It has been an exciting time in the cattle business. Cattle prices remain strong, consumer demand for beef is high and profitability has improved for many operations. Yet producers also know the other side of the equation: drought and wildfire concerns, rising fuel and hay costs, elevated interest rates, expensive capital investments, and other challenges continue to pressure farm and ranch balance sheets. 

With that reality in mind, strong financial management remains one of the most important tools a producer can have.

To help beef producers build resilient operations with long-term staying power, three experts from across the country shared their thoughts on the financial fundamentals and management strategies that matter most in today’s cattle business. Jason Edleman, senior vice president of business development for Farm Credit Services of America in Huron, S.D.; Shannon Sand, agricultural economist and associate Extension educator with the University of Nebraska at North Platte; and Charley Martinez, assistant professor specializing in farm and financial management at the University of Tennessee in Knoxville, shared six strategies for financial success.

1. Run it like a business.

All three experts agree one of the most important shifts producers can make is dedicating intentional time to the business side of the operation.
“We recognize most people are involved in farming and ranching because they love the industry and what they are doing as a producer,” Edleman says. “They don’t want to spend days on recordkeeping, but financial acumen is an increasing part of the job.” 

Edleman has spent 35 years with FCSAmerica and currently oversees lending in South Dakota and Wyoming, along with the organization’s programs and strategies for young and beginning producers.

Sand agrees many producers still view cattle production primarily as a lifestyle. However, she says the most financially resilient operations have a business mindset. 

“Those who take a hard look at finances, set a plan and stick to it tend to be more savvy,” she explains.

That planning includes everything from drought strategies and predetermined trigger dates to expansion decisions and family transition conversations before challenges arise.

Martinez adds business management becomes especially important as additional generations return to the operation. 

He points out, “It’s a great thing that the next generation wants to return. But, you need honest discussions about the health of the business, debt structure, retirement plans and estate plans.”

2. Know your numbers.

A common theme among all three experts is the importance of understanding financial records and key business metrics.

“Cash is king,” Edleman says. 

While it’s a familiar business principle, he says it still rings especially true in today’s cattle market. Producers who maintain strong liquidity, understand their cash flow and remain disciplined with capital investments are often best positioned to navigate both opportunity and uncertainty within the cattle cycle.

Sand encourages producers to maintain key records including cash flow statements, balance sheets with inventory, and profit-and-loss statements. 

She adds, “When you go to the banker, they want those records and create ratios from them.”
Martinez says understanding cost structure is equally critical. He notes many operations underestimate their true cost of production, which can lead to poor business decisions. 
“Producers can’t control price, but it is the most talked about and scrutinized,” Martinez says. 

Instead, he encourages producers to focus on costs — one of the areas they can control. In his view, minimizing costs can be just as important as maximizing price. 

3. Practice discipline during good times.

One of the biggest financial traps in agriculture often occurs during profitable years. Strong cattle prices can create confidence and cash flow, but they can also encourage unnecessary spending.

“It’s easy to overspend on equipment, pickups and even ‘toys,’” Edleman points out. 

He encourages producers to exercise disciplined capital use by separating wants from needs and honestly evaluating whether major purchases will still pencil out if margins tighten.

“When you create payments, you’ve got to have the income flow to pay for them,” he says, and cautions producers against assuming current profitability levels will last forever. “Cycles go up and down.” 

Martinez echoes that concern, particularly in today’s elevated interest-rate environment. 

“If you’ve got money in your pocket, be informed. Don’t just spend it and make mistakes,” he says.

Before investing in equipment or expansion, Martinez encourages producers to evaluate whether the purchase truly improves efficiency or lowers long-term costs. 

“How does it help the cost structure in the future?” he asks. “Does it free up labor? Does it improve efficiency?”

But it’s not just those answers that justify a purchase.

Edleman adds, “If you buy a piece of land or any item expecting lower interest rates, that’s not a good strategy,” he says. “You’ve got to be realistic.” 

4. Analyze before expanding.

Expansion opportunities often emerge during profitable cattle cycles, but Martinez says producers should carefully evaluate those decisions before moving forward.

“Is this the time to expand my herd? The short answer is, ‘It depends,’” he says.

Martinez encourages producers to first understand their unit cost of production and breakeven levels before purchasing replacement females or expanding herd numbers. 

“If net present value is negative, it means don’t do it,” he explains. 

He says producers should carefully evaluate whether purchasing bred cows, bred heifers or replacement females will truly improve profitability long term. Current market conditions make those decisions even more challenging. 

“It’s a weird time,” Martinez says. “Cattle prices are high, but costs are also higher, looming drought is a concern and land availability is tough.”

Sand adds expansion conversations should also include diversification and long-term family planning discussions. She recalls one family who required returning children to come back with a separate business idea that could contribute additional revenue to the operation.

“You can always test it on a small scale,” she says.

5. Use available resources.

All three experts stress that producers do not need to navigate financial management alone. Extension services, lenders, in-person industry programs and online financial tools can all help producers make more informed decisions.

“Information helps make better decisions,” Sand says. 

She encourages producers to utilize online budgeting tools (such as the University of Nebraska’s Agricultural Budget Calculator), spreadsheets, enterprise calculators and educational webinars available through Extension services and universities.

“I am a big proponent of cash flow budgets,” she says. “Many of these are spreadsheets you can plug in and use. The question is: Do you have the numbers?”

Martinez also points producers toward available financial software and budgeting tools, noting strong records can improve lender relationships and create better long-term planning opportunities. 

“It is time well spent,” he says.

Edleman adds that strong communication with lenders remains critically important. 

“We want borrowers who are excellent communicators.” 

That means producers who understand their financial position, think through multiple scenarios before making major decisions and communicate their plans.

6. Manage risk and think long term.

Risk management continues to grow in importance as cattle values rise and market volatility increases. Martinez notes that a 10% price decline today carries far greater financial consequences than it did a decade ago. 

“At today’s prices, it might be a drop of $200 per head,” he says.

Because of that, this trio believes tools such as Livestock Risk Protection (LRP) are becoming increasingly valuable.

“If your cattle operation is contributing one-quarter or more of household income, it’s becoming imperative to have LRP,” Martinez says.

Additional tools such as futures contracts; options; and Pasture, Range and Forage insurance can also help protect operations against unexpected volatility.

Sand encourages producers to plan ahead for drought and feed costs by utilizing trigger dates and enterprise budgets. 

“Take a hard look,” she says. 

Furthermore, Edleman says financially successful producers continually test assumptions, reevaluate plans and remain flexible as conditions change. 

 “A common mistake is sticking to an assumption too long,” he says. 

Whether it’s believing feeder cattle prices will continue climbing or assuming grain markets will weaken, producers who fail to adapt can quickly lose profitability. 

Instead, Edleman encourages operations to regularly test their assumptions against current market realities and look for ways to improve margins. Programs that add value, such as Certified Angus Beef, direct-to-consumer beef sales, niche marketing programs and agritourism can all provide additional revenue opportunities for some operations. 

“The mistake is producers sometimes do less when they are doing great,” Edleman says. 

Rather, he believes profitable years can be the ideal time to strengthen management practices, improve genetics, expand marketing opportunities and prepare for future downturns.

“There are always going to be variables in this business, so producers also need to look for opportunities,” Edleman concludes.

Bonus financial strategies

Beyond the major themes, the experts also offered several additional pieces of advice for producers focused on long-term success:
Maintain strong liquidity and working capital. 

• Don’t make poor purchases simply to avoid taxes. 
• Build partnerships and support networks within the industry. 
• Utilize diversification and off-farm income when appropriate. 
• Young producers should begin building credit history early. 

Seek out educational and financial management programs that fit your operation’s needs. As an example, to help young producers strengthen financial management skills, Farm Credit Services of America developed its “Starting Gate Program,” which focuses on helping beginning operators build financial acumen through balance sheets, income statements, decision-making exercises and networking opportunities.