number of participants was limited to allow maximum interaction and encourage open discussion. Extension staff and researchers served as moderators and resource professionals (not presenters) and noted concerns of the operators as well as innovative practices and ideas. Thus, the forums suggested research and education needs and served as a basis for future dialogue among beef producers, educators and researchers.
A similar format was used for an information exchange for veterinarians and for accountants and personnel responsible for management information systems. The information exchange for veterinarians led to a training session on SPA for veterinarians and local interest in SPA. Other agricultural advisors were also target groups for IRM education.
A new IRM educational initiative focused on accountants working with cow/calf producers. Case studies and other experiences of investigators suggested that accountants who were simply filing tax returns for clients could provide additional valuable services by summarizing records to support managerial decisions. Hence, plans were developed for a managerial accounting workshop using input from accountants, advisors and producers. After the initial workshop, evaluations and follow-up surveys suggested topics for future conferences.
Project investigators also met annually with the Southern Region IRM working group sponsored by National Cattlemen’s Beef Association (NCBA) to discuss plans and programs.

Research results and discussion:

C. Results and Discussion

Our three objectives were met. We learned there are no “magic bullets” or easy cures for red ink in many cow/calf operations. While some tools can help producers improve on the margin, problems are often difficult to diagnose, solutions are not easy to implement and often producers are not highly motivated to change, at least in the short run.

Case Studies
Each case study was unique in their circumstances, strengths and weaknesses. Detailed summaries of individual cases are included in Tesconi’s thesis. An IRM index was developed to evaluate the producers’ adoption and use of practices advocated by IRM specialists to improve resource management in the areas of animal science, financial management, forages and herd health. Disciplinary specialists evaluated the management practices of the case study producers using the information in the interview packet and knowledge of the producer gained from the case study. Using their professional judgment they rated each producers’ adoption of recommended management practices within their respective disciplines. An index score based on a scale of 1 to 10, with 1 being the least desirable and 10 being the most desirable, was developed for each discipline. An aggregate index score for each producer was then calculated based on the index scores from each discipline.
Producers tended to score highest in animal science. The cow-calf producers are likely more familiar with cattle production relative to the other disciplines since that is the business they chose to enter. The financial management scores had the most variation and possessed the lowest average score. This can be explained by the differences in goals and expectations of producers and thus varying time and effort directed toward the financial management of the operations. The forage scores were also weak, again presumably because of inherent preferences for cattle-related activities. The producers who used computers in their business tasks were the top ranking producers in the overall index.
A Spearman Rank Correlation was used to analyze the relationship in each of the disciplines and the overall index with net income, feed costs, grazing costs, other costs and the total cost of production. Four relationships were strongly significant. As expected, the Animal Science and herd health indices were strongly correlated. The forage index was highly significant to net income indicating that forage management practices are influential to net income. The feed cost variable had a strong negative and significant relationship with net income. Also the financial index and the overall index were strongly correlated. Due to the different in standard deviation and variance of the financial management index relative to the other areas of the index, further research is needed to analyze the significance of the financial management index in regards to the overall index.
Producers identified their strengths and weaknesses as well as identified long-term goals of their operation. In some instances, there appeared to be differences between the producers’ perception of their management when compared with the scores of the IRM specialists.
Cross-case analysis with respect to the original propositions revealed the following:
· Proposition 1. Producers who use and maintain more extensive financial and production records, as well as use external information, are more likely to generate a profit. Producers that the experts ranked higher in the overall index used and maintained more extensive financial and production records. Also, on average, these producers with the exception of one used more external sources of information. The profitability of producers relative to the financial index score was inconclusive however as the highest scoring producer was the most profitable with the lowest scoring producer second most profitable.
· Proposition 2. The more profitable producers are more likely to have relatively high levels of adoption of IRM practices in all areas (animal science, financial management, forage management and herd health). The producers who scored highest in the overall index were relatively consistent in all areas, that is, above average in most areas. Thus, the proposition seemed to be supported by cross-case analysis.
The IRM index was an initial attempt at summarizing a large amount of information into a single measure. Additional work is needed to test its validity as a measure and its usefulness in assessing management practices. Much more information was collected than was used so the interview packet should be streamlined. Further, specialists from different disciplines used different means of calculating their portion of the index so some standardization in technique would be useful. And, further testing of the weights assigned to the disciplinary components of the overall index would be helpful.
Case studies such as these point out the difficulty in suggesting improvements to a farm/ranch operation without several hours of orientation to document and analyze existing practices. The educator who routinely is asked to participate in broad-brush educational programs realizes that he/she may rarely provide the right advice at the right time for many in a given audience. Many producers seek quick answers from Extension staff who want to accommodate them, but how helpful can we be in responding to questions without background information? At the same time, learning about questions that innovative producers do not know how to address is instructive with respect to research and educational program needs.
Veterinarians are one of the more frequently used as well as highly regarded consultants on operations with livestock. Educators should not overlook veterinarians as a potential audience for training programs with the idea that they may have a multiplier effect. Likewise, dialogue with and programs for tax preparers and accountants may be useful in minimizing the number of mixed signals producers receive and helping to minimize the stress associated with trying to maintain records for different purposes.
Even producers with fairly sophisticated record keeping systems may lack skills or time to efficiently and effectively summarize and analyze information. Record keeping must be made as simple, inexpensive, and painless as possible. Programs in time management might be beneficial to many producers. Another alternative would be to assist in further development of consultants and encourage producers to use them to supplement their personal efforts and skills.
Agricultural faculty are not experienced with the use of case studies as a research tool compared to survey methods and quantitative research. We were uncomfortable with the technique, and were somewhat ambivalent about the results. A detailed look at a few, probably non-representative farms and ranches can be disconcerting. We are trained to generate hypotheses from theory, then test the hypotheses generally using large population-based data sets or time-series aggregates and statistical methods. These statistical tools are not appropriate for case study research. We never resolved our discomfort, and our inclination is still to generalize or make inferences.
The contextual information and insights derived from the case studies were extremely valuable. Producers consistently reported the need for more information on forage management. Surveys help us understand the state of the world, without telling us much about how and why certain practices are used or how a business is managed. Case studies can play a very important role in answering the how and why kinds of questions. Case studies were valuable in letting us see the “real story” behind a particular topic.
Case studies are time-consuming, invasive research. Researchers were uncomfortable in the role of interviewer for several reasons. Farmers and ranchers are busy people. Gathering information for a case study is a major imposition. Further, the participating producer may question the benefit in project participation. Consequently, we found it difficult to get much more than a couple of hours of the manager’s time. That was sufficient for a reconnaissance, but was clearly not enough time to do any serious evaluation of management.
Researchers were uncomfortable in the role of interviewer for several reasons:
· Most had no formal training in interview techniques and so felt inadequately prepared to use interviewing as a primary means of data collection.
· As educators, our inclination is to want to respond to questions rather than ask them.
· The interviews required several hours of the manager’s valuable time so the researchers felt as if we were imposing and consequently may have hurried the interview or failed to ask appropriate follow-up questions because of the perceived imposition.
· The researchers wanted the interview to be a pleasant experience (or, at least not unpleasant), which precluded exploring areas of potential interest if perceived as sensitive, for example, a decision to hold a purebred sale in a new operation.
Many aspects of the interview protocol worked well. One lesson learned in conducting interviews was that a tape recorder would have been useful. Having colleagues along to also listen and take notes was helpful, but probably still an imperfect substitute for recording the session. Some points of the protocol were difficult to pursue in an interview mode. For example, identifying critical success factors was difficult for some producers.
In general, we believe case study research has a place in agriculture tool kits. The ability to observe management behavior with accuracy and insight should lead to better theory, questions and hopefully answers. While we doubt that “qualitative research” will ever replace more quantitative research, for those willing to take a risk, case study experience can be very valuable. We gained insights about management processes which we do not get from analyzing data; however, we found it difficult to summarize what we felt we had learned.

Technological Tools

Least cost winter-feeding program
To remain profitable a cow-calf producer must constantly seek to keep production costs low. One area where input costs have significant room for improvement is the area of winter-feed costs. By using linear programming, cow-calf producers are able to compare available feedstuffs on a more complete basis. The linear program allows producers to find the least-cost combination of feed ingredients that will satisfy the nutritional requirements of the animals to be fed. The use of this tool can assist in significantly reducing winter-feeding costs in both fall-calving and spring-calving systems.
By using linear programming to determine the least-cost feedstuffs, we were able to show a dramatic difference in winter-feeding costs when depending on the price and quality of fescue hay. This difference suggests that producers who intend to feed hay, either purchased or produced on the farm, should have the hay tested for nutritional content. The feeding of low quality hay without supplementation can fail to meet the minimum nutrient requirements of the animals to be fed, leading to poor performance in the areas of reproductive rates, weaning weights, and weight loss over the winter-feeding period which could also reduce gross revenues. Also, with the variability found in the quality of hay, fescue hay may be too expensive for the value of nutrients supplied.
The results of this study can be of significant value to cow-calf producers in Alabama and elsewhere. The amount of savings in winter-feed costs could have a significant impact on reducing annual maintenance costs and thus improve the profitability of cow-calf operations. If for example, producers changed from feeding twenty-five pounds of high-priced and mean-quality fescue hay per head per day to feeding twenty-five pounds of mean-priced and high-quality fescue hay to their wet cows, the savings could be as much as $61 per head. For a 50-cow herd, savings of $61 per head would reduce cow-calf cost of production by $3,050. These dollar amounts whether expressed per head, per cow herd, or for a region are worth investigating.
Profit-maximizing beef/forage enterprise combination.
In trials for a northwest Oklahoma base case, fescue, because of its bimodal growth pattern plus volume and quality of production, dominated improved pasture forage solutions despite its higher cost. In all scenarios, owned and rented pasture was fescue unless production is halved or acreage of other forage was forced into the solution. Some wheat was harvested as forage, except when expected annual wheat forage production was halved or the dry matter minimum on livestock consumption was raised. Wheat was harvested for grain only when wheat forage production was halved, harvest efficiency was dramatically lowered, or the dry matter intake requirement raised. Native pasture was used, but additional acres were rented only in the scenarios where hay costs were halved or spring-calving cow costs were greatly reduced. Bermudagrass and bluestem only came into the profit-maximizing solution when forced.
The enterprises in the solution did not vary with changes in assumptions about types of improved forage used, forage harvest efficiency, capital constraints, size of rental tracts, or changes in wheat price. The maximum on available capital was constraining in all scenarios except the low harvest efficiency scenario and most affected the size of the stocker enterprise. Easing the capital constraint and increasing the size of rental tracts increased net returns relative to the base case. Owner labor hours were not constraining in any of the scenarios studied.
With data appropriate to a specific region, the software promises to be useful in evaluating profit potential for different land bases, forage mixes and beef enterprises. The solutions provide food for thought for producers evaluating forage alternatives, land base expansion, and stockers relative to cow/calf operations.

Building on IRM Research and Education

Veterinarian information exchange and SPA workshops
The forums provided an opportunity for veterinarians to discuss producer needs, discuss challenges associated with consulting and identify needs for further education. In open discussion, participants discussed everything from “comfort levels” to ethical issues related to consulting. The SPA workshop for veterinarians familiarized them with SPA concepts and software through interactive, “hands on” sessions.

Managerial accounting workshops.
Like the workshops for veterinarians, these workshops increased awareness of tools available to assist in financial record-keeping, analysis and planning as well as IRM concepts. Like veterinarians, accountants are local resources with whom producers have regular contact. Because they often assist producers with record-keeping, they are well-positioned to provide management information, not just prepare taxes. But because of their backgrounds and training, few accountants know what kinds of summaries would be useful to producers, how to develop and interpret them or know when the reports might be needed. Educators were surprised at the level of interest in these workshops. Participation ranged from 45-80 persons in different years.

SPA Workshops and Case Development.
SPA workshops provided the participants a chance to dig into their own production and financial numbers with professional guidance. They began to understand the need for data that is collected and summarized in a consistent manner and they recognized shortcomings in their existing information systems. At the same time, through the production and financial performance measures calculated, they begin to identify strengths and weaknesses in their operation.

Producer information exchanges.
These forums provided an opportunity for producers to share concerns and lessons learned about timely topics and issues of great concern. Producers appreciated the opportunity to meet in a neutral environment with their colleagues to learn from each other.

Quicken Workshops and Materials
Farmers do not need to spend a large sum of money to computerize their financial records. Quicken was found to be a viable package for recording farm and ranch financial records for most producers (any operation without payroll or accounts receivable/payable) and especially for small producers. It is inexpensive, user-friendly, and flexible. Its flexibility allows for summary by enterprise and facilitates both tax and management reports. Step-by-step instructions and “hands on” workshops proved popular as did a quarterly newsletter with financial management tips and information about other new resources for farm managers, for instance, software and publications. A website provided instant access for the latest materials internationally: http://www.agecon.okstate.edu/quicken.

Participation Summary

Project Outcomes

Project outcomes:

Case studies

These case studies pointed out the difficulty in suggesting improvements to a farm operation’s management information system without extensive orientation to document and analyze existing practices. The case studies helped individual producers begin to identify strengths, weaknesses of their operations and made project investigators aware of the uniqueness of each case. In one case, the producer had averted a near disaster by having forage tested for nitrates, a lesson that was shared with other producers. In another case, the producer’s feeding program was identified as likely to result in a price penalty under their contract with the end buyer, so changes were made to allow them to increase income potential.

Learning about questions that innovative producers have difficulty addressing is instructive with respect to research and educational program needs. Because management tends to be neglected for production activities, educational efforts must be focused, timely, and make adaptations of new skills as simple, inexpensive and painless as possible. Since producers value highly insights gained from other producers, perhaps educational programs should regularly include innovative or exemplary producers as speakers. Sometimes educators falsely assume cattle producers are in the business to make a profit. This can be a major stumbling block to developing effective programs. Getting their goals and objectives clearly and positively identified is a must for developing successful programs.

Most cases highlighted a need for forage management information. This information suggested new research projects as well as educational programs. In the longer run, the impact is expected to be lower costs of production.

Boiling down the information collected into a few meaningful conclusions was difficult. One-on-one work with producers confirmed the uniqueness of each situation and called into question the value of “broad brush” programs. This suggested the need to re-think some traditional Extension delivery methods. At the same time, we learned how labor-intensive, extensive one-on-one work is, making it infeasible except on a very limited basis given current resources.

Factors critical to successful integration of production and financial management and the sustainability of farms were studied. The insights gained have been shared with other farmers, educators and researchers, enhancing both the social and economic viability of family farms. Although the focus of this project has been on farms with beef production, the research and education model is transferable to other types of production.

Technological tools identification and development

The initial IRM bibliography and software survey highlighted materials available and served as a resource for IRM materials as well as a directory of educators with IRM interests. The survey confirmed that few state educational institutions commit significant resources to software development. Texas A&M had the most to offer in the beginning and has continued to be a leader in public software development for cow/calf producers. The publication cataloging commercially developed cow/calf software record-keeping programs proved very popular. Thousands of printed copies were distributed nationwide (it was also available via the internet). It filled a void in making information about a variety of software products available in one place, allowing producers and educators to do one-stop comparison shopping.

Least cost winter-feeding program
This thesis could be changed to address the ability to increase the animals’ body condition score if necessary or desired. It could be adapted into a web-based forum which could be provided to assist cow-calf producers in lowering feed costs. This study could also be expanded to lowering feed costs in additional enterprises such as feeding stocker cattle. Additional research could be done on which feedstuffs are included to either localize or expand the regions according to area feedstuff availability. Increased knowledge could be gained by analyzing the influence of varying prices and quality of feedstuffs other than fescue hay. Further research could also include the use of futures market strategies to lower winter feed costs.

Profit-maximizing beef/forage enterprise combination
To increase returns, producers must optimize their production given certain constraints. Some constraints producers face are land availability, available forage resources, and precipitation. Feed costs can often be reduced if producers are attentive to their available forage resources. Incorporating cool season forages into a forage maintenance program can extend the availability of nutritional forages further into the winter. Typically, producers use native forages, possibly because they think that establishing a new forage will cost too much or will require too much labor. However, the benefits of using an optimal mix of forage can outweigh the costs of establishing a new forage. Some forage enterprise budgets prorate establishment costs over a five year period. Those budgets can be used in this model. An optimal forage mix may allow producers to maintain more livestock on the same amount of land.

Compiling detailed forage enterprise budgets along with income-providing (e.g. cow-calf, stockers, and grain) enterprise budgets into one whole farm budget will help a producer to design a production system that best fits the producers goals. The prototype linear programming model containing a forage database of forage dry matter (DM), total digestible nutrient (TDN), and crude protein (CP) will help identify profit-maximizing solutions. For each month, the model balances the availability of forage DM, TDN, and CP with estimates of cow-calf and stocker nutrient requirements measured in DM, TDN, and CP. It also allows the user to estimate changes in quantity and quality of stockpiled forage over time. This program provides producers with a tool for analyzing their production potential along with the associated financial inflows and outflows. It also provides researchers a tool for analyzing various factors that influence farm-level behavior.

Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture or SARE.