Despite the record prices and opportunities seen during the previous 12 months, the beat of beef industry attrition continues, and is increasing, depending on how you interpret the summary of statistics provided in the recently released 2002 Agricultural Census.
Compared to 1997, there were 11.5 percent few beef cattle operations in 2002, according to the census—899,756 operations in 1997; 796,436 in 2002. Look back over the past several and that means the number of beef cattle operations has declined 27.5 percent during the past quarter-century, with the greatest attrition occurring during the past five years or so.
For overall context, the number of farms—classified as any operation that sold or would have normally sold $1,000 or more worth of agricultural products during the census year—declined 3.9 percent, from 2.23 million in 1997 to 2.13 million in 2002. During the same period of time the total acreage utilized for agricultural production declined 1.7 percent--95.48 million acres in 1997 and 93.84 million acres in 2002—while the average farm acreage increased 2.3 percent from 431 acres to 441 acres.
While there is little surprise that the number of beef cattle operations continues to decline, especially considering that the Census accounts for the beginning of the longest cyclical liquidation phase of a cattle cycle on record, the degree of it and the categories gaining and losing beg some speculation.
For instance, the smallest cattle operations—long held up as the largest growth area of the industry has declined the most. Operations with 1-9 head of cattle, while still the most populated segment, declined 18.3 percent to 239,452 operations. Those with 10-19 head dwindled by 13.6 percent to 178,038. Outfits with 20-49 head declined 9.0 percent to 215,320 operations, and those with 50-99 head declined 4.3 percent to 89,874.
Conversely, the mid-sized operations typically thought of as losing ground to both larger and smaller producers have actually increased, according to the report. Operations with 100-199 head increased 4.8 percent to 45,354; those with 200-499 head posted the largest gain, growing 8.4 percent to 23,126; and operations with 500-999 head grew 1.4 percent to 4,002.
What's more, the most dramatic decline in numbers occurred among the largest of large operations. The handful of ranches with 2,500 head or more was whittled by 24.5 percent. According to the Census in 2002 there were only 160 such operations. Imagine that, as large as the industry is, there are fewer than 200 operations with more than 2,500 cows!
Rounding out the size perspective, operations with 1,000-2,499 heads also declined 5.9 percent down to 1,110.
These beef census statistics run counter to those assembled for farming operations overall. The smallest farms—1-9 acres—declined the most, shrinking 12.7 percent to 179,346, yet operations with 10-49 acres grew 6.2 percent to 563,772. From there only the largest operations grew in number—those with 2,000 acres or more expanded 4.8 percent to 77,970. Filling in the remaining gaps, operations with 50-179 acres declined 5.1 percent to 658,705 (the most numerous group); those with 180-499 acres shrunk 9.2 percent to 388,617; folks with 500-999 acres fell 10.0 percent to 161,552; and those with 1,000-1,999 acres dropped 12.6 percent to 90,020.
Now, couple all of this with the money side of the ledger and true paradoxes begin to develop. According to the census, farms selling $2,500 worth of agricultural products or less during the census year increased 19.2 percent -- this is the largest group (826,558 farms), accounting for 38.8 percent of combined agricultural sales. In every other category measured in terms of value of annual sales, the number of farms declined by as much as 19.7 percent, except for the top end. The number of farms selling $500,000 or more in agricultural products grew by a whisker to 70,642.
So, everyone but the largest operations reported declining sales, yet the number of farm operators reporting that they spent no days working away from the farm—they were full-time farmers, in other words—grew by 15.6 percent to 962,200. The number of farm operators who said they spent any time working away from the farm also declined by 7.0 percent, as did the number of farmers who indicated they worked away from the farm for 200 or more days during the year—832,348 operators, representing a 4.4 percent decrease.
Spun differently, 71.4 percent of producers reported selling $25,000 worth of agricultural products or less during 2002, yet only 39.1 percent report spending 200 days or more off the farm. There's no way of knowing the answer to such an apparent discrepancy, but logic suggests at least a portion of the other 32.3 percent (those selling less than $25,000 worth of goods, but not working away from the farm) are operators within households where a spouse is working off the farm. Age may be a factor, too. According to the 2002 Census, the average age of farm operators for the year was 55.3 years old. It was 54.0 years in the 1997 Census. While there's no question the average age is increasing, keep in mind that over time, Census figures have indicated rising age to a certain threshold, then a decline in average age. The last time that happened was along about 1964 when average age had increased to 51.3 years, then it declined to 50.3 years by 1978 before climbing up to current levels.
Moreover, the most recent Agricultural Economics Land Ownership survey (AELOS) from USDA in 1999 indicates significant increases in the number of folks beween 25 and 49 owning agricultural land and owning more of that land on an average basis. In 1982 this age group accounted for 16.0 percent of land owners who owned 14.0 percent of agricultural land. By the 1999 AELOS, this same age group accounted for 26.4 percent of the land owners and 21.9 percent of all agricultural land.
Bigger But Smaller?
For the beef industry overall, these highlights provide fodder for trying to make rational assumptions about who is remaining involved in the cattle business. Again, it's assumption because there's no other barometer than logic to measure the likely accuracy of such wonderments.
With that caveat, then, could it be that the smallest producers, while owning more land, are becoming more disinterested in cattle? From a numbers standpoint operations with 10-49 acres increased 6.2 percent, while beef cattle operations with 1-9 head, 10-19 head and 20-49 head declined 18.3 percent, 13.6 percent and 9.0 percent, respectively. Or, does the decline in cattle operations among these herd sizes reflect a growing disparity between the number of folks who can own land and cattle and those who can't? Folks owning 1-9 acres of land declined 12.7 percent. If the majority in this group represent folks heading back to town, perhaps much of the attrition among beef operations with fewer than 9 head can be accounted for. Either way, the numbers suggest that folks supplying genetics, feed and other beef operation inputs will continue to see fewer folks who have fewer cattle.
Similarly, the numbers may suggest at least a minor renaissance among the mid-sized herds—100-999 head. If that's the case, even as the herds larger than 1,000 head continue to decline in number, a growing number of producers will be relying more heavily on cattle revenue for their livelihood. If so, that might suggest a wider base of the most knowledgeable producers demanding more from the suppliers who serve them.
Add it all together, and it seems reasonable to assume the knowledge gap between producers engaged in beef production for revenue purposes and those engaged in it for other primary reasons will continue to widen. From a producer standpoint, that should mean increasing opportunity to exploit cost-effective production technologies and management. That's especially true when you consider the size of the national cow herd and the fact that it continues to supply growing demand while shrinking in overall numbers.