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Profitability: Don't Forget the Cattle

15 January 2015

US - You can't take advantage of historically high prices for beef cattle if you don't have animals to sell.

This is the message Ohio cattlemen have received amid a record breaking cattle market, which has seen retail and beef prices skyrocket and imports lift to cover the supply side.

The advice is simple; make sure calves reach market and manage your breeding herd through culling and replacements. 

Despite present prices, Ohio State University extension agent, John Grimes, has told producers to guard against complacency.

"Nobody can be certain how long these historically high prices will last," said Mr Grimes, advising operations to improve and take full advantage of the current situation. 

In Ohio, the average cow/calf operation is under 17 cows, but improving profitability should be the challenge to ensure a good 2015.

“Improving facilities can improve the quality of life for our animals and simplify daily chores for the producer,” he said.

“Forages are the single most important feedstuff consumed by beef cattle.

“Increase forage quality and quantity produced from pasture and hay fields in order to maximise the pounds of beef produced per acre in your operation.”

He added that management changes to increase the percentage of the calf crop weaned are also important, maximising the stock that can be taken to market.

Improving conception rates and calving difficulty are key to ensuring youngstock numbers. Meanwhile, unfit animals should be culled out, making way for younger purchases.

But gauging whether to expand is difficult, and is best done by analysing price projections, advises the team at North Dakota State University.

“With the drop in feed prices and the expected high returns on cattle in the next few years many producers have been wondering if it is time to expand their herd,” said business management specialist Shannon Sand.

Mrs Sand considered looking forward to projections up to 2019, after budgeting for production costs and calves produced.

Analysing the profit potential of investments can be done by working out Net Present Value, a model that adjust for the time value of money.

“It is important when looking at expanding the herd that producers take a long term view,” she said.

“The importance of looking at these long run projections when deciding whether or not to expand cannot be overlooked. Using more conservative values helps prevent bull market fever from affecting decisions.”

Michael Priestley

Michael Priestley
News Team - Editor

Mainly production and market stories on ruminants sector. Works closely with sustainability consultants at FAI Farms

 

Top image via Shutterstock



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