Producers can boost investments to ensure sustainability in 2024
Economists are forecasting the cattle industry should see favorable prices in 2024, creating the opportunity to spend a few dollars throughout the year.
In an article published on Jan. 10 by Farm Progress, Author Mindy Ward outlines nine top investments for 2024 cattle profits.
According to University of Missouri Extension Agricultural Economist Joe Horner, phases like the next two to three years will only happen a few times in a producer’s 50-year career.
He indicates higher profit margins will prevail in 2024 and producers will look for tax deductions, but rather than buying new equipment, he suggests producers invest in making the operation more resilient and profitable, as the cattle cycle will inevitably turn when prices fall.
It is important to remember the profitability of livestock production is influenced by market dynamics, including supply and demand, prices and competition.
Increasing profits
Horner suggests one way to increase farm profits is to invest in feed and increase extra hay inventory.
“Add 50 percent more hay stock once and rotate out hay yearly. The carrying cost is a good investment,” Horner says. “This is drought insurance, and it is easier than finding hay and makes life less stressful.”
This strategy keeps producers from buying feed or selling livestock during a drought.
Another suggestion is to create a separate bull pen and define a breeding season to reduce mismatched lots at the sale barn.
“Stay on vaccination schedules – if you don’t have one, get one. Veterinarians create value on a farm because of what they know,” Horner says. “Pick your vet’s brain, follow their suggested protocol, and don’t forget to test for bull soundness.”
Veterinarians can help producers find buyers for their cattle, conduct extensive diagnostic tests to protect their investment and connect with other ranchers to help develop the operation’s network of clients.
Additionally, having an adequate handling facility is necessary to properly apply management practices and prevent injury to both the producer and the livestock.
Handling facilities offer the opportunity for added value by carrying out economically essential practices.
Horner further notes it is a good idea to invest in handling facilities.
Investing for profit
“Invest in good fences for weaning. Bawling calves bring less money at the sale barn,” Horner says. “Do the extra work. Build the fence and wean calves before selling.”
Many innovations have occurred in the fencing industry over the years, giving producers an array of options for fences to confine and protect livestock.
Whether used as permanent periphery boundaries, temporary pasture dividers or to encircle a house, fences need careful planning and construction for efficient usefulness, long life and low maintenance.
Frequent soil testing helps producers decide whether the current management system is robbing future productivity and profits.
“Do soil tests. A soil test can signal when producers need to add nutrients to boost yields. Lime is a cheap, undervalued nutrient that can increase forage production,” Horner notes.
He further points out in order to increase profits, producers can implement rotational grazing, allowing them to mitigate drought, improve soil health, increase forage production and extend the grazing period.
Producers can also invest in risk insurance programs. Pasture, Rangeland, Forage insures against drought and Livestock Risk Protection insures against low prices.
Horner concludes, “One final tip is to seek the advice of a farm or ranch tax expert. The Internal Revenue Service has new resources to measure compliance, so talk with your tax preparer to ensure your farm is bulletproof.”
Melissa Anderson is the editor of the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.
