What is in this article?:
For almost 20 years, I’ve coordinated a year-end review of the beef industry by independent cattle consultants. While opinions have differed significantly in previous years, these eight consultants concur that widespread drought was the major event in 2012.
For 2013, improved industry profitability will be dependent on the weather. Meanwhile, continued drought could be devastating, and students of history know that severe droughts are often several years in duration.
Glacier Beef Inc./DeKalb Feeds
An abnormally warm and dry winter during 2011/2012 in the Ethanol/Corn Belt continued throughout 2012 and persists into the new year. In fact, 50% of the heart of U.S. corn production currently ranges from abnormally dry to exceptionally dry.
Corn producers struggled not only with reduced yields, but with salvaging crop failures. Many producers attempted to salvage subpar-quality corn silage for use in feedlots and cow-calf operations, but nitrates and aflatoxin levels were often high.
Interestingly, many cattle production units that manage manure intensively were blessed with increased yields compared to neighbors who used commercial fertilizer. This suggests that organic matter from livestock waste has an often-underestimated value.
Land prices continued to escalate, and many producers chose to liquidate their cow-calf herds due to a lack of feed and high land prices. Several years of highly profitable crop prices for growers have resulted in some feedlots closing down, while others have expanded. In addition, we’re seeing more construction of new designs of cattle-housing facilities that feature improved air quality, optimal cattle comfort, and are more labor-friendly for production and manure management when compared to older facilities.
Resultant from reduced corn supplies are dwindling hay/forage acres. Many producers are re-evaluating cropping schemes, and more wheat or rye acres are being planted for cover crops for possible harvest as forage in the spring. Meanwhile, distillers by-products continue to be further extracted (fat extraction), but many of these by-products are of marginal nutritional attributes and not economical to feed to finishing cattle.
In addition, disappointingly low supplies of growth implants are available to the industry. And high feeder cattle prices coupled with record feed prices have resulted in huge financial losses, especially for producers who “overfeed” cattle.
Some of this overfeeding results from producers not understanding the negative economic ramifications of growth efficiency. Meanwhile, other overfeeding is the result of packers buying cattle and then delaying their harvest for 2-3 weeks.
This past fall’s disappointing election results will assure increased regulations for U.S. cattle producers. It will take a good economist to survive and prosper.