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 All Industries go through what I call Creative Destruction at one time or another. It is about survival of the fittest. When the going gets rough the tough get innovative. As a cattle producer we are feeling the pain right now. Drastically reduced cattle prices are making for sleepless nights and this volatility is going to be the order of the day for the next year, so what's a cow/calf producer to do?
It is important to realize that most cattle operations in this country consist of fifty head or less. I don't think the average beef consumer understands this. Most of the beef in our pipeline comes from ranchers who have an intimate knowledge of their animals not money-fueled, factory farms. Small operations are closely involved with the care of their animals but they also have a harder time surviving when times get tough. To a certain degree survival is a numbers game but you can look deeper for solutions. The three facets of the cattle business hold hands but are not necessarily successful at the same time. When Cow/Calf producers were pulling in record per pound prices the feeder and finishing operations were under tremendous pressure, now the tables have been turned. So back to my question; What should the Cow/Calf producer do to survive? I will start by talking about what they shouldn't do. Many small rancher's first impulse is to skimp. They may not castrate young bulls, do first shots or background their calves in order to save money. Their thought process is since the market is so low they can't justify the extra expense therefore they will sell the calves straight off the cows and let the next cog in the wheel do the work and bear the expense. WRONG ANSWER. During creative destruction in order to stay in business you must know what your market wants and how to create value. This concept applies to all businesses, it doesn't matter if you sell widgets or walruses. Regardless of geography, in the cattle business there is one universal truth, all buyers want calves that are healthy and ready to gain. This means that the first way a producer can create value is with a good preconditioning program. When everyone else is skimping you can add value by sticking with your program. Vaccinate, castrate your bull calves, wean them for 30-45 days and get them coming to a feed bunk. If you ask any vet or potential buyer they will all agree, a good preconditioning program is number one on their list and there is twenty years of data to prove why it makes a difference. Another option is to hold your calves longer. If your operation is set up to hold your animals longer, selling them at a higher weight is an option to create value but only if you have an economical feed source, otherwise the added gain will not justify the added cost. Preg Check. Feeding open cows during the winter is just wrong. This one faux pas is the biggest money killer there is. If you haven't figured out your pregnancy rate now is the time to do so and if it isn't up to par this is the time to begin tweaking it with better genetics, a different bull, whatever increases your pregnancy rate increases your bottom line. Finally, explore different genetics, F1 crosses and all of the niche markets available to the producer, there are many ways to create value. Try to figure out a niche that can work for your particular operation. One of the biggest advantages that a small operation has is innovation. It is much easier for a smaller operation to switch gears in order to stand out in a tough market. Where capital may be lacking, ingenuity can rein supreme. Cut costs in areas that don't eliminate value. Remember what the buyer wants and while everyone else runs for the exits, stand your ground, be creative and stick with what works. Resilience equals survival. Ranching isn't an easy business, it takes a strong backbone and and a "never give up" attitude. Those who survive know in their hearts this isn't a business... It is a way of life. A Great Life! even during tough times. THINK, BE CREATIVE, ADD VALUE AND DON'T SKIMP ON THE IMPORTANT STUFF! Godspeed!  As a cattle producer I personally feel the pain when it comes to the drastic decline in cattle prices but it is important for the average consumer to understand what that means for their pocket books. The first thing I would like to point out is that there is a supply pipeline that is filled far in advance so price declines in the live and finished markets take time to filter down to the consumer. Today wholesale beef prices are 18% lower than this time last year but not necessarily being reflected at the retail and foodservice sectors. While grocery store prices have declined for 8 consecutive months the price of beef sold at retailers is down 7% from this time last year. On the flip side foodservice hasn't shown a decrease at all, in fact prices have actually increased by 2.3% even though their beef costs have decreased. Why? One reason is that grocery stores deal in predominantly fresh food therefore they move food through the pipeline quicker which allows them to lower costs quicker. Foodservice prices are more difficult to lower because of the present business environment. Rising labor costs in restaurants, rising healthcare costs and higher distribution costs all lead to higher menu prices. As the business environment changes you may see changes in the average restaurant ticket price but not for some time. On the flip side this widening gap bodes well for grocery store chains. Increasing traffic in the grocery store always favors the beef aisle because it is favored among consumers. So if you are looking to enjoy great beef and lower prices...fire up the grill and enjoy your favorite cut of meat!!! It's Grill'n Time  |
Authorwww.amazon.com/gp/product/1939930561Kelly Gray Williams is the author of a memoir; The Princess Rancher. Food has been at the core of her life for over thirty years. Her travels have taken her all over the world and have created a rich tapestry of food experiences and cultures that have shaped her philosophies on cooking and food production. My book, The Princess Rancher, is available here: www.amazon.com/gp/product/1939930561 Archives
October 2021
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