There are no limits to the imaginations of a group of 12-year-olds working on a new version of the age-old game of Chicken. As I recall those ardent discussions about rules and score-keeping, there was always an element of risk, the need for discipline and focus — and winning seemed to come down to who blinked first. Perhaps those childhood experiences were good preparation for making decisions in the current conditions of the cattle and beef business.

Given the prices of the past 18 months and into the next year or two, the strength of domestic and international beef demand in the middle of a long run of inflationary pressure, and reasonably favorable precipitation conditions for most of the country, an uptick in heifer retention and initiation of rebuilding cow numbers would be expected.

Yet, that is not the case. It appears producers are incentivized to take today’s prices on calves and bred cows. Two factors are certainly at play in this scenario: rising production costs and the shadow of massive uncertainty influencing our thinking as the result of COVID, global conflict, and declining trust in government and institutions.

Control the controllable

In times of uncertainty, it is especially imperative that business strategy be based on rational analysis to avoid succumbing to emotional decision-making. Start with controlling the controllable! The most important information a producer can have in hand is the cost of production. Without that knowledge, decisions about marketing and heifer retention will be mere guesses. Calculating and tracking cost of production year to year centers attention on factual data and sets the stage to make favorable marketing decisions while also uncovering areas of cost that might be reduced, if not eliminated.

Consider changes in forage management, and access to more pasture is another area of analysis. Access to more forage might allow retaining a calf crop into the yearling phase of production or to retain and expose to breeding a higher percentage of heifer calves, which opens doors for expanding or taking advantage of high bred heifer prices.

Producers favored with access to forage resources are also better situated to consider opportunities for strategic calf purchases and to expand into stocker and yearling production. These are decisions that require obtaining objective data and using that information so anxiety is reduced, focus sharpens, and a mindset suited to assessing risk vs. opportunities is created.

“Wherever you see a successful business, someone once made a courageous decision.”
— Peter Drucker

Taking action

Approaching the business environment with a sense of curiosity, as well as the discipline to be discerning, increases quality of decisions and helps to weave through the noise of opinion. A thoughtful and dedicated approach to gathering credible information is critical to making sound choices in both the short and long term.

It is also important to recognize that uncertainty is best navigated with trusted advisors. Making decisions in isolation invites additional risk and decreases the likelihood of favorable outcomes. On the other hand, too much information may lead to paralysis and the inability to make timely decisions. Thus, a small advisory team is an effective tool to optimize decision-making. Two or three trusted advisors (relationships may be formal or informal) who are effective at helping develop alternative pathways and clarifying the tradeoffs of those options are a force multiplier.

Holding both a short-term and a longer-term horizon is critical in the cattle business. While price-taking may be attractive, the sustainability of a cow-calf enterprise depends on maintaining productive capacity. Thus, decisions affecting the size of the cow herd must take into consideration short-term considerations for cash with a vision for the future that assures the business has the capacity to take advantage of future opportunities. We cannot shrink our way to long-term business success.

In these times of uncertainty, Peter Drucker reminds us, “Yet surely this is a time to make the future — precisely because everything is in flux. This is a time for action.”

Editor’s note: In “Outside the Box,” a regular column in both the Angus Journal® and the Angus Beef Bulletin, author Tom Field shares his experience as a cattleman and his insightful perspective on the business aspects of ranching. Field is director of the Engler Agribusiness Entrepreneurship Program at the University of Nebraska–Lincoln, where he holds the Paul Engler Chair of Agribusiness Entrepreneurship.