The Value of Record Keeping for Decision-Making on Canadian Cow-Calf Farms and Ranches

Background

It has been suggested that record keeping is an important tool for farms and ranches, especially as it relates to the ability to identify and rectify areas of improvement (Bach & Ahedo, 2008). As agricultural firms operate in highly competitive markets with little control over output prices, improving production efficiency is an important goal for managers. Benchmarking and record keeping enables ranchers to identify gaps between farm-level goals and actual production, or between individual production and that of a peer group (Hughes, 1996). The awareness of these gaps is important as it has been suggested that changes occur only after performance falls short of a goal (Levinthal & March, 1993). Records are necessary to compare performance over time and to identify productivity and financial gaps that exist. More work is needed to understand how producers exploit their records and the value gained from their application.

Objectives

• The overall objective is to advise which records are most worthwhile for Canadian cow/calf producers to keep and analyze. The findings directly benefit BCRC’s internal record keeping project focused on developing record keeping modules and guidelines.

What they Did

The purpose of this project is to determine which production and financial records are currently being kept by Canadian cow/calf producers, how the records are being used to make management decisions, and what economic value has been gained from using the records to make decisions.

In Phase 1, up to fifteen leading adopters of record keeping (financial and production) will be interviewed to gain insight on the motivating factors for collecting and analyzing records, and how their method of maintaining records has changed over time. In addition to interviews, collection of production and financial details is planned to determine the correlation between record keeping and performance.

In Phase 2, cow/calf producers across Canada (targeted sample size of 400 to achieve 95% confidence based on 36,000 Canadian beef farms) will be surveyed regarding their record keeping practices. Questions will be similar to those asked in personal interviews conducted in Phase 1. Actual records will be collected to measure if correlation exists between record keeping practices and productivity/profitability.

Econometric analysis was completed using the data to look at what influenced ranchers who were level one record keepers and level two record keepers. As well, a model was created to see what variables would influence a rancher’s decision-making confidence around animal production. Finally, a model was created to see how different variables affected a rancher’s satisfaction with their overall satisfaction with animal production.

What They Learned

Propensity to keep level 1 BCRC Records: Preliminary results showed that holding all else constant, when a rancher has a herd size of 200-250 cattle its marginal effect parameter estimate of approximately 0.42 suggests that ranchers with this many cattle are 42% more likely to be a level 1 record keeper than those in other categories.

Propensity to Keep Level 2 BCRC Records: Holding all else constant, when a producer has education its marginal effect parameter estimate of approximately 0.436 suggests that ranchers with an education are 43% more likely to be a level 2 record keepers than those without an education.

Holding all else constant, when a producer has a beef production goal its marginal effect parameter estimate of approximately 0.25 suggests that ranchers with a goal in this area are 25% more likely to be a level 2 record keeper than those with no goal.

Holding all else constant, when a producer has a beef production goal and an education their marginal effect parameter estimate of approximately -0.31 suggests that ranchers with a goal in this area are 31% less likely to be a level 2 record keeper than those with no goal or education

Decision Confidence around animal production decisions: This linear regression model shows a positive increase in a rancher’s decision confidence when holding all else constant they individually are an analytical decision maker, a level one record keeper, as well as both an analytical decision maker and they have both an internal locus of control or when they have both an internal locus of control and are a level two record keeper.

Satisfaction with Overall Animal Production: This linear regression model shows a positive increase in a rancher’s satisfaction when they have an increase in their decision confidence, an internal locus of control, they analyze their records themselves, and they plan to retire in ten years. The age variables shows that an increase in the ranchers age results in a decrease in satisfaction.

What It Means

The result of the record keeping logit models show suggest that ranchers with a herd size between 200-250 are more likely to keep level one records than those who have other herd sizes. Otherwise there were no significant variables in this model suggesting that there were no consistent things that influenced what increased the propensity for ranchers to keep level one records. The level two model suggested that ranchers who have separately an education or a beef production goal both see an increase in their likeliness to keep level two records. However, the interaction between education and a beef production goal shows a negative relationship between the interaction and propensity to keep level 2 records. This could suggest that when a rancher has an education and knows specifically what records they need to keep to measure their goals they may choose to not keep other goals that do not help them measure their specific goals.

Things that increased a rancher’s decision-making confidence such as being an analytical decision-maker and being a level one record keeper suggest that ranchers who are able to make data-driven decisions are more confident. When they have an analytical decision-making style and an internal locus of control they are also more confident in their decisions. As well, when a rancher has an internal locus of control and is a level two record keeper they are also motivated to consult their records more likely and this leads to more confidence in the decisions they are making.

This linear regression model shows a positive increase in a rancher’s satisfaction when they have an increase in their decision confidence, an internal locus of control, they analyse their records themselves, and they plan to retire in ten years. The age variables shows that an increase in the ranchers age results in a decrease in satisfaction.

Things that increased a rancher’s satisfaction with their overall animal production were individually having a high decision confidence, an internal locus of control. As well, they analyze their own records which most likely helps them understand where opportunities to increase their production is and leads to overall increased satisfaction with their animal production.