Tuesday, February 05, 2013

Smallest cattle herd in 61 years will affect farmers, meatpackers and consumers

The U.S. has fewer cattle than at any time in the last six decades, says the Department of Agriculture, which reports that a 2 percent decrease in 2012 made for the smallest herd in 61 years. The small herd size could mean lower profits for farmers and higher prices for consumers.

The causes? Severe drought in 2011 drove up the price of corn and hay feed for farmers in Oklahoma, Texas and Kansas. Ethanol production in other states, providing distillers' grains for feed, may have helped them weather the drought. Iowa is one of those. "Iowa’s cattle industry is gaining on other states,”  Gov. Terry Branstad told a biofuels conference, reports the Des Moines Register. “Iowa and Nebraska are becoming more attractive to cattle feeders than Texas and Oklahoma."

Losses in the industry are expected to impact consumers. Beef prices rose about 10 percent in 2012, according to the Register. The nation's largest meat processor, Tyson Foods, projected hardships but remained optimistic. "Tyson Chief Executive Officer Donnie Smith noted higher prices for feed grain and livestock production, but said continued strong demand for red meat has enabled Tyson to recover most of the costs at retail," the Register reported.

The financial impact on slaughterhouses remains to be seen. Cargill recently announced its plans to close a Texas plant and Tyson has considered closing one of its Iowa plants, the Register reports.

No comments: