What is in this article?:
For the first time in four years, our annual survey of BEEF readers indicates that producer optimism has taken a dip.
Why the sour pickles?
The factors contributing to the downward tilt in the outlook are varied. However, 82% list increased input costs as their top concern in the short term (Figure 1). They’re also concerned about consumer demand (66%). What’s more, 64% are concerned about government regulations and oversight, and 53% are worried about availability of feed and forage.
Long-term concerns (five years and beyond) were similar, with increased input costs cited by 81% of respondents. However, government intrusion into the cattle business rose to second place in the long-term outlook, with 71% of respondents noting that concern. Consumer demand at 55% and availability of feed and forage at 48% were also major long-term concerns (Figure 2).
Not surprisingly, 87% of respondents say they’re making changes in their management and procurement strategies in an attempt to reduce input costs. Only 13% say they’ll stay with the status quo when it comes to their procurement strategies.
However, if the beef industry is anything, it’s a business comprised of optimists. Of those who are more optimistic in the short term, 88% say they like the supply-demand fundamentals that have been at work in the cattle market the past few years. Looking beyond the borders of the U.S., 53% say increasing international demand gives them cause to be optimistic, while 37% listed available feed and forage (Figure 3).
Looking long-term, 84% of respondents think supply-and-demand fundamentals will continue to be major positive factors in the cattle market, followed by increased international demand at 66%, and available feed and forage at 37% (Figure 4).
With increased input costs and availability of feed and forage being top of mind for many respondents, BEEF asked readers their strategies for decreasing feed costs. Altering forage management was first (59%), while 39% have reduced cattle numbers. Another 29% hope to gain a better return by putting more pounds on their cattle before sale (Figure 5).
Whether those tactics are reflected in the timing of when calves come to market this year remains to be seen, however. While 41% say they will market calves in the same time frame as last year, 35% hadn’t made that decision as of April. With drought still keeping much of cattle country in its crackly grip, 15% plan to take calves to town sooner this year, while 9.5% plan to delay marketing (Figure 6).
Despite the drought, or because of it, the supply-demand factors noted above seem to be at play as producers try to match herd size with the hand Mother Nature deals them. Just over 39% of respondents plan to maintain their herd size, while 25% look to expand by 1% to 10% this marketing year. An optimistic 8% of respondents plan to grow their herds by more than 10% (Figure 7).
However, drought is still the X factor this year, particularly in the West North Central (IA, KS, MN, MO, ND, NE and SD) and Mountain (AZ, CO, ID, MT, NM, NV, UT and WY) regions of the country. Overall, 16% of respondents plan to reduce herd size by 1% to 10%, while 12% expect to cut numbers by more than 10%. If that trend holds true for the second half of the year, 2013 could be another liquidation year.