Is your operation financially stable and profitable?

Let's switch gears and get back to ranching and business strategies. Recent statistics show that there is an approximate 22% decline in beef producing operations. Although this is approximately only a 1% decline annually it is a significant amount over time.

What is the main driving force behind those exiting the industry? I'm sure there are a number of reasons why folks leave the industry. But the main driving forces are financial stability and profitability.

If you are a cow-calf producer have you been making a profit with the higher calf prices in the past couple of years? Or are you just breaking even? This is something that every producer needs to take a look at. How can I increase my profitability and decrease my cost? There are many expenses and variability's that are out of the producers control. Such as land cost, the market, weather, water and so on. How can we control the uncontrollable? What is our product that we are producing? Beef. How can we control that and how can we reduce our input cost that we do control?  

Before we can answer those questions we must look at the entire financial picture of our operation and what our long-term goals for the outfit are. What direction do we want to go? Is there a specialty market we can get a premium payment for our calves? How can we market ourselves and our product?  

When all of these questions have been answered then we can go through and start to reduce our inputs and run an efficient operation. Some areas where a producer does not want to or should not reduce are 1) herd health 2) genetics 3) pasture management. With improvement in these three areas the rest of your input cost will naturally go down and increase your bottom line. Thus, allowing your operation to remain sustainable and prosperous for years to come.

If you already have answers to all of the questions above, congratulations and keep up the great work! But if you are just breaking even and find yourself in the mix with the "average" producer you may want to consider really digging into the specifics of your operation and begin by asking, "Is what I'm doing financial sustainable and can I remain profitable even when beef supply is large and the market is less than accommodating?"

Contact us and we can help your operation reach it's goals.