Is it time to exit the cow, calf industry?

In March 2012, the prices of feeder cattle reached record highs. By mid-July 2012, the severe drought in the Midwest and the Plains caused soybean and corn prices to reach record high prices.

Feeder cattle prices have declined due to the record grain prices and forced liquidation of herds due to drought.

Many producers are contemplating their future in the industry. Should they hang on and purchase feed or exit the industry? What will feeder cattle prices be in 2013? Who makes this decision? The owner? The bank? Will health issues force the dispersal of the herd?

?Sometimes producers are forced to sell their herds ASAP when they are faced with life threatening health issues. Does the owner want to stay in business and perhaps lose all his hard earned equity?

In my opinion, I feel that psychology plays a prominent role in the decision making process to exit the industry. For many producers, the operation of a cow/calf herd is both a life style and a business.

Many producers have the attitude that “The beef industry has always had times of high and low prices. We have had low prices before and stayed in business. We just have to “dig in” and keep going. Eventually prices will increase. They always have before. When we decide to sellout there are always farmers who want to expand and buy more land and cattle. We will be okay. There is nothing to worry about.”

The owner’s pride interferes with making sound economic decisions. In addition, fear of the unknown plays a major part in deciding to stay on the farm and continue raising cattle.

Where will we live? Who is going to hire a middle-aged man who has always raised cattle and farmed for a living?