Rebuilding the cowherd while building value in the beef industry presents challenges
Greeley, Colo. – Several leaders in the beef industry agreed that challenges lie ahead in years to come in increasing cow numbers and improving efficiency to meet increasing beef demand.
During Beef Day at the Colorado Farm Show, Kevin Miller, owner of Croissant Red Angus in Briggsdale, Co; Randy Miller, owner of Miller Cattle Feeders in Pierce, Neb.; Steven Williams, vice president of cattle procurement at JBS; Fred Nichols, a cattle buyer for JBS; and Warren Prosser, an analyst with CattleFax all served on a panel addressing how the cowherd could be rebuilt in the U.S. while building value in all sectors of the beef industry. Jason Ahola, professor of beef production systems at Colordao State University moderated the presentation.
Future of beef
The group told the audience of beef producers that future efficiencies in the beef industry are going to largely depend upon getting more pounds from the current cow numbers.
If the cowherd doesn’t grow, a lot of carcass pounds can still be gained through the use of beta agonists, Williams said.
Beta agonists have been available commercially since 2004 and are growth promotants that convert energy from feed into muscle instead of fat. They can increase weight gain, ribeye area and total red meat yield. Williams said with traditional feeds, like corn, becoming more expensive, less corn may be fed to cattle, and cattle feeders may become more dependent on products like beta agonists to improve feed conversion.
As the U.S. cowherd continues to shrink, members of the audience asked, how big is too big?
“To compensate for fewer cow numbers, the industry is compensating with larger carcasses, even though they dock for heavy, heavy carcasses,” Ahola said. “At the same time, we are encouraged to produce a smaller cow. How is our industry supposed to meet that challenge?”
“We are trying to get cows that aren’t bigger and bigger, but that is the direction our industry is headed. We are still increasing carcass weight 10 pounds a year,” he said.
Effects of loss
When the Plainview, Texas plant closed recently, Williams said it was a sign that the industry is feeling the effects from losing numbers.
“It was a major packing plant in the U.S., and 40 years ago, it was in the epicenter of cattle feeding,” he said. “We still do things in the feedlot and in the packing plant on a per-head basis. Costs are determined on a per-head basis.”
“We still put so many pieces in a box, although I will be the first to admit that box is getting heavier – but, we still need that head count to continue to be in business,” he said. “Heavier carcasses do spread the overhead costs over more pounds of beef, so there is an incentive for us to purchase heavier carcasses, but we still need the numbers.”
Ahola said packing plants are starting to split ribeyes and strip loins into smaller portions to deal with the size of the cuts, but he still questions how big is too big?
“I thought a 1,000 pound carcass was the limit,” Williams said. “Then, it was 1,025 pounds, and now its 1,050. We are continuing to retrofit our plants, so I don’t know where that ceiling will be. In Green Bay, we are raising all the rails upward and lowering the floor. I think we will see that in our other plants so we can harvest 1,700 to 1,800 pound cattle.”
The diminishing cow numbers are also taking their toll on feedyards in the U.S. Many smaller feedyards are going out of business or being purchased by larger yards.
Miller said the smaller feedyards have to find a niche so they can continue to compete. At his own feedyard, he feeds a lot of different animals, like cull cows, to keep his capacity up.
“We also custom feed cattle, as well as feed our own cattle,” he explained. “It is important to find those niche markets to stay in business.”
Increasing the herd
Prosser said it is tough to expect ranchers to increase cow numbers when there is no incentive to do so.
“You can sell a cow for slaughter and get just as much as what it would take to purchase a bred cow,” he said, “so, there is no incentive to retain cows. The market hasn’t told us to fully expand yet, and I blame the weather for that.”
However, Prosser remains optimistic.
“I do think it’s possible to get back to the peak beef numbers we once had, but there has to be an incentive for people to do so. Right now, ranchers are having to make an economic decision with a lot of risk, and the weather hasn’t helped that out,” he explained. “If there wasn’t a drought, I think we could get back to where cattle numbers were five years ago.”
The panel said large ranches are going to be key in building back the U.S. beef numbers, because they are the only ones able to sustain the risk.
Who will take over?
With rising costs, Colorado State University Professor of Beef Production Systems Jason Ahola said it is becoming impossible for the younger generation to start ranching, and it concerns him who will raise cattle someday.
“At CSU, we have changed our perspective from kids owning a ranch, to working on someone else’s ranch like in an absentee ownership situation,” he said.
Randy Miller, owner of Miller Cattle Feeders in Pierce, Neb., agreed.
“In our industry, it is nearly impossible to go and be a rancher unless you inherit it. That is why I started feeding cattle. I started with a $50,000 loan that had to be consigned and built up from there,” he said. “Now, I tell kids from CSU that come work for me that if they are still here 10 years from now, they are fired. I want to give them the knowledge to be able to do this on their own.”
“It is easier to feed cattle, because you don’t have to own them,” he said.
Developing relationships with key people in the beef business can also go a long way to providing a rancher with an opportunity to get started.
“Developing these relationships is very important,” Miller said. “It is not realistic to expect to own a 1,500 cow ranch the day after you graduate.”
Steven Williams, vice president of cattle procurement at JBS, said at their company, they hire about 90 college graduates a year to work in various departments of their company. They also offer leadership programs to help youth excel in the beef business.