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Producer Strategies to Combat Low Beef Prices

May 17, 2016
Angus Heifer

Beef prices hit their peak in spring of 2015, and have been on continual downward spiral since. Many producers are finding it difficult to make a profit with decreased calf auction prices. With poor growing conditions in South America, feed prices are expected to rise? How can beef producers withstand the double hit of lower income and higher expenses?

The first step a producer should take towards improving margins is cutting costs. Which cows are making money, and which cows are costing money? Open cows are money sinks. If she didn’t get bred after two cycles, cull her. Some cows are more efficient at feed conversion than others. Is she a hard keeper? Does she require more feed than other cows in her age group? Cull her. Are you constantly having to treat her for one problem or another? Cull her. Is your bull not consistently settling cows? Replace  him. Does your bull have hoof problems that interfere with breeding? Replace him.

Once the herd is pared of unprofitable cows, the producer should look at options for improving returns on market animals. While the market is becoming saturated with feeders, there are still ways to improve the way your feeders look to the market. Do you have neighbors that breed the same time as you? Work together to create a consistent group of animals that will fill a semi load.  Synchronize breedings so calves are born within a short window. Make sure you have a consistent vaccination, parasite control, and castration program that will improve the long-term performance of your calves.

If group marketing calves is not an option, consider finishing your own calves and custom marketing. With the local foods movement, people are more and more interested in the source of their meat. Working with local customers can be advantageous to both you and the customer. Beef processed in a USDA or Indiana licensed processing plant can be legally sold in Indiana (USDA inspection is required for selling across state lines). It can be more profitable to sell halves or quarters than selling on the hoof. 

Farmer’s market sales of freezer beef is one way to build a customer base. While farmer’s markets are time consuming, they enable connections with many potential customers. By engaging many different customers, you can demonstrate the quality of your product and build a long-term customer base.

The advantage of selling a quarter and a half is that the entire animal is sold—you don’t have to worry about being stuck with undesirable cuts. The disadvantage is you have to find a customer with a large amount of ready cash to be able to purchase a large amount of meat at one time.

The advantage of selling individual cuts at a farmer’s market etc. is that you can make more per pound of meat, and you can sell to people with less cash on hand, but there is the disadvantage of needing more customers, and potentially being stuck with less desirable cuts.

 

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