Cattle Today

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HUNTIN' DAYLIGHT -- CHANGING FACES

by: Wes Ishmael

Coffee shop conjecture can paint the future of the cattle business blacker than a well hole at midnight. You've heard it: The kids are leaving and they ain't coming back...who can blame them; those of us left are getting longer in the tooth...what will those city slickers do for food when we're gone; it's the corporations taking over everything and owning it all...we'll just be hired lackeys; and on and on and...

Of course, even if actual facts slip into these conversations by luck and by golly they can appear just as dark.

As an example: According to the 1997 U.S. Census of Agriculture - USDA is just now collecting information for the 2002 edition: The average age of agricultural producers is 54.3, up from 50.5 two decades ago; The number of beef cattle operations has declined 16 percent during the same time; the nation's beef cowherd continues to shrink while still churning out record levels of beef tonnage.

The percentage of agricultural operations reporting off-farm income remains approximately 50 percent but those reporting working away from the farm more than 200 days during the year climbed 5 percent to 37 percent.

At the same time, according to the 1999 Agricultural Economics Land Ownership Survey (AELOS), just less than 10 percent of all agricultural landowners account for 61.8 percent of all agricultural land, owned in chunks of 500 acres or more. In 1982 11.6 percent of all owners controlled 60.4 percent of the land. While the number of the largest landowners - those owning 2,000 acres or more - declined in 1999 to 1.7 percent, down from 2.0 percent, they owned more of the total land - 35.8 percent in 1999 compared to 34.6 percent in 1982.

So, few observers are surprised to find statistical verification to a shrinking and consolidating industry. However, while human nature always tries to kill every wheat crop at least twice before it sprouts and tank every cattle market at least three times before the calves hit the ground, the fact is when considered in full, trends shaping up in land ownership and use suggest plenty of reasons for optimism.

Age Rules, but Youth is Gaining

For one thing, although land ownership is still dominated by folks at least sliding past middle age or older, more younger people are controlling a larger percentage of agricultural land.

According to USDA's 1999 Agricultural Economics Land Ownership Survey (AELOS), folks 65 years and older account for 37.8 percent of all landowners and 39.4 percent of all agricultural land. Compare that to those 44 years old and younger accounting for 16.9 percent of the ownership and 12.9 percent of the land.

But, a significant shift is occurring. In the 1988 AELOS, the 65+ age bracket accounted for 47.3 percent of ownership and 48.9 percent of the land. Ownership, both in terms of owners and land on a percentage basis has remained relatively flat between the two studies for the 55-64 age group. The biggest gains crop up for folks 25-49 years old: In 1982, they accounted for 16.0 percent of the land owners and 14.0 percent of the land. By 1999 they represented 26.4 percent of the land owners and 21.9 percent of the land. Most of the gain has come since 1988 when those 25-49 years old comprised 19.8 percent of the land owners and 16.1 percent of the land.

Plus, context demands recognizing that age and ownership has cycled up and back down before. Most recently, the average age declined from 51.3 to 50.3 between 1964 and 1978 before inching back up to the 54.3 indicated in the 1997 Census.

What's more, according to the AELOS study, contrary to popular dirges to the contrary, consolidation is not occurring via non-operator corporate ownership run amok.

In fact, the number of non-operators and the proportion of the land they own are declining. For perspective, AELOS defines owner-operators as folks who own the land and either do the work or at least make the day-to-day decisions regarding planting, feeding, harvesting, etc. All told, 47.8 percent of agricultural land owners were non-operators in 1982 and accounted for 46.2 percent of the land. By 1999, non-operator owners had declined to 41.2 percent, accounting for 41.8 percent of the land.

As well, in 1982 non-family corporations, trusts, estates and cooperatives accounted for 7.8 percent of the land. The other 92.2 percent of land owners were individual and family sole proprietorships, partnerships and family-owned corporations. Combined they accounted for 94.3 percent of the land. By 1999 those same ownership structures accounted for 98.1 percent of land ownership.

     

Pasture and Grazing Land Follow Suit

Of the 1.9 million farms reported in the 1999 AELOS - a farm is defined as any place from which $1,000 or more worth of agricultural products is sold or would normally be expected to sell during the designated year - 69 percent are farms with livestock.

Of the 1.3 million farms with livestock, 49 percent are classified as rural residences - farming-ranching is not the primary occupation and there is less than $250,000 in annual agricultural sales.

Another 42 percent of the farms with livestock are classified as intermediate - farming-ranching is the primary occupation, but annual sales are less than $250,000. That leaves nine percent classified as commercial operations - farming-ranching is the primary occupation and annual sales exceed $250,000.

AELOS also designates farms with livestock according to the estimated average number of animal units on the farm during the year. USDA animal unites are defined as 1,000 lb. total live weight (while definitions account for the whole gamut of livestock, the discussion here is confined to cow/calf and stocker operations, i.e. non-fed cattle).

With this designation in mind, 54 percent of farms with livestock are classified as farms with few livestock - eight or fewer animal units of beef cattle. Another 27 percent are classified as farms with pastured livestock types and few other livestock-eight or more animal units of beef cattle. The remainder is classified as farms with confined livestock types-think in terms of feedlots, grower yards, etc.

For added perspective, farms with pastured livestock and few other livestock accounted for about 86 percent of all beef cattle on farms, and about 68 percent of all beef cattle other than fed cattle and cows. Incidentally, this same classification accounts for 88 percent of all the sheep and goats and about 68 percent of all the horses, ponies, mules and donkeys.

All told, 49.5 percent of all agricultural land - some 461.9 million acres - was classified in the 1999 AELOS as cropland used only for pasture or grazing, or as pastureland other than cropland and woodland pasture. Although the total volume of agricultural acres has declined 4.5 percent since 1982, pastureland represents slightly more of the total agricultural land in 1999 than in 1982.

By definition, in the AELOS study, all grazing land except land used under grazing permits on a per head basis was included as land in farms and ranches, as long as it was considered part of a farming or ranching operation. As well, land accounted for includes those acres set aside as part of annual commodity acreage programs or as part of the Conservation Reserve Program.

Digging back into the Census, of the 804,595 farms and ranches reporting beef cows calving, 0.7 percent of the owners had 15 percent of the cows in herds of 500 cows or more. Compare that to 28 percent of all beef cow owners having herd sizes of nine head or less, representing three percent of all the cows. Combined, 79 percent of the owners have 49 cows or fewer and control 31 percent of all the beef cows, while 9.7 percent of all owners have 100 or more cows and control 50 percent of the cows. The group with the highest relative number of owners and cows are those owners with 20-49 head who represent 28 percent of the owners and 20 percent of the cows.

What's it Mean?

Since no one has a crystal ball capable of cracking open the future, this information can't serve up any take-it-to-the-bank answers. However, the benchmarks and trends portrayed by these numbers do allow for some rational assumptions that bear discussion and will be examined in future installments to this series. For instance:

*      If the number of part-time cattle producers continues to grow, while the number of full-time ones continues to decline - even as they ride herd over increasing numbers of cows - could it be that the industry's hopes for branded, value-added products is limited?

*      If younger people continue to take hold of a larger portion of agricultural land, ostensibly with capitol and expertise generated from other businesses, will fewer acres be available for cattle grazing and beef production? Could it be this evolving reality will help limit future cyclical expansions of the cowherd so that those who want to remain in the cattle business have more opportunity through less competition in the form of tonnage?

*      Really, geographic and weather variables aside, how many cows do you have to own, how many calves do you have to retain ownership in beyond the pasture, to make a full-time living in the cattle business? Will that number continue to increase?

*      If non-family corporations own so little of the agricultural land in relative terms, why is there so much fuss over corporate ownership within the industry?

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