Few would describe the U.S. beef industry as overly optimistic these days. After all, the prodigious and deep change wracking the beef economy has most folks concerned and anxious, and the uncertainty is especially acute in the seedstock segment. There are a number of reasons for this:
- Profitability has declined while prices have flirted with all-time historic highs. Because the seedstock industry tends to be even more input-intensive – taking their offspring to a year or more of age to market them, with the requirements of additional labor, more advertising, etc., – this sector’s costs have escalated even more dramatically than those of the cow-calf sector. Plus, unlike the cow-calf sector, the seedstock sector has expanded in recent years, and there are concerns that supply may outstrip demand.
- A seedstock producer’s success is closely tied to anticipating industry changes – and cow-calf sector needs – several years in advance. The uncertainty of what it means to have $6 corn, the promise of marker-assisted selection, etc., has made it increasingly important – and difficult – for seedstock producers to anticipate the industry’s direction.
- A general malaise has settled over the seedstock segment that is part uncertainty, part economic pressures, but also a downgrading of optimism in general. The focus on carcass traits seems to be waning, but people are uncertain what the next big trend is. Feed efficiency (both maternal and terminal) is the logical next great thing, but measuring it has proven problematic at best and expensive at worst. Genetic markers may be the next great frontier but that technology is still a ways off.
- Then there are things disrupting the great status quo that was built around breed loyalties. Breed associations see the wisdom of working together in areas such as genetic evaluation but are and will always be fiercely competing for market share. The composite movement has shaken the foundation of breed loyalties, as well.
- Then there are the little things, such as significant genetic defects that have been propagated in at least three major breeds at this time. These have created problems as breeders extricate themselves from past mating decisions.
- This is the season for dispersal announcements, which happen every year at this time. It’s not so much the number of dispersals – roughly 1/7th of all seedstock producers disperse each year – but rather the type of operations that have announced their dispersals this time around. They are operations considered to be dominant players in their respective breeds – outfits like Camp Cooley (though Camp Cooley is not going out of business), or the Deiter Bros. operation in South Dakota.
Perhaps what’s so surprising is that seedstock producers are a cocky optimistic group by nature, which makes a loss of confidence even more striking.