Measuring Production Efficiency

Pounds per Head or Pounds per Acre: Two side of the Same Paradigm

For decades we’ve been encouraged to evaluate the efficiency of production by focusing on weight weaned per cow. Now some are arguing that the critical measure should really be pounds weaned per acre. But neither measure is very useful. Each is just a different side of the same failed paradigm: increasing production will increase profit. The problem is, whether it is pounds per cow or pounds per acre, increasing production does not necessarily increase profit. The most productive ranch is rarely the most profitable.

A few years ago, in the development of RFP Next Steps,  our program to help our graduates apply Ranching For Profit School  principles to their ranches, we took a deep dive into this question: If there is only one thing you can measure to determine the efficiency of production, what should it be?

We looked at every possibility. We found that, if your goal is increasing profit, the best measure of production efficiency is gross margin per unit. The video below helps to visually explain this concept.

The unit we usually use in livestock enterprises is a standard animal unit or an acre. They measure the same thing because a standard animal unit quantifies the energy that an animal needs, and, of course, for grazing animals that energy comes from acres.

The bottom line is that the weight weaned per acre or weight weaned per cow, are two sides of the same failed paradigm. Gross margin per unit is the only production measure that matters! Production measures that don’t include the value of production and the cost of achieving it are meaningless when you are ranching for profit.

If you have enjoyed our post, please follow and like us and be sure to share us with your friends.

1 Comment

  1. I whole-heartedly agree: Weaning weight and pounds per acre are just dumb; GM/Unit is a great tool. Unfortunately, it’s a bit clumsy in conversation. I think most folks will agree that in western culture we avoid asking people how many cows or acres they have. For the most part, those numbers don’t tell me much anyway. Similarly, I would be hesitant to ask someone what their GM/Unit is, even though it would be really interesting.

    When I meet an interesting ranch person, I often ask how many paddocks they run on, or what their typical rest period is, or how many days they feed hay each year. Answers to those questions are pretty good indicators of GM/Unit.


Leave a Reply

Your email address will not be published. Required fields are marked *