Be smart with extra livestock income in good times, prep for future 

Some cow-calf producers were finally able to catch a break in 2025. High calf prices helped many reach higher levels of income than they’ve seen in quite some time. But to prepare for the not so good times, it takes planning. 

Sam Sterling, business developer and beef lead with Pinion Global, said accounting for every dollar in a cattle operation is crucial at any time of the year. He said account for the value of the grass, wheat pastureand hay, even if it was raised on the ranch. Know your expenses, he stresses. 

“If you want to rent it out to somebody, it has value,” he said. “The other thing that right now, you see people, well, I made this much money, let’s go buy a new pickup. Let’s go do this or spend money.” 

Those in agriculture should be conscious of paying down high interest debt and now is a good time for beef producers to do that. Be cognizant of interest rates and tackle those debts with higher interest rates first.  

“Pay down some debt, anything you can do to increase some efficiencies in your operation,” he said.  

Some operators see the extra income and want to go buy a new pickup, chute, trailer, or add new pens. That’s all fine and well, he said, but “we all know these times aren’t going to stay here forever.” 

Pre-paying for inputs is another option, he said, instead of buying just to buy and save the tax bill.  

“It’s pretty easy to prepay or buy some extra hay, or buy some extra feed, or buy something that is truly going to have value that you’re going to have to buy anyway,” he said.  

Sterling said if a producer is aware of their expenses and being smart about paying for items, it can help the bottom line when times are leaner. 

Expansion might be on some producer’s minds, and prices for bred cows or heifers are as high as they have ever been. He adds a word of caution. 

“To me, if you’re operating on all borrowed money, you have to be careful giving three or four (hundred dollars) or $5,000 for a bred cow or heifer or whatever,” he said. “But if everything’s paid for, and if you’rekeeping some heifers, that’s fine. You want to buy a few cows or heifers that you’re averaging these high prices into already paid or some other low-cost stuff, I think you’re all right.” 

For example, an operator shouldn’t buy 500 head of high-priced cows or heifers when they only own 100 head that are paid for.  

“I think just that whole common-sense thing,” Sterling said. “I think everybody’s been through some of these times right now. I think it’s not time to get crazy. I think you can continue to pay attention to detail especially with the volatility right now in the markets.” 

Sterling encourages producers to check out Livestock Risk Protection insurance to help manage risk. However, it’s important to know your numbers and costs. 

“You can actually go ahead and insure some of these prices,” he said. “I don’t think that’s the worst thing to do.” 

Producers should have a team of professionals they trust who can help explain insurance or other financial products to help their operation. Record analysis can help get them going in the right direction financially.  

He said organizations like the Kansas Livestock Association or CattleFax have resources for members to help educate and inform. Younger operators can turn to those individuals who have been in the business for many years and learn from them. 

 “Don’t be so big that you can’t go ask them how they’ve got to be successful,” he said. “It goes back a trusted adviser. Don’t try to do this all on your own.” 

Potential investment 

University of Nebraska Extension educator Aaron Berger suggested in a news release beef producers should consider several things before they spend some of their profits from high selling calf crops. Investing capital back in the operation can help prepare for success and when times are a little leaner. 

—Celebrate and reward those who have made investments and sacrifices to make the ranch successful. 

—Visit with the tax accountant and banker to get a financial picture of the operation and see how income and investments can be managed to address tax liability for 2025. 

—Invest in educational experiences or opportunities to become more knowledgeable and effective in roles and responsibilities of the operation. 

—Explore retirement accounts as a tool for reducing taxable income. Those with full-time employees might look at individual 401(k) accounts.  

—Look at record-keeping systems. Are you getting the information needed to make effective decisions from your current system? 

—Evaluate current estate plan. Look into developing one if there’s currently not one. 

—Look at improving current livestock watering or monitoring systems. Technology has made remote water monitoring systems effective and affordable. Consider how an investment in this technology could benefityour operation. 

—Evaluate emergency power sources at wells and homes on the ranch. Backup generators can be incorporated in the electrical grid and become invaluable during extended power outages. 

—Look at fencing systems and see if additional permanent, temporary or virtual fence can improve and increase grazing or forage utilization. Purchase fencing supplies when cash is available. 

—Investments with a multi-year benefit could be considered for things like improving pastures or hay meadows. Consider spending money on soil fertility and pasture renovations. 

—Consider buying inputs in bulk as there might be cost advantages to buying truckloads of products or seasonal inputs when prices are lower. 

—Add a scale as part of your operation. Accurate weights of cattle can improve marketing and management. 

—Take a hard look at working and loading facilities. Changes might be able to improve safety and working experience for cattle and people. 

—Challenge and evaluate operation. Invite a team of people to give you feedback and evaluate your business. 

“Find people who will challenge you and who think differently than you,” Berger said. “The implementation of just one or two ideas could have a tremendous impact on long-term business success.” 

He also said purchasing equipment just to avoid paying taxes might not be the best plan.  

“Overhead costs associated with depreciation, interest, repairs, taxes, and insurance that comes with owning equipment are costs that should be minimized to the cowherd for long-term profitability,” he said. “Consider investments that will help reduce overhead expenses. If it isn’t a good business investment, it isn’t a good tax management strategy either.” 

Capital that came from 2025 can help improve operations but be diligent about it.  

“Thinking ahead and coming up with a plan for strategic investment can increase the long-term impact on the bottom line and position the business for future success,” Berger said. 

Kylene Scott can be reached at 620-227-1804 or [email protected].