Knowing this enables you to determine the required price relationship between the beginning and end of the production period. Review Table 2. Trends in domestic cattle numbers and prices should be considered before deciding whether or not to retain ownership. Cattlemen should be aware of the size of the U.S. cow herd and the calf crop and also have some knowledge of the current cattle cycle. Perhaps the most important piece of market information to consider is whether cattle prices are expected to rise or fall, as a function of the cattle cycle.
Retained ownership increases capital requirements and delays income.
This must be considered and some adjustment to cash-flow expectations must be made if retained ownership is going to be successful. You may need to prepare a balance sheet, projected income statement, cash flow and a marketing plan before the lender will provide the additional capital required for increased production costs and delayed income. In today s cattle industry, leased grazing and custom feeding are options available to most cattlemen. In both options, there are various arrangements for assessing charges. The two most common methods are a fixed charge based on cost of gain, and the sale of feed and services .