If beef cow herd expansion does start in 2014, it will likely to take until 2017, at least, to recover drought liquidation since 2011, while expansion beyond that level could take the rest of this decade.
If ever there was a time for producers to expand the nation’s cowherd, you’d think this would have to be it.
There are no more adjectives left to describe the height and breadth of calf and feeder cattle prices, which by all accounts should yield previously unimagined returns beyond cash costs for cow-calf producers this year. Meanwhile, underpinned by resilient domestic beef demand and growing international beef demand, wholesale beef values and cash fed cattle prices also continue to fly higher than anticipated when the year began, helped along by pork prices pushed higher by Porcine Epidemic Diarrhea Virus.
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At the same time, the promise of a bountiful corn crop suggests feed costs could be at least as low again next year. Although wide swaths of the country are still battling drought, nationally, pasture and range conditions continued to be improved-year-over year through the first week of June.
Early signs certainly suggest beef cowherd expansion is beginning to take place. For one thing, beef cow slaughter is down significantly.
Using the most recent six weeks of data as of June 2, analysts with the Livestock Marketing Information Center (LMIC) explained beef cow slaughter was down an average of 21% compared to the previous year. Dairy cow slaughter was down 14%.
The mix of feedlot placements is also trending toward more steers and fewer heifers.
Derrell Peel, Oklahoma State University Extension livestock marketing specialist, said in his late-May market comments that the cowherd could expand by 0.5% to 1.0% this year.
“Aggregate numbers suggest that beef cowherd expansion up to 1% could be possible in 2014, but a review of individual states where herd expansion is most feasible indicates that net herd growth of perhaps 0.5% is more likely,” Peel explained. “…If beef cow herd expansion does start in 2014, it will likely to take until 2017, at least, to recover drought liquidation since 2011, while expansion beyond that level could take the rest of this decade.”
There continues to be wide conjecture about expansion over the next decade. Consider USDA’s 10-year projections released earlier this year. Those projections estimate a beef cowherd of 33.7 million head in 2023—4.7 million head more than we had when 2014 began.
Consider, too, the annual U.S. Baseline Briefing Book released by the Food and Agriculture Policy Institute (FAPRI) at the University of Missouri. FAPRI analysts see beef cows increasing from 28.9 million head this year (Jan. 1) to 30.9 million head in 2018, and then declining to 30.1 million head by 2023.
Visit with folks in various industry sectors and expectations run across a similar gamut. Some expect the cowherd to grow as fast and far as forage and profit potential will allow—more of a traditional cyclical scenario. Others believe equity requirements and financial risk suggest stabilizing and maintaining the herd size, rather than any sort of boom-and-bust cycle.
Expansion Details: Who & Where
However that plays out, the Census of Agriculture suggests who expands and where could also be changing.
Comparing results of the recently released 2012 Census of Agriculture (COA) to the previous one in 2007, Peel notes cropland used for pasture declined 64% from 35.8 million acres to 12.8 million acres. One obvious reason is the economic incentive farmers had to till every possible acre in order to exploit high grain prices. Overall, Peel says total pastureland in the U.S. decreased by 3.6% (17.1 million acres), due to the 23 million acres of lost cropland used for pasture above.
“The significance of this loss of pasture acres is substantially larger than suggested by these percentages,” Peel says. “Cropland pasture is usually significantly more productive than permanent pasture/range on a per-acre basis, so the loss of these acres represents a significantly higher impact on forage production. This loss in pasture production, combined with an 11.3% decrease in hay (harvested) acres, implies a significant decrease in total forage production potential in the U.S.”
Moreover, Peel explains, “In the eastern half of the country, including the Midwest, Great Lakes, Appalachian, Gulf and South regions, pastured cropland, which accounted for 21% of total pastureland in 2007, dropped to less than 7% in 2012…
“The average number of pasture acres per beef cow in the eastern half of the country is less than 5 acres/cow, while in the Plains and Rocky Mountain regions the average is over 22 acres/cow. Although this is a broad measure of stocking rates, it is indicative of the forage productivity in the two regions. As a result, while there is only 17% as many pasture acres in the East, the number of cows in the eastern half of the country was 75% of the number of cows in the Plains and Rocky Mountain regions in the 2012 census. This percentage is similar in the 2007 census, but the 2012 census includes the impacts of the drought. Drought recovery at some point is likely to result in herd rebuilding in the west, particularly in the Southern Plains, while the loss of pasture acreage likely means that cow inventories in the east will be permanently reduced.”
Producer age is shifting, too, based on comparison between the last two COAs.
“The conventional wisdom has been that the ongoing cow liquidation in the U.S. has come at the upper end of the age distribution for producers,” says Nevil Speer of Western Kentucky University in his May 28 BEEF Industry At A Glance. “The thinking is that older producers, encouraged by higher prices and/or drought conditions, have taken the opportunity to retire from the business. However, the data indicate that’s not really the case.”
According to Speer, the number of farms operated by younger and older individuals didn’t really change very much. “Rather, the loss of cattle operations came in the heart of the age distribution. In fact, operators aged 35-44 and 45-54 comprised almost the entire reduction between 2007 and 2012,” Speer says.
Comparing more broadly, the relative concentration of beef cows by herd size shifted between the census in 2012 and the one 15 years earlier in 1997.
For perspective, there were 76,589 fewer beef cow operations (-9.52%) in the 2012 census than in 1997 for a total of 727,906 total operations with beef cows. There were 5.1 million fewer beef cows (-15.0%) in 2012 than in 1997 for a total of 28.96 million cows.
The fewest producers continue to control the most beef cows on a relative basis. According to the 2012 COA, 3.58% of all operations with beef cows had herds of 200 head or more, representing 32.6% of all beef cows. At the other end of the spectrum, 57.2% of all operations had herds with 19 or fewer cows, representing 11.37% of all cows.
Between 1997 and 2012, the census data suggests the number of operations with larger (500-999 head) and the smallest (1-9 head) cowherds grew, while operations with smaller (20-99 head) and mid-size (100-199 head) cowherds declined.
Most of the attrition among operations—not counting herds with 2,500 or more cows—occurred for those with 50-99 head. There were 25,408 fewer of these operations (-26.30%) in 2012 than in 1997. Herds with 50-99 head accounted for 1.65 million fewer cows (-25.85%) in 2012.
Operations of 20-49 head decreased by 50,449 (-22.1%) to a total of 177,658 operations in 2012. These accounted for 1.52 million fewer cows (-22.19%) than in 1997 for a total of 5.33 million head.
Also losing significant ground were operations with 100-199 cows. There were 9,011 fewer of these operations (-19.83%) in 2012 for a total of 36,428 operations. These operations accounted for 1.11 million fewer head (-18.82%) than in 1997 for a total of 4.80 million cows.
On the other side of the coin, the most growth on a percentage basis occurred among herds with 1-9 head. There were 36,593 more of these operations (16.31%) in 2012 for a total of 261,017 operations. This group also accounted for 83,396 more cows (+7.46%) in 2012 for a total of 1.20 million head.
The next most growth occurred among herds with 500-999 head. There were 273 more of these operations (+6.93%) in 2012 and they accounted for 176,590 more cows (+6.94%) than in 1997 for a total of 2.72 million head.
As for the operations with 2,500 or more cows, there were 168 in 2012, which were 44 fewer (-20.75%) than in 1997. They accounted for about 696,000 cows, which was 26.29% fewer.
The opinions of Wes Ishmael are not necessarily those of beefmagazine.com or the Penton Farm Progress Group.
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