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A detailed audit of your records can assist in management decisions. Many cattlemen don't enjoy keeping detailed production and financial records of their operation, but the Texas Agricultural Extension Service (TAEX) and Texas A&M University in cooperation with NCBA have developed a way to make your paperwork pay. The Standardized Performance Analysis program, or SPA, is a way to analyze your cow/calf, stocker or farming operation by looking at both the production and financial sides of your business. "Most people use their income tax return to make management decisions about their operation, but it is not always the best system to use," says Dr. Ron Gill, beef cattle specialist for TAEX. Gill spoke at a seminar put on by the Texas and Southwestern Cattle Raisers Association. "Just think about it. You try to hide or conceal income from the IRS, and then want to use those records for managerial accounting. It doesn't make sense. Some people make it their goal to not pay any taxes. Did they ever stop to realize if they don't pay taxes, they're not making any money?" "I used to love it when I didn't pay any taxes," says Minnie Lou Bradley who sounded praises for the program at the ranching school. Bradley owns Bradley 3 Ranch and B3R All Natural All Premium Beef in Childress, Texas. "Once I used the SPA program to analyze our business, I discovered where I was making money and where I wasn't. Our operation is much more efficient now. I don't mind so much paying those taxes because I know we're making money." The SPA program is the first step in the process to improving your operation, explains Brenda Duckworth, who works for TAEX. "It teaches you what aspects of your operation to focus on and how to utilize that information." SPA can help commercial cow/calf operators identify any areas of their business that may be out of line, says Stan Bevers, an extension economist for TAEX. In the Rolling Plains area of Texas, Bevers has accumulated a data base of 100,000 mother cows, and can compare one rancher's statistics with those of similar size in the area. "For example, if we determine you paid $85 per cow last year for feed, we can compare your feed costs to other ranches similar to yours. If that figure is high, then we try to determine why and see how we can lower it." On the production side of the equation, SPA can figure your weaning ratios based on exposed cows, pounds weaned per cow or even weaned pounds per acre. The results can answer questions like are the cows producing enough to justify the operation? Do some low producing cows need to be culled? Does the land pay for itself used in a cow/calf operation? Despite the program's existence for about a decade, only a small portion of ranchers use SPA. "It takes a lot of time initially to get the system in place for an operation. Then a commitment must be made to periodically reanalyze and adjust the information," admits Gill. "The long term accuracy depends on an individual's commitment to the program. But once you've gone through the process, the results are extremely valuable." "I can look at our records and make some major decisions in just a few minutes," says Bradley. "For instance, I can decide in less than 10 minutes if we've got the money to spray for weeds or mesquites. How much money we've got and how much we're going to need in the future is all spelled out with our monthly financial statements." Although the largest number of participants are from Texas, out-of-state producers are encouraged to use SPA. "SPA is not widely used in other areas due to a lack of consultants," says Duckworth. "But private consultants are available for anyone interested in the program." TAEX holds a workshop each year for those interested in learning more about SPA. For more information, call your local extension office or the Texas Agricultural Extension Service at (940) 552-9941 |
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