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Avoiding the Secret Assassin

On this week's podcast, Peter and I talk about crop scheduling. Crop scheduling is how growers decide what to plant and when. The goal is to always have something available to harvest and sell. By having a stable pipeline, growers maximize their profitability and by careful notetaking, growers can improve their decision-making process for the next season.

While this conversation is for small and medium-sized growers, it is extremely applicable to understanding what is happening in the meat supply chain today. With processing plants shutting down due to COVID-19 outbreaks or reduced capacity to increase employee safety the number of hogs, cattle, and chickens processed each day is significantly reduced.

With processing plants not purchase livestock, producers and ranchers are forced to keep their animals. There are economic ramifications. First, the supply of animals to harvest is outpacing demand and driving the price of market-weight livestock way down. Second, producers have to keep the animals on their farms and ranches and keep feeding them, which can be expensive.

However, the bigger problem has to do with applying Peter's theory on crop scheduling. The growers have market weight animals, but they also have animals that will reach market weight next week, and the week after, and the week after that. Livestock operations run at the capacity to maximize profitability and efficiency. Therefore, if the market weight animals do not leave the farm, the younger animals cannot move into their pens as they grow. This backs up the entire system.

With processing capacity offline, producers have to remove the largest animals from their farms by culling them and/or they have to stop accepting new young animals. I don't think anyone wants to see or hear that animals are being culled. It's emotional for producers that raised these animals and the general public reading about it in the news, especially as so many people are struggling with food insecurity given the current economic climate. It's economically damaging to the producers, and disposal creates a lot of logistical problems.

There is another problem. If there is no room for young animals on farms or farmers don't raise new animals for fear that there is no market to sell the animals to when they reach market weight, then farms won't restock. That means in six weeks for chickens or eight months for pigs there will be no market weight animals. The processing plants might be up and running, but there will be no animals to process. Instead of having an oversupply of animals at the processing plant, there will be shortages.

Large-scale agriculture has succeeded in creating the seamless transitions that Peter talks about. However, COVID-19 disrupted this well-managed program. Now dumping is a rampant problem that will likely get worse before it gets better. Hopefully, this example, explains what's going on in the news a little bit better and highlights the full potential that can be achieved through effective crop scheduling.

Want to increase your profitability through crop scheduling, take a look at this infographic that corresponds with Episode 4 of The Grower & The Economist. Click here

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