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Non-emotional decisions critical during market volatility
An ag economist says the current volatility in the cattle markets is a good reminder for producers to explore risk management options. University of Tennessee’s Charley Martinez says producers who sold animals on Monday or Tuesday of last week had a very different experience than those who sold animals Thursday or Friday. “Marketing animals with no risk protection, you kind of took it on the channel a little bit last week,” he says.
He tells Brownfield that when producers understand production costs, it can help take the emotion out of marketing. Martinez says producers can either focus on the cost of producing pounds per acre or the cost of production on a per-head basis. “Regardless of which tactic someone wants to use, I think good record keeping number one is imperative,” he says. “And being honest with your records is something that we don’t talk about enough. Like charging yourself for labor, a lot of people don’t like doing that because they think well, it’s free. Well, no, it’s not free.”
Martinez says when producers start with a complete picture of their finances, “That’s when you can actually, truly take a step towards risk management and start using the tools, whether it’s LRP futures options or some type of insurance package.”
