Economics in feeding cattle are usually very profitable or very bleak. It seems there is no in-between. If you ask cattle feeders, they would say that the bleak years outnumber the really good years financially.

According to recent USDA Economic Research Service reports, higher second-half 2017 feedlot placements will lead to higher first-half 2018 marketings and seasonally higher production. That leaves ERS to project fed cattle prices to be lower during the first half of 2018 compared to a year earlier.

Tyler Weborg and the family team at Weborg Feeding Co. know all about tough times in the fed cattle industry. Beginning with 500 head, they've been feeding cattle through the ups and downs of the market near Pender, Neb., since 1972. Now the family farms 5,000 acres and has a feedlot capacity of 25,000 head.

"Our basic strategy to deal with tighter margins is risk management," Weborg says. "We feed our cattle to meet the grids or niche markets. We also do our own crop harvesting to save money, and we shop around for our feed inputs."

Weborg says the operation focuses especially on risk management and keeping feed costs down. The family works hard to purchase the right cattle for their lot. "Buying high-risk cattle could end up costing you more than the high-quality cattle in the end," he explains.

Quality labor essential
Having enough high-quality labor to carry out the operation is always a key factor, Weborg says. "You can't be so cheap in the labor market that you hurt effectiveness and efficiency," he notes. "Finding good employees and paying them well is part of our strategy to help the feedlot's bottom line."

Larry Howard, Nebraska Extension educator in Cuming County, concurs. "Labor is a major issue in the production agriculture field," he says. "If you already have a good employee that has the skills that you need in your operation, you need to do your best to retain them. It is much cheaper in the long run to invest in your current employee by increasing their pay if needed and offer to help them increase their skill set, than it is to start over by hiring a new individual.”

Communication is the key to keeping good employees, Howard says. "Make sure the employees understand the goals of the operation, because when they do, they are usually more responsible in their jobs and this most likely leads to success for the employee and the operation," he adds. "Communicating effectively might be as simple as a list of daily jobs to be done that is posted so everyone knows who is responsible," Howards says. "Encourage a positive teamwork environment so the strengths of every employee are being utilized."

Herd expansion
While tight margins are expected into 2018 for cattle feeders, the pace of beef cow and heifer slaughter might suggest that the rate of herd expansion may have slowed this past year, according to ERS.

There are other positive factors that might be in play, including some export growth in 2017, compared to a year earlier. U.S. domestic beef consumption has dropped by about 15% over the past decade, partially because of higher retail prices. The long-term outlook is more positive.

ERS notes that retail beef prices are expected to drop, so that could drive demand for beef up in the future, reversing a multiple-year decline in domestic meat consumption. This comes even as long-term projections point to beef and pork production increases over the next eight years.

In the meantime, Nebraska feedyards, like Weborg Feeding, continue to meet market challenges by finding their own ways to cut expenses without hurting the results.