Exciting stuff going on here folks!! A good family friend of ours was recently featured on the local news as part of a great little segment about the cattle crossing operation in Douglas, AZ. Check out the video below!!
I am so excited about this segment, not only for its content, but also because it highlights an important aspect of the beef community. And, of course, it has inspired a blog post (a tad on the lengthier side, but I assure you it is well worth the read!).
The Spring of my Senior year in high school (Class of 2014!), I competed in the FFA Prepared Public Speaking CDE. The cattle market was doing really well to say the least, and I was pumped up about it, as were most of the other ranchers in America!
So, it seemed only fitting that my speech would be about the state of the cattle market, educating my audience about how we had gotten to that point (including importation and exportation of cattle) and assuring consumers that beef really is worth the buck!
My speech went a little something like this…
“There we were, standing in front of a huge feedlot full of bawling Angus cattle. The wind was blowing dust and manure in our faces. It smelled terrible. And yet, I knew it was the smell of money. I had come to talk to the feedlot owner to see what he thought about the current state of the cattle market. He told me that cattle producers were ecstatic because our market was at an all-time high. During our conversation, I learned that cattle and beef production represent the largest single segment of American agriculture. In fact, the USDA says more farms are classified as beef cattle operations, about 31 percent, than any other type of farm. The owner and I stood there in front of the lively cattle for a bit longer, pondering the idea that beef really is worth the buck. Since cattle prices are at an all-time high right now, we decided that the big question facing the industry is: where is the cattle market headed?
My name is Mackenzie Kimbro and I am a sixth generation cattle rancher. My family has been in the business of commercial beef cattle production for 118 years. We continuously strive to produce the highest quality product that we can, and my family is not alone. More than 97% of beef cattle farms and ranches are classified as family farms. Furthermore, there are more than 1 million beef producers in the United States that are responsible for more than 94 million head of cattle.
94 million head of cattle may sound like an outrageously high number to you. In reality, the number of beef cattle in the United States is at an all-time low, while beef cattle prices are at an all-time high. In 1933, my great-grandfather wrote that 500 pound calves were bringing 6.5 cents per pound. Today, 500 pound calves are bringing more than $2.00 per pound, fat cattle weighing 1300 pounds are selling for $1.50 per pound, and 750-pound feedlot ready calves are going for $1.70 per pound.
The current record high cattle prices are due to the fact that cattle inventory numbers are down and corn prices are low compared to what they were in the last two years. In recent years, beef producers were not making enough money to stimulate their business and allow cattle retention. The industry is heavily reliant on Mother Nature, and thus ongoing drought conditions have made feed supplies extremely limited. Producers have had to drastically reduce their herds and are not able to retain an adequate number of replacement heifers.
Corn prices were extremely high for a very long period of time, rocketing from 2 to 8 dollars per bushel. Ongoing drought through 2011 drastically reduced the amount of corn being produced, which partially caused this increase in corn prices. Also, the fuel standards changed, requiring ethanol to be produced primarily from corn. This limited the availability of corn for feeding cattle. There is a direct relationship between corn and cattle prices because corn is vital to the production of a table ready beef product. Corn affects the cost of production and the cost of beef, whether on the hoof or at the grocery counter. Thankfully, for the cattle industry, 2013 showed a record high corn crop that dropped corn prices down to 4 dollars per bushel.
International exporting and importing of cattle also plays a critical role in our cattle market. In 2013, the US ranked 4th in the world in beef exports, by exporting 2.5 billion pounds of beef. That same year, beef imports to the US equaled more than 2 million head. Exporting helps our cattle prices stay on the higher end as long as the demand worldwide stays stable. However, it also takes a significant amount of our own supply. Throughout recent history, importing beef into the US resulted in lower prices for our US producers. Currently, imports do not seem to be having a negative effect on the market prices in the US due, once again, to low cattle numbers here at home.
The cattle industry has become very efficient at beef production. In fact, we are producing as many pounds of beef as we were producing 20 years ago, with less head of cattle. This efficiency is due to better genetics and advancing technology in production practices and disease prevention methods. Alternative methods of production are also being implemented including grass-fed and organic beef production. While these alternatives give additional options to the consumer, corn-fed beef is still in higher demand.
There are many other concerns and considerations that are making the question, “where is the cattle market headed,” impossible to answer. Climate, once again, reared its ugly head this past year and froze to death over 100,000 head of cattle in the Dakotas. Also, due to the decrease in cattle numbers, packing houses are being forced to close because they cannot maintain an efficient business. Drought will always be a factor in some regions of the US. A fluctuating economy, legislation and hardships affecting ranches and farms being passed down generation to generation, and an aging industry population will make it difficult to recover herd numbers. Ranch ownerships are changing and land is being taken out of production.
Cattle producers are working hard to rebuild their herd sizes now that they are making enough money selling fewer calves. However, one cannot simply rebuild their herd size overnight. Heifers take about three years to reach a mature, calf production level. With this being said, several experts say that cattle numbers will remain low for the next couple of years, helping cattle prices to remain pretty high.
The question “where is the cattle market headed?” is a tough one for anyone to answer. Despite the fact that America produces the safest, cleanest beef in the world, there are still too many factors playing into the future of cattle pricing. The beef industry and Cattlemen’s’ Associations continue to support their members and strive for a better product at a lower production cost and the retention of a fair market price. Consumer demand is critical to the success of all that we do and these organizations are essential to the continuation of beef promotion. We cannot change the climate or the economy of our country. As producers, we can strive to provide a quality product while preserving the integrity of beef production. And, we can be thankful for the cattle market being at its all-time best. So, please, remember this statement: Beef IS worth the buck!”
Now, from a consumer perspective, higher prices for beef at the meat case don’t usually sit too well. One concern I have heard voiced by consumers is, “When are we going to see beef prices go down? I love beef, but I’m not sure that I can afford to feed it to my family as much as I’d like.” That’s a great question, but it’s not one that anybody can really answer. It all comes down to that supply and demand, and right now we know that the beef community has a lower supply of cattle and our input costs are up due to drought and our fragile relationship with Mother Nature. Thankfully, there are several different methods we can use as farmers and ranchers to raise more beef using fewer resources, and there are also ways that you as a consumer can incorporate beef into your budget. Some great examples of economizing with beef include buying lower priced cuts in bulk and freezing them for later use; cooking a larger cut once and dining twice; keeping an eye out for Manager or weekly specials; and thinking outside the box, stretching a steak by cutting it up to use for kabobs or, something that my family does, is buying a tri-tip or other roast, cutting steaks off of one end to cook for dinner and cooking the other half as a roast for the next few days of meals. Ground beef and chuck roasts are two fantastic options for budgeting with beef because both can really be stretched for quite a few delicious meals! You can find more great tips and lots of delicious recipes at BeefItsWhatsForDinner.com and you can always rest assured that beef is a safe, wholesome, nutritious and delicious source of protein! As I always say, beef is worth the buck!
Here’s to good rains, great friends and healthy cattle,