By Kay Ledbetter
Whether it was the loss of equity in the ranching business during 2016 or ranchland conditions after recent wildfires, national experts at the third annual Beef Cattle Conference and Ag Tour discussed how ranchers might work to “right the ship.”
The Texas A&M AgriLife Extension Service in Hemphill County hosted the event, which attracted 277 people representing 11 states and 19 Texas counties, said Andy Holloway, AgriLife Extension agriculture and natural resources agent in Hemphill County.
“Those attending left with a lot of take-home messages from our speakers, and the timeliness of the tour was so appropriate with all the forbs and weeds coming back on this burned-out country,” Holloway said, referencing the thousands of acres burned in March wildfires.
Their first message, he said, came from Dr. Doug Steele, AgriLife Extension director from College Station, who said producers must get engaged to provide more literacy to the public about agricultural production.
“We as producers are going to be the necessary step to make consumers aware of the value of our products to their health,” Holloway said. “We have to realize and utilize the power of the ‘pasture to the plate’ message.”
Troy Applehans, with CattleFax, Denver, Colorado, reviewed statistical facts from 2015 to the lows of 2016 cattle market and where markets are now, as well as glanced into the crystal ball, estimating what future markets might look like.
“It was very sobering,” Holloway said. “A 550-pound weaned calf lost 46 percent of his value from April 2016 to mid-October. People need to pay attention to those figures – it was not very encouraging.
“Our markets had gotten too high over a period of a couple years prior to that based on the depletion of the cow herd during the drought in 2011,” he said. “Producers were aggressively buying cattle nationwide and the price just got too high. Some people bought $3,000 replacement cows and now they are worth $1,500, and the calves off those cows are worth about $750.”
Salem Abraham, with Abraham Trading in Canadian, explained the price drop was almost a 50-year event. Not since 1973 has there been that much drain on equity in the cattle industry, and it resulted in bankruptcies and cattle losses back then.
“The take-home message was that these younger ranchers have time to recover; that’s in their favor,” Holloway said. “But unfortunately for some of the older ranchers who are upside-down now, they may not have enough time to recover.”
However, all was not doom and gloom, Holloway said.
Stan Bevers, KPI System owner and former AgriLife Extension economist, Vernon, outlined key producer indicators that can help a rancher find solid footing once again.
“We’re under water with what we are getting for our calves versus what it is costing to produce that calf,” Holloway said. “Stan said the only way we can get back into the black is to lower our input costs. There are some you can’t change, but there are some you can do something with.”
Bevers said depreciation is something many ranchers don’t consider, but they should, because a cow does depreciate and that needs to be factored into the management plan.
Ranchers also have to develop an efficient, low-cost program, Bevers said, adding that’s the only way to make it in this volatile business.
“With the average cost higher than the market value, if you are not cognizant of that, you are going to lose money fast,” Holloway said.
Another message from Bevers was to make sure fertility is enhanced. Fertility is the No. 1 input cost. If the analysis doesn’t include the number of cows exposed to the number bred to the calves weaned, it is not an accurate picture.
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