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.
McClellan Consulting Service
I love roller coasters, but the 2012 ride was way too expensive for the thrills it provided. I don’t believe anyone in the cattle industry has ever seen, or would care to see again, such volatility in all sectors of the industry.
During our annual client meeting in late June in North Carolina, much of the discussion centered on whether corn would have a 4 or 5 as the first number in its price. Little did we know that our early-planted, great-emergence corn crop in the upper Midwest had its last rain.
Similarly, 2013 will revolve around moisture in the Corn Belt and cow-calf country. If we get an average-to-good crop, commodity prices will be more reasonable and herd liquidation will slow; but that’s a big if.
We have too much bunk space, much of which is in the wrong location relative to commodities. We also have too much packer capacity, which also is ill-placed to some extent. Thus, we can expect more contraction, regardless of moisture conditions.
Despite that pessimism, niches like natural, source- and age-verified, as well as producer-identified marketing, will continue to grow as the industry responds to what the market tells us it needs. We also must take the offensive and do a better job of telling our story, so consumers have real facts about our industry.