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Producers weigh risks of investments to expand herd

Some cattle producers say they’re very hesitant to expand their operations due to volatility in the industry.

“Right now, the market tells us that we should be selling.”

Frank Utter of Brewster says he’s in no hurry to purchase replacement heifers. “I think most people’s mindset right now is we can trade old for young, and when this thing really looks like it’s ready to expand you can have a real good functional set of cows in the prime of their life.”

Steve Sunderman says it depends on how much available capital he has, but high prices make it a very risky investment. “You don’t really have a way to lock in your product or your calf for more than a year or two out.  When you’re making that decision to buy a bred heifer that you can survive 3, 4 or 5 years to cash flow that investment your making.”

Craig Uden says some of his considerations are interest rates, labor and what happened about more than a decade ago.  “We did this in 2013 and 2014 and then it was a bust. Those cows – it took the rest of their lifetime to pay them off. That’s in the back of almost every producer’s mind.”  

The producers also say the administration’s tariff policy and New World screwworm also creates uncertainty for producers looking to invest.

Frank Utter:

Steve Sunderman: