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MANAGEMENT
IMPROVING EFFICIENCY
Roland P. Freund
Regional Farm
Management Agent
Penn State
In my last column, we looked at
various efficiency measures and
how to evaluate an enterprise.
It is quite simple for economists
to tell us what we must do to
improve efficiency, but a lot more
difficult when we are in the real
live farming situation. This time
we will look at some specific prac
tice changes which we might want
to consider.
Productive
Efficiency
Theory says that the efficiency
of an enterprise can be impoved by
reducir variable costs, or
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increase the income, or both. For
crop enterprises this can be done
by:
• Using nutrient management
and integrated pest management
practices to apply only the required
inputs and no more.
• Where possible, use no-till
and such practices to save machine
time and labor.
• Plan ahead to ensure that crops
are planted and harvested as close
as possible to the optimum time
frame.
• Maximize the use of rotational
grazing during the growing sea
son, to enable ruminants to harvest
most of their hay-equivalent
requirements at better quality and
lower harvesting costs.
Livestock enterprises will be
more efficient when adequate
attention is paid to:
• A comfortable (for the animal)
Tiberdome
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environment with sufficient venti
lation .and a dry resting place.
* The basics of nutrition to pro
vide high intakes of excellent qual
ity water and feeds, particularly
forages for dairy animals. Don’t
pay big bucks for foofoo dust!
• Optimization calculations to
see what is best for your situation.
Particularly where land is
expensive, it is inefficient to sub
stitute intensive grazing for the
much higher energy production
per acre which can be supplied by
com silage. When grazing and/or a
good forage program is supplying
high protein, and com silage furn
ishing cheap energy, grain intakes
(particularly protien) can be
reduced for a very efficient feeding
program.
• Reducing the culling rate of
breeding animals. This will pro
vide for more breeding stock sales
or more rapid herd expansion. It
can be achieved by attention to all
the details necessary to ensure
reproductive performance, sound
feet and legs, hygiene, and disease
prevention.
* Raising healthy replapement
breeding animals that are capable
of achieving their genetic
potential.
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Labor Efficiency
There is a big variation in labor
usage between farms using the
same production system. It is
important to keep track of specific
tasks and record just how much
' labor is devoted to each task on the
farm. This can be very revealing,
and can provide management with
a lot of information to improve
human resource management.
It might be possible to raise
labor productivity considerably
by:
• Taking time for management.
• Organizing and structuring the
workforce, assigning responsibili
ty and authority to workers.
• Planning ahead, with backup
plans for when circumstances
change.
• Doing preventive mainte
nance to ensure that all equipment
is ready to roll as soon as condi
tions permit.
• Modifying routines to
improve workflow and reduce
backtracking.
The first thing we tend to think
of to reduce labor is bigger and bet
ter equiment. This may or may not
help. As a rule of thumb, a labor
saving investment of $BO,OOO
would need to save at least
$12,000 of labor costs a year
before it is cost-effective.
Part-time and shift-work labor
to do routine chores can sometimes
be more economical than new
equipmeht. Changing the system
from conventional to no-lill or hay
to haylage might also be
considered.
There will always need to be
compromises between labor sav
ing and capital investment. The
average commercial dairy probab
ly spends $6OO per cow per year
for labor and family living. If this
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Flywoy Business Park
139 A West Airport Road
Utitz, PA 17543
Ph; (717) 569-2702
Lancaster Farming, Saturday, October 23, 1993-C3
figure is any higher, it makes it
very difficult to retire debt.
All changes and system
upgrades need to be planned to
improve labor efficiency, not just
on how cheaply they can be done.
Reducing the investment over
heads for the enterprise, or spread
ing the same investment over more
productive units, is easier said than
done especially when we are
trying to improve productivity and
labor efficiency at the same time.
But there are some strategies that
can help:
• Have a long-range plan of cap
ital investments in attainable steps.
• Build equity, not debt. Pay off
small chunks of debt quickly and
then move on to the next step in the
plan. This ensures that debt service
goes for principle and not just
interest.
• Avoid long repayment per
iods. If you can’t pay for facilities
in 10 years or less, you are probab
ly belter off without them.
• Don’t become land poor.
Making debt payments of $2OO per
acre for bare land that can be
rented for $7O makes sense only
for the person who has little or no
intermediate and short-term debt.
• Get help from consultants.
Engineers can help to identify
potential bottlenecks and their eli
mination. Extension agents and
specialists can advise on produc
tion practices, equipment, etc.
Your farm management agent is
available to help with labor man
agement, business analysis, and
strategic and cash-flow planning.
We hope that we can help you to
identify potential problems on
paper before you make them in
concrete.
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