Three Purina experts reflect and share risk management strategies for cattle producers heading into 2021.
2020 has been a wild ride. Despite unexpected challenges and obstacles, some opportunities emerged, and the grittiness of American cattle producers was re-affirmed once again.
Purina cattle industry experts Jon DeClerck, Christina Hayes, and Martha Moen reflect and discuss risk management strategies to make the most of 2021:
We all could use some inspiration right now. What’s been inspiring you?
DeClerck: The resiliency of the American cattle producer inspires me. Cattlemen and women stepped up to challenge after challenge, and they continue to produce a reliable supply of high-quality beef for consumers.
Hayes: ’m inspired by the people I work with. From sales representatives to cattle producers, they’ve been upbeat and eager to step outside their comfort zone to find solutions. Through teamwork and creativity, we’ve formulated alternative rations, maintained feed quality and kept products in stock despite supply chain disruptions and challenges, including the widespread distillers grains shortage.
Moen: I’m inspired by all the cattle producers who stuck to their foundational management strategies, like sound cattle nutrition and health protocols. Their grit and determination to hold steady during challenging times will pay off in the long run.
What opportunities has 2020 presented?
DeClerck: Many cattle producers are marketing cattle directly to consumers in their community, as well as at their local meat processing plants. Selling directly to consumers offers a unique opportunity to connect with folks one-on-one about beef production. By creating a positive impression with consumers, you can not only grow your own marketplace, but you can help build a more conducive environment for beef production nationally.
Hayes: The rise in virtual events, webinars and online resources means education and networking are more accessible than ever before. Anyone can attend tradeshows and industry events from home, often for free. Those who are willing to embrace virtual events and communication can apply new ideas and learnings to make their operation more efficient and, hopefully, profitable.
What strategies can help producers manage risk?
DeClerck: Create backup plans to manage through weather challenges specific to your region. Think through worst-case and best-case scenarios. Proactive planning keeps you from making a knee-jerk reaction and helps you rationalize during a crisis. I recommend keeping enough feed in storage to last for a prolonged period, in case weather or price prevents you from accessing feed resources
Keeping cows in good shape is another foundational strategy. A sound year-round cattle nutrition program puts you in a better position to handle situations that could impact forage availability or cash flow, such as persistent drought, a winter storm or tough markets. Cows in body condition score 6 only require nutrition to maintain condition and can bounce back quickly after a short-term nutrition gap. Conversely, cows in body condition score 4 require more feed resources to recoup condition and recover from a gap in nutrition.
Hayes: Take time to reflect on the year and learn from it. Look at your records to see if any changes you made in response to COVID-19 impacted your reproductive success and replacement heifer trajectory. Now might be a good time to refresh your cattle nutrition program and explore new marketing strategies to support your goals in 2021.
Moen: Keeping cows in good shape now also impacts your ability to capitalize on potentially higher prices next year. If you’re looking to sell bred heifers, maintaining their body condition score is more cost-effective than putting on condition closer to sale day. Body condition score also impacts how quickly a cow returns to estrus, conception rates and even next year’s calf crop.1
How can producers navigate risk from a marketing perspective?
DeClerck: I recommend diversifying your risk portfolio through futures contracts and hedging. These marketing tools can help you lock into a profitable price, so you’re well poised to ride out market volatility.
Moen: Look for opportunities to differentiate your sale calves by adding value before sale day. Demand for weaned and preconditioned calves is growing, and so is the price discount for unweaned, bawling calves. Retaining ownership at the feedlot is another option to potentially earn more for your calves. Test the waters and mitigate risk by starting with a small calf group.
The question on everyone’s mind: What are the markets going to do?
There’s no way to know for sure. However, keeping an eye on future trends can help you make better operational decisions.
2021 Trends to Consider
- Plateauing U.S. cow herd numbers, COVID-19 impacts and significant drought all led to sizable herd liquidation in 2020. As a result, fewer cows will be around in 2021, leading to a smaller calf crop and fewer feeder calves headed to yards next fall.2
- Beef prices have increased by 25% and boxed beef prices set a record earlier this year, indicating national demand for beef is still strong.3
- Livestock, poultry and dairy exports are forecast to grow by $500 million year-over-year, led by beef and veal purchases.4
No matter how 2021 plays out, Hayes, DeClerck and Moen all agree: Producers who hold steady will set themselves up for success.
Meet Our Experts
Jon DeClerck, Ph.D. is a technical cattle consultant for Purina Animal Nutrition based out of College Station, Texas. Jon grew up on his family farm just outside Aledo, Illinois. He graduated with his undergraduate degree from Texas A&M University. Jon then pursued his master’s degree and Ph.D. in ruminant nutrition at Texas Tech, where he specialized in feedlot cattle management. Prior to his time at Purina Animal Nutrition, Jon taught and coached judging teams at Iowa State University and Texas Tech University.
Christina Hayes, Ph.D. is the beef product manager at Purina Animal Nutrition. She earned her master’s degree and Ph.D. in animal science from North Dakota State University. Christina works magic behind the scenes to solve supply chain challenges, ingredient availability issues and much more. Her goal? To keep the right high-quality nutrition products in stock and available when you need it.
Martha Moen, Ph.D. is a cattle consultant based in central Florida. She graduated with her undergraduate and master’s degree from University of Florida. She earned her Ph.D. in agronomy from Texas A&M University, where she focused on the application of fibrolytic enzymes and bacteria inoculants to sorghum silage and small-grain hay. Prior to her time at Purina Animal Nutrition, Martha previously taught at Abraham Baldwin Agricultural College and served as a University of Florida county livestock extension agent.