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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.
Last year’s continued crippling drought helped foster runaway land values, record-high corn prices, shortages of grazing and harvested forage, and a limited feeder cattle supply. The implications of continued drought are serious and will only serve to slow the rebuilding of the nation’s cowherd, which is now the lowest since the 1950s.
Nonetheless, the U.S. feedlot and packer industries adapted to survive. The day of “John Deere rations” (yellow corn and green hay) seem to be gone, as consultants were forced to become extremely creative in utilizing ethanol by-products cost effectively. Meanwhile, packers raised heavyweight carcass limits to deal with existing supply challenges, and feedlots complied by increasing out weights to historic levels. Accordingly, the use of beta agonists rose.
Other 2012 highlights include an implant shortage that left one major supplier (Merck) to carry the supply burden, while the media frenzy over lean finely textured beef temporarily set back the beef markets.
In addition, the Environmental Protection Agency denied an industry request for a waiver on the renewable fuel standard (RFS). And, Miratorg, the largest pork producer in Russia, entered the beef business by utilizing North American seedstock and intellect.
Kenneth Eng is a consulting nutritionist and owner of Eng Ranches. In 2012 he established the Dr. Kenneth and Caroline McDonald Eng Foundation, which funds research in cow-calf efficiency at the University of Nebraska, Texas A&M University and Oklahoma State University.
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