Knowing the value of every pound of meat you sell has more to do with the success and failure of your livestock enterprise than does the rise and fall of livestock prices.

When you become as knowledgeable about what you’re doing as the packer, it is then that you will be maximizing the profit of your enterprise. This has been the focus (over the years) of every “livestock Marketing seminar” I’ve ever conducted.

But, to put things in perspective, your operation is but a minuscule dot in the scheme of things, as there are about 89 million bovines of all ages and sexes in the country. About 38 million are female that have had at least one calf. Of those, 29 million are beef cows and the rest dairy animals. Considering that virtually every cow is eventually slaughtered for meat consumption, a cyclical factor enters into this.

When milk prices are high, dairy herds expand, retaining older cows and holding more female calves back for replacements. This cuts the flow of dairy animals from the dairy pool, contributing to a temporary uptick in slaughter cattle prices. The reverse is true when milk prices fall.

So, again, you’re miniscule within these cycles of one-time factors that contribute to a temporary rise and fall in livestock prices. You can’t control that, but you can control the value of each animal that you send to market.

You also have more control over intrinsic costs, such as transportation and labor. The cost of diesel fuel and labor should not be passed on to you. If a packer wants your livestock, make him fill the tank and hire a driver.

At today’s price of a $50.00 T-bone, perhaps you can turn a blind eye to corporate greed, but eventually you’ll be paying the price, if you don’t take charge of your own destiny. Lock in a profit before you invest your first dollar.

You can point a finger at price gouging by monopolies as being the root of all inflation. However, a government fixation of the meat industry from the 1930’s through the 1970’s on busting monopolies and punishing price fixing has come full circle. The government for the next four decades turned a blind eye to abusive power. In that period of time there has been a lot of consolidation and reduced competition in the meat industry. As a result, there are increasingly fewer packers, meaning less and less control by the producer, meaning that you have to take back what is rightfully yours, as there has been a greater shift in pricing power against farmers and ranchers.

Supposedly, you are to be protected from unfair price gouging by the basic Packers and Stockyards Act. This act was put in place by Congress back in 1921 to preserve competition and protect farmers. But, today it is so outdated and obsolete – that it is a waste of tax payer money. Learn to protect your own prices.

The industry has moved away from all live regulations to that of carcass evaluation and cutability based pricing. When will Congress address this issue and move the industry into the 21st century. Once you learn this concept, you will be guaranteed a profit.

Right now there is a shortage· of cattle, high feed prices, and a war in Ukraine, all of which should be a concern of every elected official. (Be careful who we elect for President, as we want one smart enough to understand all of this.) Feeding livestock is a complicated matter.

To learn that the supply curve for any producer, the list of the quantities offered for sale at each of a wide range of prices, is the same as the marginal cost curve for that producer. If the money a producer can get for selling one more unit of product doesn’t equal the extra costs to produce it, he won’t raise it and sell it anymore. This will be determined when you determine your cost of production.

Then consider how this is all complicated by time lags. Such as ranchers deciding how many cows to breed long before one year’s crop of calves is ready to sell to a feedlot. To order seed and other inputs, grain farmers must decide during the winter what acreages they will plant to each crop in the Spring. They can hedge the price at which they sell, but output still depends on the weather. Likewise, feedlot operations must buy feeder cattle months before they will be ready to sell, as adjustments not only take time, but require a great deal of knowledge. (Something we have. not seen a lot of in the upper echelon.) Knowledge has been the foundation of my every livestock marketing seminar.

Moreover, there are some apparently perverse patterns, such as when meat prices rise, and farmers and ranchers want to increase production. To do so, they will refrain from culling older cows and genetically less productive breeding stock that would otherwise be slaughtered. Supply and demand are but one of the many factors that come into play when determining price.

Both reactions cut the short-term flow of livestock to market, thus accentuating a price rise, based on an annual cycle in ranching management and a nine-month gestation period, beef prices will tend to rise for a couple of years. These are built in pricing factors, but have nothing to do with determining the “cutability value” of an animal.

This is all about simple arithmetic, as higher prices will reduce the culling of the cow herd and contribute to the retention of young replacement cows that would otherwise be fed out. Determining the value of an animal is all about simple arithmetic: Calculating weight, grade, and yield.

Most of the presidential candidates will get this, but none will understand how to determine the value of an animal.

Thus, the rise and fall of livestock prices will continue to go un-understood by our most highly vested elected officials. Our government officials have proven themselves to be incompetent.

This marketing picture is true for both beef and pork, as the ‘’beef cycle” of seven years or so is matched by a shorter term “hog cycle” driven by shorter gestation and maturation periods but, no matter the term, before you invest your first dollar, lock in a profit.

BOTTOM LINE: Let’s start electing people that are smarter than we are. Let’s PP, meaning turn the Packer Producer relationship around. The Packer is nothing without the Producer!

The supply chain is more powerful than the manufacturing chain.

To be such a willing supplier at the whims of the packer makes no sense (CENTS).

Determine the value of every pound of meat you sell, and, insist upon that price.

Being a patsy to the beckoning call of the packer makes no sense (CENTS).

If HE wants your livestock, tell HIM to send a truck, fill the tank with diesel and pay the driver.

I’ve personally had it up to here with the PACKER/PRODUCER relationship. Let’s take the gloves off.

The rise and fall of livestock prices is in your hands. Take control of your own destiny.

I’ve dedicated a large portion of my formative life to that of conducting livestock marketing seminars and purebred hog auctions throughout the entire Midwest. While serving in that capacity, “The Knightro Report” of some thirty plus years has served the meat and livestock industry with valuable knowledge and teachings, for which it will be forever grateful to the magazine you are reading right now.

The goal of which has always been that of mutually prices. Establishing fair and equitable meat and livestock

Fair and equitable has always been a part of my decision making, going as far back as my graduation from North Dakota State University. At that time, Florida. I was offered teaching/graduate positions at SDSU, Mississippi, and Florida.

I made mention of this, only to acknowledge that my good friend, Shannon (who is preparing this, my last news release) is pulling up stakes and moving to Florida. It would have been ironic that we both might have ended up at the same destination.

While serving as our Church Secretary, she has also served as my right hand gal. So, it is with great trepidation that I think of her leaving and the end of a long run of story telling.

This has been a wonderful relationship, for which I will be forever gateful, as she and her husband Dan move forward with their lives, by the Grace of God!