Will Feedlot Owners See Increased Profits in 2020?
No one knows exactly where beef industry prices and feedlot profits will settle in coming months. However, feedlot managers may improve their bottom line in the coming year by taking safety to the next level and help reduce workmen’s compensation rates.
Mike Keenan, Risk Control Manager at Omaha’s Gallagher Insurance, says keeping feedlot injury rates at a minimum can mean fewer employee absences, lower employee turnover rates, and lower workmen’s compensation payments.
He encourages feedlot owners to do all they can to make sure their workplace is as safe as possible so workers know they can return home safely each day to their family.
“Just because feedlot employees work in a potentially dangerous environment doesn’t mean they don’t have a right to do their job in a safe manner,” Keenan says. “A feedlot’s DART rate (Days Away, Restricted or Transferred) is a measurement of safety used by OSHA (Occupational Safety and Heath Administration) to determine how safe your business has been in a calendar year. The number of workplace injuries and illnesses that result in employees missing work, being restricted from work activities or being transferred to a different job helps determine the rate you pay for worker’s compensation.”
The number and type of injuries that occurred in the past are a predictor of what is likely to happen in the future. When workmen’s compensation rates are calculated, injury and illness data are a determining factor in whether or not the rates will be higher than the industry standard or lower than the standard.
High rates of injury or illness are likely to trigger a visit from OSHA to inspect the workplace and evaluate safety compliance. However, since OSHA standards are often based on general industry work conditions, inspections may overlook areas where risky work practices are exercised.
“In a feedyard, a focus on just complying with OSHA standards is likely to cause you to overlook many risks for potential employee injury,” Keenan says. “One example of that is the OSHA standard for handling cattle. Exposure risks in a feedlot are different than those in a single-family farm or dairy. To thoroughly evaluate current safety practices, it’s helpful to review injury records for the past three years.”
Identifying what types of feedlots tasks are related to recent injuries and what type of injury occurred can help feedlot managers recognize inadequate safety practices for specific jobs or areas of the feedlot.
Once a specific need for improving safety is identified, managers can develop improved safety practices for that activity and make plans to train employees in regard to using the new approach.
“It’s possible that the training can be done when you’re doing that specific job,” Keenan says. “Sometimes, when we explain why we’re changing the way we do a job and outline the risks employees are exposed to if they don’t use safety practices, the change is more readily accepted.”
Since feedlot managers are required to maintain injury records for reporting purposes, the necessary data is available. The information may also be helpful in reducing employee absence, lower worker turnover rates and improve the overall perception of the company in the community.
“When you’ve had a bad year, it’s understandable that you might want to forget what happened,” Keenan says. “But the consequences of a high injury rate will follow the company for three years in terms of how worker’s compensation rates are determined. Those consequences may also have a lifelong impact on an individual and their family.”
Keenan notes that feedlot managers easily understand the controllable nature of costs such as fuel and feed. It’s more difficult to appreciate that setting and enforcing an effective safety standard results in a variety of benefits for the company, workers and the surrounding community.
“If someone is severely injured or loses their life in a feedyard (or any workplace), the family and community suffer a great loss,” Keenan says. “If someone incurs an injury that will impact them for a lifetime, that impacts the feedlot in terms of costs and many other ways. It’s well worth the time and effort to evaluate your safety standards and do all you can to address every safety concern.”
When workmen’s compensation rates are set, the insurer uses an
Experience Modifier. This helps the insurer determine if the insured feedyard saw the expected number of injuries in a calendar year, had more than the expected injuries or had less injuries than expected over the year.
When injury rates remain stable, workmen’s compensation rates will also be fairly stable. If injury rates were higher than the company’s overall average, the rates will rise accordingly. If a company is able to reduce the number of typical injuries, workmen’s compensation rates will also decrease.
“All feedlot owners want their employees to be safe,” Keenan says. “It’s not as if people are standing in line to take the place of a worker that’s injured. Typically, coworkers must pick up the slack until the injured worker returns. When we get in a hurry and are flustered, trying to accomplish more than we normally would, we can get careless and are tempted to take risky shortcuts to get the job done at all costs.”
Maintaining a low rate of worker injuries can result in an improvement in how a company is perceived by workers’ families and by the surrounding community. Companies with a reputation for taking care of employees find it easier to hire quality workers and reduce worker turnover, both of which have a positive contribution to the bottom line.
“Since research shows that, in any job, workers typically have the most injuries during their first year of employment, it makes retaining feedlot workers even more important,” Keenan says. “If you are constantly hiring new employees, your potential for injury will naturally be higher.”
Setting safety expectations from the start, making time to train new employees and review safety practices with existing employees are key to making safety a priority in any workplace, including a feedyard.