Cattlemen confront 'risk'

By MINDY POEHL | Central Texas Edition

Ron Gill, with the Texas Cooperative Extension of Texas A&M, lectures about drought planning during the Got Risk? Beef Cattle Risk Management Conference in Waco. -- Photo by Mindy Poehl

June 3, 2004 -- Every person who is a Texas beef producer faces risks. Hazards can affect anything from land to cattle and developing a good risk management plan can not only limit risks, but can also improve current and future profitability.

The 2004 Got Risk? Beef Cattle Risk Management Conference was held on Tuesday, May 18, at the Waco Convention Center. Different qualified speakers spoke about implementing risk plans, managing information and different services available for cattle producers.

"There are lots of ways to manage risk and many tools out there to help," Dr. Steve Amosson, regents fellow, professor and Extension economist in Amarillo, said. "People need to be aware of what they (the tools) are and to identify them so they can manage them."

Amosson spoke about the Master Marketer Educational System (MMES), which presently consists of a number of educational efforts and support activities that provide Texas producers the opportunity to enhance their marketing and management skills and their bottom line.

MMES combines three successful educational concepts: intensive education, master volunteers and marketing clubs into a unique educational program that will result in improved profitability for farmers and ranchers statewide. They will learn how and when to use various risk management strategies.

Amosson said MMES is not for the novice. "You must know some things about marketing," he said.

MMES consists of a 64-hour training course, broken down into four, two- day sessions held two weeks apart. Speakers come from the Texas Cooperative Extension, numerous universities and private industries.

The focus of marketing clubs varies. Some address marketing multiple commodities, while others focus on a single commodity. A survey of MMES graduates revealed an increase in returns of $31,517 annually, resulting from what they had learned in the program.

Robert Wood, assistant commissioner for Rural Economic Development with the Texas Department of Agriculture then spoke about programs for cattle producers.

An abundance of programs is available for cattle producers. Wood is a big proponent of business planning. He spoke about four main risks: production risk, marketing risk, financial risk and legal risk.

For more information on programs, contact your local TDA field representative, call TDA's Rural Development line at 1-877-428-7848 or visit http://www.agr.state.tx.us/eco/index/htm.

Ron Gill, with the Texas Cooperative Extension, Texas A&M University, was also on hand, addressing drought risk management in beef cattle systems.

Gill said, "We need to have a plan. A drought is 100 percent certain in the future."

A drought is a prolonged period during which annual precipitation is less than 75 percent of the average. Droughts occur 16-45 percent of the time in Texas.

The main management objectives are to minimize damage to ranges and pastures and minimize economic losses, Gill said.

Risk management begins before a drought begins. Planning in advance will aid decision making when times are tough. Timely, planned adjustments can reduce the impacts on long-term health of the range and pasture, the cattle operation and the financial status of the ranch.

Short-term risks of droughts are decreased animal production and increased production costs. Long-term risks include forage resource risks. Excessive grazing reduces plant productivity and less palatable forages, Gill said. Cattle resource risks, such as herd productivity and profitability are long term risks, along with debt servicing.

The drought situation in Texas has increased woody plants by 30 percent and the perennial warm season grasses have declined 20-80 percent, Gill explained. Corn prices have been low and hay prices have been high.

"We need to be prepared and know what we are going to attack first," said Gill.

Annual increases in weeds is the biggest change in Central Texas, due to the drought.

"We've been able to improve cow size and improve production, but at a cost," Gill said. "We're not making much more money than we used to."

During droughts, cattle have increased exposure and susceptibility of diseases. If you do not have enough resources to keep the cattle healthy, the herd should be reduced. The primary objective of partial herd reduction is to optimize the performance of the remaining breeding herd relative to forage conditions.

Avoid common destocking mistakes. Do not "hang tough" by hoping and praying that things will get better quickly. Wean calves early, cull cows that are five years or old and cull enough cows to feed the rest of the herd.

"If the cows aren't making you money, cull them," Gill stated.

A recovery plan should also be implemented during droughts. Allow adequate time for pasture recovery, increase forage supply and outline restocking strategies.

Actively planning your future, rather than passively reacting to events as they occure, increases a rancher's business' likelihood of success.

"The purpose of Got Risk is to educate producers about the options they have to improve their businesses," Wood concluded.