Lower Cattle Prices

If you are a cow-calf producer, I’m sure you’ve noticed cattle prices have been struggling for most of the past year.   When that happens, most cow-calf producers don’t want to think about it or talk about it.   They just hope prices will recover before they need to sell their calves.   There is nothing wrong with hope – but it is not a good management strategy.

Compared to one year ago, 500-pound calves are selling for $100 less.   One hundred dollars per head is a significant reduction in income.   As long as we are selling calves into the commodity system, we will never have control over the prices we receive.   Therefore, we would do well to focus on the two things we do have control over.

Since we have no control over the markets, we need to focus our attention on increasing production and/or decreasing expenses.   When I talk about increasing production, I am always referring to production per acreNOT per animal.   Focusing on production per animal (bragging rights) will actually decrease production and profit per acre.   The status quo beef industry has been focused on the wrong thing for the last 40+ years.

I know many PCC customers who have increased pounds and profit per acre by 50 to over 200 percent.   That’s HUGE!   These producers have implemented proper grazing management to make the most of every ray of sunshine and drop of rain that falls on the land they control.   They also have smaller, more efficient cows that fit their environment – instead of artificially changing the environment to fit their cows.   If they can do it, why can’t everyone else?

The average cost of producing a calf has more than doubled in the last 20 years.   That makes it very difficult for most producers to make a decent living.   In contrast, most long-time PCC customers have a cost of production that is 40 to 50 percent less than the national average.   That’s a huge advantage of $300 to $400 per calf!    The easiest money you will ever make is the money you don’t spend – and it is tax free!    If they can do it, why can’t everyone else?

Nothing affects profitability – or lack thereof – as much as stocking rate and cost of production.   Period!   As cow-calf producers we do have control over both of these.   Unfortunately, most cow-calf producers are doing the exact opposite of what they should be doing.   Most are still focused on increasing pounds per animal – instead of per acre.   If you are still trying to increase pounds per animal, you will never be able to increase stocking rate and you will never be able to reduce cost of production.

What are you focused on – production per animal or production per acre?

 

Quote Worth Re-Quoting –

“If you need high prices to stay in business, you will eventually go out of business.”   ~ Tim Goodnight

 

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