How Beef Producers Navigate High Input Costs
Anyone involved in production agriculture knows that input costs are just a part of the business. However, high prices and inflation have created more challenges for cattle producers over the past year. Members of the RancherMind community came together from across the country via Zoom to share how they navigate high input costs and gain insight from fellow cattlemen and women. This group of cattle producers discussed feed costs, fertilizer costs, adjusting their business strategy as a whole and the future of cattle marketing for the commercial cow-calf producer during the 60-minute RancherMind event on March 23, 2023.
Adjusting Your Management Style
Adjusting how you manage your operation is a necessary component of navigating high input costs. Feed and fertilizer costs were the two inputs that came up the most for RancherMind members. Solutions shared by attendees included cutting back on fertilizer application, feeding later in the year if possible, maximizing grazing and looking at what feedstuffs will be the most economical in the long run. Kacey and Jake Jacobson of Max, ND run a Red Angus commercial cow-calf operation. Kacey Jacobson says, “One thing we've really looked at lately is deciding what type of operation we can have that will be the most profitable. I think there's just some things that in certain years if the price of bulls is really high, or if pasture prices are high, you can capitalize on maybe marketing your open heifers at a little different time of the year, or selling bred heifers for a while, or just kind of changing little things by being very vigilant of the markets and what opportunities are around. I just think that there's a few little things like that, that might make a difference and a few 1000 bucks here and there can kind of go a long way.”
Input costs during a drought was another topic that was brought to light. Jarrod Montford shared how he made the decision to destock early to save grass and eliminate the need to feed any extra cattle when the grass ran out. Montford says, “This is the first year that I've ever bought outside hay. We bought a little bit more native grass hay and I bought cornstalks. I had never bought or fed cornstalks before so that was a new feedstuff for me. With the price of feedstuffs it was also the first time that I've actually ever fed whole corn and not a DDG-type product to supplement cattle through the winter… We start breeding in mid-December, so we can get middle-September calves. So, we made the decision to destock at breeding time. Then we just allowed some of those cows to go ahead and nourish the calves until mid-February and decided to wean earlier.” Montford is a cow-calf producer located in Texas who strictly uses artificial insemination and embryo transfer to breed his cow herd.
The Future of Marketing Cattle
Let’s face it. With tight margins, we always want higher prices when we sell cattle. But what does the future of cattle marketing look like and what are cattlemen and women doing now to be more proactive?
Steve Best, a stocker and cow-calf operator located in Ohio, is concerned about the beef industry moving towards vertical integration. Best says, “I feel like they're trying to drive us to where the poultry and the pork industries are right now. We raise a few hogs and market meat directly to the consumer. I contacted our local auction to ask them when they sold hogs. Basically, they just asked me when I wanted it, how many and how big. There was no auction on hogs. If you wanted one you just had to call the sale barn and they’d get you one. Personally, I don't want to see the beef industry go in that direction to where we have no negotiated trade whatsoever.”
The topic of cattle marketing and vertical integration led to conversation about cattle being purchased based on their genetic merit as opposed to hide color. “I think we are heading to vertical integration, but it will be different than in the hog industry. Genetically, beef cattle are still catching up to the hog and poultry industries. Right now, we have a system where it's really based on hide color. I mean, we see a certain hide color bring way more money than others, but what's the basis behind that? Where's the economics? We did a survey at the Red Angus Association of America with over 250 participants - mostly feeders. An overwhelming majority of respondents acknowledged selecting off of black hide color did move the industry forward for a period of time in terms of quality characteristics. However, nearly all of the respondents also said that this is not right, and we need to base the value of cattle on their genetics. To me, that will be the type of vertical integration where the price will be based on what's under the hide.”, says Steve Koester, a registered Red Angus producer located in North Dakota.
Talking about the future of cattle marketing was exciting and interesting to say the least. However, it is critical to look at what cattle producers can do today to improve their marketing strategies. Montford shared how he sees value in smaller cattle producers who can’t sell a full load of calves collaborating with other breeders to create full loads. Koester agreed and says he’s seen this work well for his customers and other producers as well.
At the end of the day it all comes down to reminding yourself that your cattle operation is a business. With owning a business comes taking the time to understand what inputs are a necessity and what can be substituted or eliminated without being detrimental to your goals and end product. Don’t be afraid to research different strategies for marketing your calves and mix it up to discover what route will be the most beneficial for your operation.
Learn more about the RancherMind program using this link. https://www.casualcattleconversations.com/ranchermind-events
