Road Warrior

The Advisor Who Paid Off

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The other day our veterinarian, Todd, shared a story with me about a producer who came to him with a pinkeye problem, which was not only aggravating, but costing him a lot of money. He told me this story during a driving sleet storm as we were checking cows for heat as part of our breeding program.

Todd indicated that he went out to the herd and addressed the pinkeye problem. However, while there he observed the calves were in poor condition despite lush pastures. He suggested that the producer implement a comprehensive plan of worming, fly tagging, vaccination and vitamin boosters. Todd had not heard from the producer until he dropped by just before the holidays.

The producer was extremely pleased with the outcome of Todd’s recommendations. His cattle had sold at an average of 40 more pounds per animal at market by following the protocols and procedures throughout the summer and fall. While the cost including veterinary time was about $12-15/head, the benefit with today's prices was nearly $50 a head, a 3-to-1 cost-benefit ratio. In this situation, the veterinarian came out on an ordinary call, suggested a routine that was followed and executed, and the producer reaped outstanding returns.

The point is that having an advisory team, whether it includes a veterinarian, accountant, consultant or lender, can be a moneymaker. The critical part is one's ability to follow through and execute after the consultants have made their recommendations. In this case, instead of buying more cattle, the producer was more effective with his existing resources.

I often say that it is important to get efficient before you get bigger, or grow your business. In other words, “better is better before bigger is better.” Those thinking of buying or renting more high-priced farm ground may need to consider how to utilize existing resources in a more cost effective manner. This may include input from a team of advisors including a crop consultant, peer producers from outside of the area, or an economic business consultant who could conduct an objective resource utilization analysis. Just like the livestock producer who had a pinkeye problem, it is important to be open-minded enough to follow procedures and protocols recommended by an advisor with a high level of expertise to improve profits.

 

Editor’s note: Dave Kohl, Corn & Soybean Digest trends editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups. He can be reached at sullylab@vt.edu.

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Dave Kohl is an ag economist specializing in business management and ag finance. He can be reached at sullylab@vt.edu.

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