As producers, we like to use Beef Month to promote the taste and health advantages of beef over our competitor proteins (poultry and pork). You’re likely to see ads on billboards, radio spots, ads in print media, and possibly a TV spot or two in some local markets. Cattlemen around the country will be cooking steaks and hamburgers at numerous events in an attempt to grab the attention of another customer or convince consumers to grab another package of burger or steak as grilling season begins. All these things are an attempt to drive up demand, sell our healthy and delicious product, and ultimately increase the profitability of everyone in the cattle business.
I would like to see all Cattlemen’s associations put an emphasis on education and financial planning for producers during Beef Month (in conjunction with trying to promote our product). Without proper planning and management, will we be in the business several years from now to worry about promoting beef? Spring is a critical time for beef producers. The financial decisions you make now, will affect the whole year and whether you are profitable.
I know there are numerous things we’d all rather be doing than sitting at a desk staring at cash flow analysis. I do that every day and the phrase “cash flow analysis” made me snore. I was much happier yesterday weaning and tattooing the fall calves and moving a few early spring pairs to the first green pasture of the year. (I would also like to publicly apologize to my mom. Mom, I realize I am the one who misread calf 818 as 813 when you were recording weights. I am sorry we had to spend 20 minutes looking for bull calf 813 that didn’t exist. I also apologize for any mean words I said; you were right.)
But what decisions should we be making right now that are going to affect our cash flow and profitability for the upcoming year? We should be focusing on those fall calves we just weaned. Should we sell the ones we aren’t keeping for replacements now? Or should we run them on grass and try to capitalize on some additional gain and late summer markets? How many purebred bulls should we keep to market this fall? Is the cowherd expanding state wide and should I keep more bulls to sell? And should I run the fall cows that were open on grass to add weight or take them to the slaughter cow markets now? All these questions affect the profitability of the operation.
But we aren’t done there. What about those spring pairs? Am I going to sell all those calves when I wean them in the fall? (Hint: looking at some fall predictions might help with this decision) Am I going to hold them over until the higher spring markets? And if so, I better get out of this office and start rolling more hay to get them through the winter!
And if you are running stocker cattle, you better really be sharpening the pencil! The fall weanlings are getting ready to hit the market. How many head do I need for the summer? How much are my feed inputs going to be? What do I expect to sell them for in the fall? Considering all that, what can I pay for them right now and make a profit?
All these decisions need to be made now. But they need to be informed decisions based on economic analysis and market conditions. Taking the time right now to focus on inputs and marketing decisions will be key in your operation’s profitability. Take the time to sit at your computer, office, or even kitchen table and focus on cash flow and profitability. Your spouse, your bank account, and your banker will thank you at year end.
Kevin Stith is a credit analyst with First Financial Bank’s Farm and Ranch Lending Division. He can be reached at 1-888-398-4119 or at [email protected]
