Many cow-calf producers are deliberating how they might avoid the worst of the weakened fall calf market.
Terry Betker, a partner with Myers Norris Penny, said there are several possible strategies.
The first is to simply keep the calves with their mothers for a little while, he said.
“The problem with that is that I don’t think that is going to be a real novel strategy, so you are going to have to watch because if there is sudden dump, you could get caught.”
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Weaning and backgrounding the animals is another option.
“Last year that would have been a real dicey situation because of the feed shortage. But this year there is more feed around.”
A third, less obvious option is to approach a backgrounding lot or feedlot and negotiate a shared risk arrangement.
He said backgrounders and feedlots are short of cash.
“The farmer might be able to structure it to say to the background lot, ‘I’ll put my calves in here and defer payment,’ ” he said.
They can negotiate how payment will be made when the market recovers.
“It is a bit of a novel approach and it clearly depends on the financial situation of the farmer and whether he can afford to do that.”
