“Short-term optimism is up.” That’s how BEEF research guru Scott Grau somewhat understatedly characterizes this spring’s 50-point jump in U.S. beef producers’ attitudes regarding short-term industry prospects. Grau, who conducted BEEF magazine’s annual reader attitude survey, attributes the spike to good fundamentals and a steady succession of record prices.
In fact, Grau says that among the 800 respondents to the April survey, even the 30% still in the grasp of drought, while slightly less optimistic than their counterparts in wetter regions, aren’t doom and gloom.
Optimism is up big-time
Last year, BEEF magazine’s measuring tool of producer attitudes — the Producer Optimism Index (POI) — took a sharp dive to below 96, from 2012’s 144 (POI figure). That was the most dramatic one-year drop in short-term attitudes since the series began in 2006. But the April 2014 survey cataloged short-term POI at 145.1, and readers’ view of the long term also improved to 112.2 from 2013’s 104.5.
When asked, “Compared with last year, what is your current level of optimism regarding the short-term future — within the next two years — of the U.S. beef industry?” almost 50% of all respondents say they’re more optimistic, while 46.5% say their attitude hasn’t changed. Only 4.2% say they’re less optimistic than last year (Figure 1).
These results stand in sharp contrast to the 2013 survey, when 21% of survey respondents described themselves as more optimistic about the industry’s short-term future, 53% said their level of optimism was about the same and 25% were less optimistic.
A look at the regional breakout for 2014 shows the weather effect Grau refers to (Figure 1). Regions with sufficient moisture show much higher levels of optimism than areas still locked in drought. Of the respondents in the East North Central region, for instance, 65.1% say they’re more optimistic, while the South Atlantic (60.7%) and East South Central (62.3%) showed similar results.
However, producers in a big swath of the Southwest and West are showing the wear and tear of the weather. By the same token, they are also showing the toughness and resiliency that characterize cattlemen.
Of the respondents from the Pacific region, 37.5% say they are more optimistic than last year, while 56.3% say they are about the same as in 2013. Only 6.3% say they are less optimistic.
Producers in other regions were more evenly split. The Mountain region registered 45.9% more optimistic, 49.2% about the same and 4.9% less optimistic; the West South Central came in at 45.4% more, 46.7% the same and 7.9% less; and the West North Central showed 46.2% more, 51% the same and 2.8% less.
Far and away, the industry’s supply-demand fundamentals are driving short-term optimism, say 81.9% of all respondents. A tick more than half (50.4%) see increasing international demand as a positive sign, and 49.1% say greater availability of feed and forage is positive in the short run. Numbers add up to more than 100% because of multiple responses (Figure 2).
Of those who are less optimistic, 72.7% overwhelmingly see government regulations and oversight as a concern, while 48.5% cite increased input costs and 39.4% are concerned about consumer demand. Numbers add up to more than 100% because of multiple responses (Figure 3).