By Dr. Andrew Griffith
This week a question was asked concerning liquidating the cow herd while the cattle market is strong. This is not the first time I have received this question as several producers have certainly entertained the thought.
The answer or the correct move for an individual producer is dependent on expectations, goals, longevity in the business, and alternative land uses if the land the cattle are on is owned. One thought some should consider is that the cattle market is expected to stay high for three years. If a person can stand to stay in business for a couple of years then it may be a wise decision to capitalize on a couple or three of years of strong calf prices and slowly market a few cows without keeping any heifers as replacements. This will result in taking advantage of the market while reducing the herd size. The producer can then reevaluate the alternative in year three and determine if liquidating the herd completely is still in the best interest of all parties.
Tax implications should also be considered when making this decision.
Source : osu.edu