Cash flow analysis for the current cattle cycle

A herd can cash-flow and not be profitable, and a herd can be profitable but not cash-flow. Both measures of a beef cow herd are critical and need to be addressed on a regular basis.

 

Harlan Hughes, BEEF Magazine

Jan 09, 2019

 

As a rancher takes his herd through each cattle cycle, he has to be concerned about two economic performance factors concerning his beef cow herd. One is the net cash flow associated with the beef cow herd. The other is the net economic profit generated by the beef cow herd.

 

A herd can cash-flow and not be profitable, and a herd can be profitable but not cash-flow. Both measures of a beef cow herd are critical and need to be addressed on a regular basis.

 

Over a complete cattle cycle, the goal of a beef cow herd is to generate an economic long-run profit. The reality is that some years the beef cow herd is more profitable than others. Most of my recent Market Advisor columns have focused around the economic profit question.

 

From a cash flow standpoint, the beef cow herd needs to cash-flow each and every year. If it doesn’t cash-flow in any given year, you will be asked to explain why to your banker. Your banker will ask what you are going to do differently this year. This Market Adviser series will focus on the net cash flow analysis of the beef cow business.

 

My study ranch ...

 

Economic data used in analysis ...

 

Heifer development costs ...

 

Family living draw ... 

 

more, including links, tables, charts

https://www.beefmagazine.com/management/cash-flow-analysis-current-cattle-cycle