Industry At A Glance: How Do You Manage External Risk?

Today’s cattle business requires ever-more vigilance in management against potential shocks from the outside.

Nevil Speer

November 11, 2013

2 Min Read
Industry At A Glance: How Do You Manage External Risk?

Commodity markets are inherently volatile and unpredictable. That’s especially true in the beef complex given the large number of external influences that move the market. Moreover, markets have become even more reactive in recent years with the growing prevalence of technology, as computer trading, online news and social media all possess the ability to move markets almost instantaneously.

That requires ever-more vigilance regarding the management of one’s business against the potential shocks from the outside. It’s no longer sufficient to just oversee the production side and hope that other risks to the business either don’t occur or move so slowly they don’t matter. In addition, the increasing capital associated with the business make managing risk more significant all the time.

Risk management is often thought of simply in terms of markets. However, there are other means to mitigate risk including increasing the amount of working capital in one’s operation, managing costs, paying down or restructuring debt, and locking in operating margins.

Several years ago during a Cattlemen’s College presentation, I asked the attendees to designate the primary means in which they’re buffering their business against external risk. Those results are presented here.guarding against external risks in cattle industry

Do these results surprise you, or do they correspond to how you perceive many producers trying to manage their businesses? What other important or key categories would you add in response to the question? Leave your thoughts below.


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About the Author(s)

Nevil Speer

Nevil Speer serves as an industry consultant and is based in Bowling Green, KY.

Nevil Speer has extensive experience and involvement with the livestock and food industry including various service and consultation projects spanning such issues as market competition, business and economic implications of agroterrorism, animal identification, assessment of price risk and market volatility on the producer segment, and usage of antibiotics in animal agriculture.
Dr. Speer writes about many aspects regarding agriculture and the food industry with regular contribution to BEEF and Feedstuffs.  He’s also written several influential industry white papers dealing with issues such as changing business dynamics in the beef complex, producer decision-making, and country-of-origin labeling.
He serves as a member of the Board of Directors for the National Institute for Animal Agriculture.
Dr. Speer holds both a PhD in Animal Science and a Master’s degree in Business Administration.

Contact him at [email protected].

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