 Hello, I'm Ken Kelly, a regional farm and agribusiness agent with the Alabama Cooperative Extension System. Today, we're going to talk about maintaining an economically sustainable livestock operation. In livestock production, there are some things that we can directly affect and some that we cannot. For example, most producers can do very little about prices received. The commercial livestock industry is a commodity industry and by its very nature puts producers in the role of price takers and not price makers. This is true to some degree with all cattle producers, but especially true with conventional cow-calf producers. Most Alabama producers fall into this category, which means that they have a somewhat limited ability to affect one of the major components of their net profitability prices received. Therefore, it makes sense to focus our management decisions on something that all producers can affect their cost of production. Logically, if we can affect the prices, the only way to improve our profitability is to reduce the amount of input it takes to make our product. There are some criteria we need to put into place as we discuss strategies for reducing our cost of production. A lot of beef producers in Alabama are not full-time farmers or ranchers. They have other jobs and responsibilities that consume their time and resources. Therefore, when we talk about changes that we can make to our operations, we have to consider the feasibility of each of these proposed changes. Little changes can often lead to big results. Oftentimes we think that we need complex business structure or specialized animal husbandry training in order to put together or modify our business plan in the cattle business. Most of the time, however, some of the most beneficial changes we can do are fairly simple and are pretty universal across the cattle industry. Since we have a limited time on this particular video series, we're only going to talk about six possible areas that you might look at to reduce your cost of production on your cattle operation and hopefully increase profitability. The regional farm and agribusiness agent will be glad to help you look at your particular operation and offer other suggestions that might be applicable for you. Final note is we discuss strategies to reduce cost of production. Whenever we do things to reduce our cost of production, we have to be careful not to undermine our production itself. Cattle producers are in the business of growing good forage and producing healthy animals that we end up as a desirable item for beef consumers. To that end, we shouldn't think in terms of what we can eliminate from our operation, but what we can do to increase profit. It's often said you can't starve a profit out of the cattle business. That's often what producers think about when they think about reducing production costs. Instead, let's concentrate on being better managers of what we have in streamlining our operation. The first cost of production and reduction strategy we want to talk about is improving our record keeping. Record keeping in any business is an absolute must. And contrary to the way some of us treat our cattle operation, it is a business. The only way to know the help of your business and in turn make necessary changes to that business is to keep good records. Record keeping can be as complex or as simple as you want to make it. Some producers may choose to keep records in a notebook on the dash of the truck or a shoe box beside the recliner. While other producers might want to use record keeping software such as CattleMax or QuickBooks, the methodology of how you keep your records isn't as important as being thorough and comprehensive so that good business decisions can be made. There are many types of records that could be beneficial to your operation, but some are necessary in order to be a good cattle manager. Herd records are absolutely mandatory for making informed culling and herd decisions. Breeding dates, siren down information as well as cabin information, weaning weights and health protocols or issues are just some of the herd records that all cattle producers need to keep. Financial records are also important. These types of records allow us to make important business decisions that will affect the health of our operation and are also necessary to develop our schedule for tax purposes. Financial records should include all expenses for the operation. These records would include both short-term cash expenses like feeding fertilizer as well as mid-term expenses like equipment and long-term expenses such as land or buildings. The only way to truly know what we can do to reduce our cost is to analyze these records and make an informed and not emotional decision as to the areas that we need to work on in our business model. Continue on to part two of this series for strategies two and three.