By Kit Pharo
Cattle prices have been edging their way up for the past two weeks. That’s the kind of news we all like to hear. I think prices will continue to trend upwards because the five-year herd expansion rate appears to have leveled off.
While you are happy, happy, happy about higher prices, I would like to challenge you to take this opportunity to start market-proofing your business. As Tim Goodnight said in a previous PCC Update, “If you need high prices to stay in business, you will eventually go out of business.”
We all know cattle prices will continue to go up and down, up and down. We also know the cost of inputs will continue to go up, up, up. This makes it very difficult for the average cow-calf producer to make a decent living – especially when prices are down.
As we said in our October 2nd PCC Update, nothing affects profitability as much as stocking rate and cost of production. Many PCC customers have increased stocking rate and pounds per acre by 50 to over 200 percent. Most long-time PCC customers have a cost of production that is 40 to 50 percent less than the national average.
These producers have market-proofed their business. They are very profitable when cattle prices are low. They are even more profitable when cattle prices are high. If they can do it, why can’t everyone else?