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Computer Software Tools to Enhance Ranch Profitability
By moniquegarcia on Wed, 08/07/2013 - 12:54pm
Enhance Economic Opportunities for Agricultural Producers
The ranching business is by nature multifaceted, with expertise required in three main management areas: range, financial, and livestock production. The success of the ranching enterprise is dependent upon the operator having skills in each of these areas. Given that many ranchers are in the ranching business because they treasure the lifestyle, financial management can often be neglected. Yet it is the area where the rancher can define the strengths and weaknesses of the operation to ensure the ranch will still be in the family for the next generation. Concerns over the proposed Animal ID system, COOL (Country of Origin Labeling), price uncertainty and few pounds of product to sell during the recent drought have made the need for understanding and analyzing the financial area very important for the Arizona rancher. Although the drought situation as temporally eased, the cost of potential replacement animals and the uncertainty of restocking have made several ranchers in the state reevaluate whether they can or should get back in the ranching business.
Description of Action:
Cooperative Extension continues to address ranch financial management by providing hands-on computer-oriented workshops. Today’s computers and software provide relatively easy tools for recording and analyzing ranch management decisions. With appropriate inputs, the computer can numerically and visually evaluate how business decisions have the potential to threaten or enhance the financial health of an operation. However, using computers can be a barrier to many who for one reason or another have never had the opportunity to learn how to use them. Three UA faculty have developed diagnostic software tools that pinpoint problems for ranch profitability and assist in record keeping, cash flow analysis, drought mitigation options, retained ownership, and evaluating the decision to restock the ranch after the animals have been removed.
Each software tool has been designed and written with the input of ranchers so that it is user-friendly and relevant to Arizona ranchers. Data used for the computer workshops was taken from production figures for the UA’s V Bar V Ranch. The ranch restocking software evaluates the costs and returns associated with variations in buying replacements or waiting for replacements to come from within the herd over time. Training is conducted using a 20-machine wireless-portable computer lab. This mobile lab allows faculty to reach under-served communities that normally do not have access to computer facilities.
The program outreach focuses on scheduling several workshops in remote communities where little, if any, hands-on ranch management training has occurred. Even though workshops were brought into their “back yards,” respondents in under-served rural areas indicated that they still drove an average of 40 miles to attend the computer workshops and several drove 100 to 250 miles. One respondent who drove 80 miles had never attended a computer workshop because “one has never been offered in my community before.”
From December 2003 through September 2004 this program was delivered as an oral presentation to a total of 1,431 participants at several conferences. Of the 1,431, more than 40 percent (406 people) received hands-on training computer workshops throughout Arizona, Nevada and Utah. Program outreach has included Hopi, Navajo, San Carlos Apache, White Mountain Apache, Tohono O’Odham, Supai and Havasupai Native American communities–essentially all of the tribes involved in raising cattle in Arizona. When the workshop was presented the 17th Annual Southwest Indian Agricultural Association (SWIAA) Conference, which includes Arizona and Nevada tribes, the Nevada Tribal Agricultural Committee, representing the 26 tribes in Nevada, requested more Planning for Profitability workshops for their members. During the past year, additional information on the potential for agri-tourism and specialty agri-product market opportunities was added to the workshops in an attempt to provided alternatives which may be available to the Arizona ranching community.
Questionnaires were sent to 68 ranchers in underserved audiences in 2004. Of these, 44 percent reported that they had used one or more of the computer spreadsheets in making decisions for their operations.
One rancher who had never used a computer before and who had been performing all of his ranch management accounting by paper and pencil was so excited about the spreadsheet templates that he wanted to buy one of the computers in use at the workshop. A couple of elderly participants said they used to make all of their decisions with pencil and paper but the workshop convinced them that it was time to switch over to doing their spreadsheets on the computer.
“It gave me a better understanding of how and why we need to do a proposed budget for better management.” –workshop participant
“Will follow expenses more closely. The workshop helped show how and what.” –participant
“Very informative, I hope more people will benefit from these workshops” –participant
USDA: RMA; The Western Center for Risk Management Education; Arizona Cooperative Extension
The University of Arizona Economics Building, 403F
Tucson, AZ 85721
Tel: (520) 621-6245; FAX (520) 621-6250