“It seems the consensus in the market is that demand is a huge problem; however, the markets have upside potential with risk” said Matthew Diersen, in his opening statements at the Beef Cattle Risk Management Session I recently attended.
In this struggling economy, beef demand has taken a hit, as consumers have less disposable income to spend on high dollar beef cuts. However, Diersen, who has a Ph.D. in ag economics, encouraged producers to ride the economic storm as hidden opportunities are just around the corner for those who stick it out.
With a short supply of cattle, Diersen added that the USDA predicts the U.S. cowherd to start rebuilding in 2011. He presented numbers showing an average $40/head loss for cow/calf producers in 2009. Economists predict a $60/head gain in 2011, but looking at cash returns in 2005 at $150 to $200/head, Diersen said $60 isn’t going to encourage too many folks to get into beef production again. He also stressed the importance of watching market indicators for making educated decisions down the road.
Certainly, developing and writing a commodity marketing plan using the marketing options and insurance tools available to producers can be tricky and overwhelming. However, Diersen said having a plan serves as the roadmap for the ranch business plan and will help capture high prices and minimize risk when making decisions down the road. I had the opportunity to discuss these things with him in an interview, and I hope you will take a minute to listen to our segment below.
BEEF Daily Quick Fact:The protein in beef helps you maintain a healthy metabolism, but beef isn’t only useful in maintaining a healthy body. Studies suggest that the protein in beef may be help prevent many chronic diseases such as type-2 diabetes and osteoporosis. (Source: Spring into Shape at Beef It's What's For Dinner)