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Risk Management for Beef Producers by Focusing on Five Management Strategies for Creating Profitability in Their Operation

Wesley Tucker

Summary

The current beef industry was built upon a foundation of cheap land, cheap fertilizer, cheap fuel, and cheap corn. Even record cattle prices are not sufficient to combat the rising input costs and increased risks cow-calf producers face. Without having access to many of the risk management tools grain producers have, the most effective method for managing risks in a cow-calf operation is to focus on five management strategies that create profitability. These strategies modify the traditional beef production system to account for the production, marketing, and financial risks producers face each year. Since 1990 the University of Missouri has taught 13,335 producers to utilize a systems approach to managing these risks through a series of three-day regional grazing schools. The focus of this presentation will be on how the risk management and economics portions of the schools are helping producers manage their production, marketing, and financial risks. The five management strategies discussed include: methods for reducing feed costs, nutrient recycling to reduce fertilizer expense, more efficiently matching stocking rates with forage production to eliminate the need of harvesting and feeding supplemental forages, extending the grazing season, and utilizing seasonal cattle prices and historical values of gain to select the best marketing strategy for each operation. By learning more about these five strategies producers are much less susceptible to many of the risks other producers face. From long term evaluations, participants report that what they learned through these schools has increased their profitability by 22% on average.

Details

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