By Aaron Berger
Cow-calf producers are looking at the potential for exceptional levels of income for 2025 due to high calf prices. This income will give many cow-calf producers the opportunity to invest capital back into the operation in ways that can prepare them for future success.
The following are options, in no particular order, to consider when thinking about and planning for investments in the ranch or cow-calf enterprise.
- Celebrate and reward the people who have made investments and sacrifice to make the ranch successful! Recognize the blood, sweat, tears and stress that family and employees have given and show them appreciation.
- Visit with your banker and tax accountant about your current financial position and how income and investments can be managed to address tax liability for the 2025 year.
- Invest in others and yourself! Is there a class or an educational experience that would help people be more knowledgeable and effective in their roles and responsibilities? Take a trip and go see other operations who are doing something you are considering or would like to learn more about. Great leaders and managers are lifelong learners. The greatest educational gains usually are at the edge of your comfort zone.
- Explore retirement accounts as a tool for reducing taxable income. For operations without full-time employees, individual 401K accounts offer tremendous flexibility and the opportunity to borrow up to half of the balance of the account invested with a maximum of $50,000 borrowed per person. For a married couple this could be a total of $100,000. When exploring 401K providers to potentially work with, be an informed consumer and fully understand the fee structure as well as services provided before setting up an account.
- Look at your management information system. Does your current recordkeeping and accounting system provide you with the information needed to make effective decisions? If it doesn’t, then an investment in the tools, training or hiring of help in this area could be extremely beneficial.
- Hire an attorney to review and evaluate your current estate plan. If you have been putting off developing an estate plan, this may be the time to invest in completing one.
- Consider how livestock water and monitoring systems could be improved. Water is frequently the first limiting factor for grazing management systems. A dependable water supply is critical for good grazing management. Technology has made remote water monitoring systems effective and affordable. Consider how an investment in this technology could benefit your operation.
- Evaluate emergency power sources for wells and homes on the ranch. A backup generator that can be incorporated into the electrical grid for the ranch could be valuable to maintain ranch operations and deliver water to livestock when the power is out for an extended period.