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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.

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.

Unless you have already determined that you are a low-cost producer, or plan to sell your cows in the next two or three years, looking at ways to reduce cost should be important.

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.

One problem every rancher faces is that steers' average daily gain is often higher than that of heifers, yet most ranchers charge a flat rate for gain. If you look at this situation from an economic standpoint, the rancher is not realizing as much revenue from heifers and therefore not achieving his maximum profit.

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?