– Garth Ruff, Beef Cattle Field Specialist, Ohio State University Extension (originally published in The Ohio Cattleman)
As we retire the 2023 calendar how are you planning for success in the cattle business in ’24?
It’s hard to believe that we are already hanging a 2024 calendar on the wall. 2023 has been a roller coaster ride at times across the board. We have seen several ups: record cattle prices, Jim Harbaugh caught in a cheating scandal, great hay making weather. However, with the ups come the downs: high input costs, a Buckeye loss to TTUN for the third time in a row, Joe Burrow’s broken wrist, lower hay yields.
Early 2023 will be remembered by cattlemen for the record cattle prices that have continued to soften since September. In early November in a typically benign WASDE report, USDA raised their beef production projection 2% for 2024.This increase sent some shock through the markets. This increase in projected beef production is likely due to higher feedlot placements this fall due to weather. Look for this to be somewhat short lived as the cattle supply continues to be tight. While cattle prices have been softer since mid-September, the long-term outlook is still rather favorable as the cow herd continues to shrink.
At this point, I am optimistic going forward. A strong Replacement Female sale on Black Friday was an indication that there is demand for quality cattle with known genetics and there is greater willingness to pay for quality cattle than one may have thought given the greater scope of the economy.
As we retire the 2023 calendar what are you going to do to be successful in the cattle business in 2024. In my mind it comes down to three overarching themes: Producing the kind of calves that a buyer wants to buy, being more efficient with input costs where possible, and managing risk.
1) Produce the kind of cattle a buyer wants to buy. That statement seems like an oversimplification of the cattle business especially given the limited number of cattle available, but one that I see several producers struggle with.
Perhaps there should be an added caveat to that statement – Produce the kind of cattle a buyer wants to buy without being discounted at the market.
In 2024 to achieve the above, attention must be focused on uniformity and quality of a calf crop. A 90-day breeding and calving season today is almost too long, given calf prices. There are numerous research studies that show that earlier born, older, heavier calves are more valuable than younger lighter calves born at the end of the season. A 60 or even a 45 day breeding and calving season will improve the uniformity of a calf crop and there potentially increase lot size.
Here in Ohio with smaller sized cow herds, lot size remains the greatest obstacle for many producers avoiding discounts when selling feeder cattle.
With regards to calf quality, everything starts with genetics of the cow herd and the bull. Be intentional when selecting or purchasing replacement females. Be even more intentional when buying a bull. Purchase a bull that has the genetic ability to improve the genetics of your herd. A bull purchase can have a decade long impact on calf value if retaining females.
2) Be more efficient with input costs. Interest rates are high. Can that new tractor or baler purchase wait? Should we take a harder look at that operating note? Can better stockmanship and management save some money on the back end? All questions that I think are worth consideration.
I have had several discussions about how this peak in the cattle cycle hasn’t been as profitable on the cow-calf side as it was in 2014, even though cattle prices have been high. It all comes back to input costs. Consider the cost to operate in 2014 vs 2023. Fuel, trucking, machinery, fence, interest, veterinary costs have all significantly increased over time. Inflation could be the word of the year in 2023.
Hay and stored forage are often a necessary evil given our climate and stocking rates. Feed can amount to 70% of the cost in a cow-calf operation. Consider ways to optimize forage use.
Develop a budget and sharpen a pencil. A budget will provide guardrails for your operation. Utilize a balance sheet for more than doing your taxes, it can provide a financial snapshot at any point in time and be used as a decision making tool.
3) Manage risk. In the past I have written about various risk management programs that are available to producers. Programs such as Livestock Risk Protection, are viable tools given the value of cattle and volatility the market can bring at times. With high food costs, conflict in Europe and the Middle East, drought, and who knows what other curveballs are out there, protection against risk is key.
I also like to think about risk management as it relates to animal health and performance. Having a sound vaccination plan, practicing biosecurity, feeding quality mineral are all risk management tools against preventing open cows.
You are going to hear a lot about these practices to manage risk going forward as we begin dealing with new cattle diseases, specifically Theileria, that is transmitted by the Asian Longhorn Tick.
The small cow herd and subsequent calf crops of the next year or two have cause for optimism going forward; so long as farm finance, risk management, and calf quality and uniformity are at the forefront of producers minds. Have a safe and beef filled holiday season and a Happy New Year.