Senior Farm and Ranch Broadcaster Ron Hays caught up with the Vice President of Operations at Farm Data Services and Oklahoma cattle producer Clay Burtrum to discuss the critical importance of risk management programs in today’s cattle markets.
“Every time we think these cattle prices can’t go any higher, they go higher,” Burtrum states. “It is a good time to be thinking about risk management strategies whether you are a cow calf producer or that guy that is buying smaller weight calves to run on grass for this next fall.”
Burtrum noted that most cow calf operators are almost finished with calving season at this point. He said that they don’t have to know the total number of steers and heifers they will have before they get risk protection. He used the example of a producer with 100 cows and suggested that he insure forty steers and forty heifers so that he doesn’t miss out on the currently high prices; then, he can capture the rest on a different plan after he knows what else he has.
“Let’s capture that market right now and those opportunities,” he said. “Just for an example, you can insure your calf crop – I’m going to average steers and heifers – for about $1,750 for about $50. That is less than a tank of diesel in today’s market, and you are insuring your calf crop for this next fall. Keep in mind that you don’t have to sell those cattle. You can retain ownership until next spring if you decide to run those on wheat pasture, or you can sell sixty days early if we get into a drought. It all settles against what the index is. It doesn’t matter what your cattle bring.”
He emphasized that there are no reasons not to use an LRP as the premium isn’t due until the month after the contract expires, and it also keeps producers bankable because the bank can rest assured that the producer will have a return on investment.
For producers wanting to know how to take out an LRP on their cattle, Burtrum advised working with a reputable agent who understands the program and the industry. Put an application on file, and then the agent will walk them through the different scenarios related to their position in the cattle industry – cow calf, stocker, or other.
“You can even insure those bred cattle. If you are a fall producer that just pregged those fall cows, we can insure those unborn cattle as well,” he said. “Then, we walk you through the different scenarios of what weight class, and when are you going to market those cattle.”
He pointed out that Farm Data Services sends out daily customized email quotes tailored to the individual operation. “We not only work you through buying the product, but when it comes time for a claim, we will work you through the claim process as well,” he offered.
For more information, visit FarmDataServices.com.
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