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This thought-provoking cattle version of the old chicken-and-egg adage come to mind when looking back to the Jan. 1, 2002, cattle inventories and outlook forecasts.

Since producers have little control over areas outside their ranches, focusing on management at the ranch level is essential and determining your ranch's cost of production is helpful in making management decisions.

An objective answer to the profit potential of cow-calf pairs purchased (or heifers retained) today can be arrived at by conducting a net present value analysis of the cost and income streams associated with owning cows for the next several years.

For the first time in twenty years, we have seen an increase in beef demand, as measured by a combination of increased beef consumption and consumer spending. New product development helps revitalize beef demand in the long run.

As the end of 2001 approaches, it seems wise to reevaluate factors affecting the cattle industry.

Three factors determine the economic profitability of producing calves: calf prices, bred and cull animal prices, and unit cost of production. Prices are primarily determined by market factors. Unit cost of production, on the other hand, is under your direct control.

Should you be retaining heifers this fall or trying to buy bred cows or bred heifers?

The United States Department of Agriculture's annual inventory report, Cattle, released January 28, indicated that cattle herd liquidation continued during 1999. All cattle and calves inventory declined to 98.048 million head, 1.1 percent below that of a year ago, marking the fourth year in a row that cattle producers reduced the size of the U.S. herd.

The cattle cycle is alive and well in 2001, with prices for all classes of cattle moving upward over the last three years.

It is important for all of us to be strong proponents of the beef industry, promoting the strengths we enjoy such as a safe product and one that is tasty and good for us.