Frank J. Buchman

Cowboy • Horseman • Writer

Ways To Take Advantage Of Current Upswing In Cattle Market

Cattle producers should take full advantage of the current market upswing as record profits in the industry are projected for the next several years.

While drought and other economic challenges tightened the U.S. cattle herd in recent years, the constriction eventually created a significant and welcomed upswing in profitability for many beef cattle producers.

As 2023 ended, many cow-calf and feeder producers were experiencing record profits, with experts forecasting this upward cycle to continue for several years.

“This upturn and the resulting increase in working capital create opportunities for producers in 2024,” said Todd Moore, Farm Credit Mid-America analyst.

But even as they examine the right opportunities for their operations, producers should continue to manage costs, consider long-term implications, and make strategic decisions that position them to face a future that will continue to change.

Producers can stay grounded in best practices while taking advantage of additional capital.

Increased profitability may enable a producer to set his or her operation up to be more efficient without borrowing as much from lines of credit.

For some, this could mean scaling the operation to add cows or handle higher volumes of cattle.

For others, it could mean investing in equipment, rolling stock or livestock handling facilities to make the operation run more efficiently.

While capital investments could reap profitable rewards in the future, they should always be planned strategically.

Expand with long-term viability in mind: Producers should consider the financial sustainability of any investment or expansion they are planning over time.

Will the implications of an investment made today be viable several years down the road when the market isn’t as profitable?

If the answer is no, consider other ways to use that working capital wisely. Operations with multiple segments or enterprises will be well served to examine the performance of each and invest in growing the most profitable segment of the business.

Consider an operation’s limitations: Every operation has constraints, and producers should examine how capital investments may impact their current limitations both in the short and long term.

There will be a point when growth requires taking on additional resources or costs, like added labor. If those additional expenses are not sustainable over time, that growth strategy may not be right for the operation.

Leverage relationships

Relationships are essential in the world of agriculture, and the beef industry is no exception.

Many seasoned and beginning cattle producers credit their beginnings to relationships built with family members, friends and trusted mentors found within their local communities.

These relationships add value to the business and are important throughout the life of an operation.

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