Industry Insights

Three steps to maximize opportunities for your cattle operation in 2022

By Josh Davis

Cattle producers have seen their share of ups and downs over the last few years, from trade wars, pandemic-spurred supply chain disruptions, and labor shortages to high feed costs. With more uncertainty ahead – including drought, a new COVID-19 variant, global market fluctuations, as well as legislative and regulatory changes – the need for solid planning and strong partnerships to support your operation are more important than ever. Here are three steps cattle producers can take in the year ahead to position themselves for long-term success.

Step One: Begin with the end goal in mind.

Success is never accidental. Getting there begins with outlining clear and achievable goals for your operation. Create a vision for where you want to be and document it. This starts with assessing your total cost of doing business, looking at year-over-year performance, and creating benchmarks that will guide you. With your goals and your vision in place, it’s time to outline the shortterm and long-term strategies that will get you there.

Step Two: Seek advice from experts.

Every producer needs a team of experts and trusted advisors around them. These advisors should include a CPA, attorney, veterinarian, and your lender, to name a few. Ideally, they should specialize in the industry, and they should be people who will stand beside you in an ever-changing marketplace. Once you have a plan in place, sit down with this group of people (either together, or individually) and review the plan together. They will offer valuable feedback and help you find and fix inefficiencies in your operation. Listen to their expert guidance and tactical feedback: it will help make modifications to your plan, mitigate risk, and maximize your opportunities in both good and challenging times.

Step Three: Capitalize now, plan for the future.

Agriculture is a cyclical industry. It doesn’t matter how good you are or how solid your plan is: there are going to be times when you make money and there are going to be times when you don’t. Taking advantage of opportunities to build up capital when you can will help you withstand swings in commodity prices, export demand and disruptive events, and provide much-needed cash flow if prices and demand decrease. On the heels of several difficult years, building up a war chest of liquidity may be easier said than done. It could even mean delaying capital purchases. Lean on your team of specialized advisors to help you identify any opportunities to build your capital and insulate yourself against volatility. It’s also critical that you work with a lender who understands the volatility of the market and will stand beside you through thick and thin. Finally, don’t delay evaluating your marketing agreements and negotiating contracts until they are about to expire. Developing strategic partnerships, locking in feed costs, or even pre-buying commodities when you can are all opportunities to explore. Other opportunities include identifying stockyards with premiums for health programs, uniformity or weaned cattle. Or, if it makes sense to lean into local demand, look for opportunities to market and sell your product locally. No doubt, there’s more volatility ahead for the cattle market. Implementing a vision for your future with clear goals, aligning yourself with a team of specialized advisors, and seeking every opportunity to build yourself up to withstand market volatility will help you navigate the unknowns of 2022 and beyond.

Josh Davis is Vice President Food & Agribusiness specializing in timber and cattle at Farm Credit Mid-America. Farm Credit Mid-America is a financial services cooperative that serves the credit needs of farmers and rural residents across Indiana, Ohio, Kentucky and Tennessee. Farm Credit Mid-America provides loans for real estate, operating, equipment, housing and related services such as crop insurance and vehicle, equipment and building leases. Learn more at e-farmcredit.com.