Cattle Economics: Failure and the Road to Redemption

By Dr. Andrew Griffith

irst, very few people if any enjoy admitting failure, and there are several people who do not have the ability to admit or recognize failure or shortcomings. Second, redemption is the action of gaining or regaining possession of something in exchange for payment. This generally means something had to first be lost before it could be redeemed. Third, redemption cannot occur in the absence of failure or in the presence of pride. In short, a person can redeem something he or she lost and restore it to himself, a person can redeem something someone else lost and keep it for himself, or a person can redeem something and restore it to the person who lost it.

What does this have to do with farming or cattle production? It may have a lot to do with both if a producer comes under financial strain. The Bible has several stories about land or people being redeemed by family members and this often meant making payment with livestock. From the historical perspective of the Bible, the person with the first right to redeem something was the closest of kin. This remains a common practice today as family members often pay debts for someone else who is in financial trouble. However, the key to not having to redeem something is not failing.

As most readers are aware, society as well as cattle producers are being impacted by inflation, high interest rates, and increasing input costs not associated with inflation. These conditions have the potential to cause financial strain, which may result in forced sells of livestock to make payments or simply provide for the remaining livestock on the farm. Despite the increased cost of production, cattle markets will attempt to provide some support this year in the way of higher prices and thus higher revenues. This does not mean higher profits, but higher revenues will offset some of the higher costs.

This brings us to the main topic of discussion, which is the 2023 University of Tennessee beef cattle budgets. The University of Tennessee releases livestock and row crop budgets on an annual basis to aid the planning process. This year the expected total cost of carrying a cow-calf pair is $1,200 per pair. This is further broken down into variable expenses of $854 per pair and fixed costs of $346 per pair. There will be tremendous variability of expenses across operations. Thus, there is no need to object to this cost projection, because it will be different for every cattle producer. However, this is why the budgets are available in an editable Excel file or in a printable PDF so producers can insert their own prices and production practices to calculate their expected cost of production. Both the Excel and PDF files can be downloaded and printed from the following website https://arec.tennessee.edu/extension/budgets/ or producers can contact their local Extension office for the information.

The cow-calf and the stocker/backgrounding budgets are general expectations of costs and revenues and are not representative of any one farm. Rather they are a template for cattle producers to modify and use in their planning for the 2023 production year. As it was once said, “failing to plan is the same as planning to fail.” As previously stated, no one enjoys admitting failure, and no one goes into a situation counting on redemption. However, being redeemed is far better than the alternative.

As cattle producers plan for 2023 and consider the potential challenges and successes of the year, it is important to remember there are only a few things the producer can control. All the failures a person experiences are not always the fault of the person who experienced the failure, because outside or exogenous forces play a role. Similarly, all successes are not because the greatness of the person who experienced the success. Thus, it is important to be humble in success and failure, because there is a good chance it was not of a person’s own doing.