NASHVILLE, Tenn. (RFD News) — Strong cattle prices are giving cow-calf producers a rare chance to build a financial cushion before markets turn lower.
University of Kentucky livestock economist Kenny Burdine says working capital is one area producers may want to focus on. Working capital is current assets minus current liabilities, or the cash and marketable assets available after short-term obligations are covered.
Stronger liquidity can help producers pay short-term expenses without leaning as heavily on operating loans. That matters in a higher-rate environment, where cash reserves can reduce interest costs and improve financial flexibility.
Working capital also strengthens the balance sheet. A better current ratio can make an operation more attractive to lenders and may improve borrowing options when expansion, equipment, land, or replacement females become available.
The current market will not last forever. Producers who build reserves now may be better positioned to manage downturns, avoid rushed decisions, and invest when the right opportunity appears.
