by: Wes Ishmael

If Mom Nature continues to cooperate, there's reason to believe the nation's beef cow inventory could finally eke out a gain this year.

Using the most recent six weeks of data as of June 2, analysts with the Livestock Marketing Information Center (LMIC) explained beef cow slaughter was down an average of 21 percent compared to the previous year. Dairy cow slaughter was down 14 percent.

“Improved pasture and range conditions in much of the U.S. and profitability prospects have driven beef cow slaughter lower and high milk prices have translated into reduced dairy cow herd culling,” LMIC analysts said. “Weekly Federally Inspected (FI) cow slaughter (data compiled and reported by USDA) as of mid-May showed large declines compared to a year ago, for six consecutive weeks FI cow slaughter has been more than 16 percent below 2013's. Of course, in the big picture, those numbers are important parts of the puzzle indicating national herd expansion plans. Large slaughter declines also have raised the cull cow prices.”

“Though conditions are still tenuous, it appears that initial herd expansion is underway and modest herd growth is possible in 2014,” said Derrell Peel, Extension livestock marketing specialist at Oklahoma State University in his early June market comments. “Heifer and beef cow slaughter totals so far this year suggest that herd expansion plans going into 2014 are still intact. Aggregate numbers suggest that beef cowherd expansion up to one percent could be possible in 2014, but a review of individual states where herd expansion is most feasible indicates that net herd growth of perhaps 0.5 percent is more likely…If beef cow herd expansion does start in 2014, it will likely to take until 2017, at least, to recover drought liquidation since 2011 and expansion beyond that level could take the rest of this decade.”

In the short term, moisture and market forces will determine how much expansion occurs and where. Longer term, expansion and cattle inventory maintenance are also dependent on an industry structure that appears to be evolving, according to the 2012 Census of Agriculture released in May.

Less Pasture Today and Probably Tomorrow

Comparing the most recent Census of Agriculture to the previous one in 2007, Peel explains, “Cropland used for pasture dropped from 35.8 million acres in 2007 to 12.8 million acres in 2012, a 64 percent decrease. This demonstrates the strong incentives that high crop values have placed on reallocating more agricultural land resources into crop production.”

The data corroborates what folks have seen in every part of the nation as farmers started ripping out fences and cultivating marginal ground previously set aside for pasture, in order to capitalize on the high grain prices of recent years.

Overall, Peel says total pastureland in the U.S. decreased by 3.6 percent (17.1 million acres), due to the 23 million acres of lost cropland used for pasture above.

“The significance of this loss of pasture acres is substantially larger than suggested by these percentages,” Peel says. “Cropland pasture is usually significantly more productive than permanent pasture/range on a per acre basis, so the loss of these acres represents a significantly higher impact on forage production. This loss in pasture production, combined with an 11.3 percent decrease in hay (harvested) acres, implies a significant decrease in total forage production potential in the U.S.”

Moreover, Peel explains, “These changes in land use suggest that the dramatic jump in crop values that began in late 2006 are resulting in structural change in agriculture that has profound implications for the cattle industry. These changes impact how; how much and where cattle production will take place.”

More Small to Mid-Size Cow-calf Operations Are Leaving

The most recent Census—like previous ones—continues to indicate the smallest percentage of operations with beef cows control the largest relative percentage of cows.

In round numbers, 3.58 percent of the operations in the Census had herds of 200 or more cows, representing 32.6 percent of all beef cows. At the other end of the spectrum, 57.2 percent of all operations had herd with 19 or fewer cows, representing 11.37 percent of all cows.

What becomes more apparent with the latest Census is the transition of the operations in between with herd sizes of 20 to 99 head, as well as those with herd sizes of 100-299 head.

Note that the following are based on comparing data in the 2012 Census to the one in 1997, so differences from one point in time to another 15 years hence.

For perspective, there were 76,589 fewer beef cow operations (-9.52 percent) in the 2012 Census than in 1997 for a total of 727,906 total operations with beef cows. There were 5.1 million fewer beef cows (-15.0 percent) in 2012 than in 1997 for a total of 28.96 million cows.

Most of the attrition among operations—not counting herds with 2,500 or more cows, which will be discussed later—occurred for those with 50-99 head. There were 25,408 fewer of these operations (-26.30 percent) in 2012 than in 1997. Herds with 50-99 head accounted for 1.65 million fewer cows (-25.85 percent) in 2012.

Operations with 20 to 49 head decreased by 50,449 (-22.1 percent) to a total of 177,658 operations in 2012. These accounted for 1.52 million fewer cows (-22.19 percent) than in 1997 for a total of 5.33 million head.

Also losing significant ground were operations with 100-199 cows. There were 9,011 few of these operations (-19.83 percent) in 2012 for a total of 36,428 operations. These operations accounted for 1.11 million fewer head (-18.82 percent) than in 1997 for a total of 4.80 million cows.

On the other side of the coin, the most growth on a percentage basis occurred among herds with one to nine head. There were 36,593 more of these operations (16.31 percent) in 2012 for a total of 261,017 operations. This group also accounted for 83,396 more cows (+7.46 percent) in 2012 for a total of 1.20 million head.

The next most growth occurred among herds with 500 to 999 head. There were 273 more of these operations (+6.93 percent) in 2012 and they accounted for 176,590 more cows (+6.94 percent) than in 1997 for a total of 2.72 million head.

As for the operations with 2,500 or more cows, there were 168 in 2012, which were 44 fewer (-20.75 percent) than in 1997. They accounted for about 696,000 cows, which was 26.29 percent fewer.

Obviously, there is no right or wrong, good or bad in any of this. If the numbers are in the ballpark of accuracy, they simply provide context for some of the changes currently happening in the industry.

Happy pondering!

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