Margin and Risk Management for Cattle Feeders

Name and Position/Title:     
Byron Leu, ISU Extension Beef Program Specialist

Fiscal Year Submitted:         
FY 11

POW Title and Number:      
144 Improved beef cattle production and economic efficiency
121 Risk management education

Title:  
Margin and Risk Management for Cattle Feeders

Issue:
The cattle industry faces a number of monumental challenges in 2011.  Cattle prices are at record levels and input costs—especially grain and fuel—are the highest on record.  Plus, the potential for market volatility is a major concern with many cattle producers.  In order to combat these challenges, many cattle producers are exploring the use of risk management tools to protect their assets and enterprise investment.

What Did You Do?
The Iowa Beef Center, with support from Land O’ Lakes, Purina, and Iowa State University Extension, sponsored a number of workshops throughout Iowa in 2010 and 2011.  Two of these programs were held in southeast Iowa—at Pella and Fairfield.  The Pella program was hosted by Dale Miller, Joe Sellers, and Byron Leu.  The Fairfield site was hosted by Leu.

The workshops, conducted by Shane Ellis from Iowa State University, utilized a hands-on computer simulated program designed to hone producer’s risk management skills relative to a two-year data set.  Through this effort, attendees had the opportunity to learn about Livestock Gross Margin, Livestock Risk Protection Insurance, cash market, forward contracts, hedging and options.

Producers were recruited through mailings, flyers, and direct interaction with Extension, Land O’ Lakes, and Purina representatives.

Results:
The two southeast Iowa workshops were attended by 12 people (8 operations) at Pella and 16 (12 operations) at Fairfield.  Evaluations from the Fairfield site have been summarized and Shane Ellis is in the final stages of completing a more extensive statewide summary of all workshop sites.  At the Fairfield site, attendees (n= 13) indicated that:

 As a result of the meeting, participants estimated the value of the program at:

These results reflect the benefit of these hands-on workshops.  The learning experience was positive and attendees strongly indicated their intent to adapt and utilize risk management strategies in their cattle operations.

 

Page last updated: July 1, 2011
Page maintained by Julie Honeick, jhoneick@iastate.edu