Cattle markets are hot these days. So, should you diversify your operation by buying a few beef cows?
“Right now, things couldn’t be better,” said Dallas Kime, senior vice president of Farm Credit Services of America, who also has a cow-calf operation with his brother in north-central Nebraska. “But I also can tell you that in the 25, 30 and 40 years leading up to this, that there hasn't been a lot of money made in the cow-calf business.”
The supply-demand scenario that drives the current situation rewards those who have stayed in beef through thick and thin. And expansion bodes better for current cattle producers who already have intact infrastructure than those who are starting from scratch.
“It would be hard to fire up a cow-calf business right now, with cow prices as high as they've ever been historically,” Kime said. “Whether it’s cow-calf or feeding cattle or being in hogs, if you aren’t consistent with what you are doing, you can get in at the wrong time.”
There are other ways to mitigate risk through diversification, he added.
“We see some of our larger producers who have a retail fertilizer and chemical business,” Kime said. “We also have customers with investments outside of agriculture.”