10 Tips to Bulletproof Your Beef Operation

Beef producers can use a window of profitability to make their farm business more bulletproof.

University of Missouri Extension agricultural economist Joe Horner says successful beef producers can make small changes in three areas to make their farm less vulnerable to risks: plants, animals and business. Being good in just one of those three areas is not enough.

Longtime producers see the big picture and plan to withstand cycles in the industry. Drought is a recurring theme for Missouri farmers, Horner says. Producers should not look at drought as an emergency. “Drought is going to happen. Build a standard operating procedure on your farm to manage it,” he advises. “Prepare yourself to glide through it.”

One safeguard against drought is to invest one time in making or buying 50% more hay than you normally need. Carry that hay inventory over every year. That becomes a strategy to keep drought from forcing you to buy hay or sell cattle in a drought.

A 50% hay cushion you can rotate through every year comes as a one-time investment that is tax-deductible. With high calf prices projected for 2024, farmers will be looking for deductions.

Younger farmers are looking at interest rates they’ve never seen in their lifetimes, says Horner. Since the great recession in 2008, lending rates were artificially low until this year. Normal times have returned. Older producers have seen these high-interest cycles before and will manage differently than younger producers. Managing cash and reducing debt becomes more important, says Horner.

Livestock producers are now 10 years into a 10-year cycle, he says. Cow inventories are tight. Feeder calves available to feed will get tighter as higher prices encourage people to keep more heifers on-farm. Economists are forecasting good prices ahead. “2024 will be as good as any time we’ve seen since 2014,” he says, with producers holding back heifers. “Periods like the next two to three years only happen a few times in a 50-year farming career.”

Horner predicts that these higher margins will lead farmers to look for tax deductions. Rather than buying a new pickup or farm equipment, Horner recommends that producers first invest in a Top 10 list to make their farm business more profitable and resilient when the cattle cycle inevitably turns with lower prices.

Source: missouri.edu

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