I have been traveling a fair bit the last couple of months and participated in a number of activities and conferences that have discussed the future of beef production and the overall Beef Industry. Some of the topics have been more related to the near future and others a much more distant future, maybe not even in my life time. We all deal with change every day and realize that it’s outcomes can be viewed as positive, negative or pretty neutral. We can all attest to the welcomed change when calf prices were skyrocketing and the ride was really quite enjoyable. Everyone also knew that the ride would not, could not last forever. We are now experiencing the change on the other side as it seems prices have been free-falling with little indication of where they might stop and take a rest.
When looking ahead some of the industry experts are suggesting that 550 lb calf prices over the next 6 to 8 months will be more like in the range of $135 to $155 per cwt. as compared to over $2.00 per cwt the past few years. If this is the case, you should be evaluating where have your production costs increased during the price run up and determine if there are opportunities to work on getting them back aligned with calf prices going forward. One area we know that increased was with land values and pasture rents. Some of those increases will not be sustainable with calf prices coming back down to these projected levels. Renegotiating these costs should be a priority.
We also know that grain and commodity prices have come down and along with it feed prices as well. Since feed costs make up a large part of your expenses, these programs should be evaluated to make sure they are cost effectively contributing to the reproductive success of the cow herd along with eliminating issues with calf health and optimizing calf growth. This is a tricky area, especially if one flirts with cutting too much and you start negatively impacting cows rebreeding early in the calving season or create possible issues with calf health and ultimately, under-performing calves. Weigh the risks by what you could give up when evaluating cost cutting strategies on your herd feeding programs. Focus on the forage resources that you have in place and determine what supplemental program can help you get as much out of those resources that you already own. It can be as simple as providing timely protein supplementation to help capture more nutrition from your forages.
So with the change in calf prices a focus on costs for maintaining the cow herd becomes more critical in achieving profitability. Make sure you are accounting for all of the costs that may have crept in over the past few years as generous calf prices may have had all of us let down our guard. Equipment, labor, time, supplement cost, waste, etc. all can contribute to the total costs of your herds nutrition program. Contact your local CRYSTALYX® dealer or sales representative to help you evaluate solutions that can optimize your purchased supplemental feed inputs while optimizing your returns. It can be a relief to know that dependable solutions can remain the same regardless if we are in an up or down market.