Working Ranch Magazine March/April 2025

MANAGING RISKS Retaining ownership of your own calves has less risk than buying stocker calves because, “starting with your own stock keeps you from having to buy calves,” Peel explains. “Some caution is advised and the transition or the addition of a stocker enterprise to a cow/calf enterprise is a little bit higher risk in the sense that it tends to be more variable,” he says. Peel directs ranchers to Livestock Risk Protection Insurance, a USDA program. The LRP website offers this introductory information, “The Livestock Risk Protection Insurance Plan for Fed Cattle (LRP-Fed Cattle) is designed to insure against declin ing market prices. Beef producers may choose from a variety of cov erage levels and insurance periods that correspond with the time your market weight cattle would normally be sold. Learn more about risk management tools for cattle producers by connect ing with your state Extension special ist for livestock marketing and your agriculture lender. Take advantage of seminars and educational events hosted by your state and national beef cattle associations. Study, learn, and analyze the broad cattle market and your own business interests and resources to avoid the downside of retained ownership. Understand how to strategically predict what kinds of cattle the mar ket will want when you are ready and able to sell your calves. Evaluate what your forage resources will support. Peel says, “Figure out where you’re making money and then ask yourself what kind of return a retained-own ership enterprise would generate rela tive to your cow/calf enterprise?” KNOWLEDGE RESOURCES Derrell Peel Publications | Oklahoma State University (okstate.edu)

situation in terms of the potential for retained ownership,” he says. “There is not just one type of stocker enterprise,” Peel says. “Evaluate a vari ety of potential scenarios because there are certainly times, right now in this mid-2024 market for example, where selling light-weight animals is a sensi ble option. When we’re short of cattle, as we are now, the market’s telling us to get these calves through the system!” Peel adds another consideration to the list. “You don’t have to do the same thing with all the calves every year. All your calves do not have to go the stocker/feeder calf route. You can sell the steers and keep the heifers which may bring more dollars as breeding stock. You can sell the big end of the steers and heifers and keep the small end and put some additional weight on those lighter calves,” he says. If you have a large enough calf crop each year, you have ample options to strategically market your cattle for optimum profit. And that requires a good understanding of where we are in the broad cattle market, which is where this conversation started. Given all these options for market ing calves, the answer to the question of should a rancher retain ownership is not a simple yes or no. “It is really a scale,” Peel says. “That becomes important when you think about the resource allocations and understand ing how many animal units your for age resources can sustain and for how long. There can be many right answers based on your analysis and resources,” Peel says. Two other points to consider involve your professional advisors. If you retain one year’s calf crop to add weight and then sell the next year’s calf crop at weaning, “you might end up selling two calf crops in one year. That can have tax implications,” Peel says, “and you just need to be aware of that and manage through that. Your CPA becomes a really important plan ning asset ahead of these changes.” Keep your banker informed of potential operational changes, too. “You may be changing the timing of payments on any debt that you’re car rying,” Peel says.

cattle,” he explains. In those conditions, it may be time to “maybe run fewer cows, or at least hold your herd steady, and use any excess forage you have for backgrounding or stocker calves.” This may mean now is a good time to block off a few hours on your calen dar, grab a large coffee, and do some fun analysis on the possible gains that retained ownership might bring If you are part of a value-added pro gram or a cattle marketing alliance, you may already be retaining own ership of your calves. If you are not involved in an alliance, retaining own ership will require you to change your thinking about when to sell weaned calves and where to graze them while they remain in your ownership. Be honest with yourself about how comfortable you are with change. How do you feel about selling weaned calves one year and then skipping a year or two of your normal sales pat tern because the market indicates it is a good time to retain ownership? Are you comfortable with adjusting the use of your forages to handle grazing needed by the older calves? “In fairness, it is not always easy to jump back and forth between those because you’re chang ing your forage use,” Peel says. Consider your retained ownership business as a separate enterprise. Your first input cost, Peel says, will be the “value of those calves based on what you could have sold them for at wean ing. This is your input price into your backgrounding or stocker operation.” Decide how long you keep those calves, based on the cattle market ing cycle and your forage availabil ity. “It could be as short as putting on an extra 150 pounds,” Peel says, “or it could be best to put another 350 pounds on those calves. This will take more time and will tie up differ ent resources and change the timing of your marketing.” Consider the type of calf you’ll be retaining. “If it is a 450-pound range calf, there’s a lot of stocker potential there. If it is a 600- or 650-pound calf off the cow, then that’s going to be a different to your ranch business. FLEXIBLE RANCHING

Livestock Risk Protection Fed Cattle | RMA (usda.gov)

Extension Risk Management Education: Managing risk drives success (extensionrme.org)

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