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Facing High Corn Prices Again: What's Your Plan?

img_4489.JPG As corn prices continue to climb, many livestock producers are reminded of 2008 when corn prices reached historic highs, creating one expensive year for feeding cattle. Current trends indicate corn prices will continue to move up, causing concern for beef producers as they prepare for the fall and winter feeding months. Pablo Guiroy and Ryan Eichler, both with Cargill Animal Nutrition, recently discussed with me how to deal with these high prices again, this time keeping in mind the lessons learned from 2008 and with the confidence of seasoned producers who have handled it once before.

In 2008, the folks at Cargill Animal Nutrition put together an approach on how to deal with high corn prices, and it was broken down into three options for producers.

1. Producers can more efficiently use corn grain.

2. A greater substitution of feeds and by-products can be used in place of corn.

3. Reduce the number of days on feed.

“How will these three options impact the economics of feeding cattle?” asks Guiroy. “The first two options will help, but will have a small to medium impact on your bottom line. However, the third option can have a major impact. Feeding cattle 90 days vs. 150 days is huge. There is a tremendous opportunity to reduce feeding days and use by-products.”

“A big point that we want to focus on is having a correct benchmark for making our decisions,” adds Eichler. “That benchmark is our profitability, or dollars per head. You can remain with your old feeding program, but you want get the best use of your dollars. Your old program might give you the best gain or best feed conversion, but in these times, we need to focus on a new benchmark — profitability.”

Eichler and Guiroy agree that although they can’t predict just how high corn prices will go, they can work to help their customers understand profitability and risk management. The bottom line, they say, is that there is a need for producers to take action. This means having a more efficient use of all ingredients and technologies available. Producers should also look at the substituting feeds in diets based on price, availability, nutritional value and consistency. Finally, reducing the days cattle are kept on feed can have a huge impact on producers’ pocketbooks.

What’s your plan for this fall? What risk management steps have you taken? How do you plan to handle rising corn prices when feeding cattle? Share your thoughts, experiences and advice in the comments section below.