The first half of the year boded well for those in the beef industry, as the U.S. Department of Agriculture reports that current steer prices show atypical growth due to the demand for market-ready cattle.
Potentially, the U.S. beef market couldn’t be better positioned as Brazilian meat companies face public health concerns that have trading partners skeptical, China reopens its market to import U.S. beef and the demand for beef domestically experiences a surge.
In the ever-changing beef market, cattle farmers make critical decisions every day. The consequences of these decisions are generally not known until much later and can be significantly better or worse than expected. As profit margins continue to decrease due to the rising costs of operation, it is increasingly important to improve efficiency.
Select the cows that best fit your environment. Cattlemen have traditionally worked hard to change the environment in which they ask their cows to flourish. Over the years, these changes can be expensive and result in lower profit margins. Instead, start with answering the harder questions such as what types of climate or soil conditions will your cattle be exposed to on your farm? These factors and others determine what specific traits to look for when assessing potential breeds for your farm.
In order to survive in the beef cattle business, you need cattle that will work for you, rather than cattle that you have to work to support.
Keep track of performance
You cannot make improvements to your business unless you know how you are performing year after year and are measuring yourself against comparable operators.
One of the biggest factors holding back the beef industry is the fact that very few farmers record basic key performance indicators. Keeping track of metrics, such as cost per hundredweight of weaned calves and pounds weaned per exposed female, can help determine what’s working and help you avoid pitfalls that are potentially pulling from your bottom line.
Improve the health of your cows
Given that your livestock is your livelihood, it’s critical that cattle have a healthy environment in which to thrive. This starts with providing the highest nutritional quality forage for your cattle. Be sure to soil test different areas of your land to know where to provide additional nutrients to keep a healthy supply of forage. While proper nutrition is critical to raising healthy and productive cattle, there are plenty of other health factors to take into account. Injuries, illness and poor health can be costly and devastating to a cattle business. Having veterinarian support, getting cattle vaccinated and immediately treating injuries and diseases can save you money in the short- and long-term.
Have a strong financial plan
In any business, having a strong financial plan is critical to maintaining profitability.
Becoming profitable is the goal of your cattle raising business because it affords you the opportunity to either expand your business or continue to refine it.
Do not overextend your resources. This leads to less than optimum management, undue stress and financial difficulties. Work with your financial advisor to make sure you are effectively managing those costs you can control. Your advisor, whether an accountant, agricultural lender or small business advisor, can help you map out where you are and where you want to go with your operation.
Wade Robson is a commercial and agricultural lender for Arvest Bank in Branson, Mo.