Minnesota Farmer


Beef prices increasing

Many of you have recently been at the grocery store considering the rising price of beef and wondering why it is happening.  I thought you might be interested in this commentary out of Kansas State.

“Overall beef demand strength has surprised analysts, playing a key role in current cattle prices throughout the industry. Over the next few months, beef supplies are expected to continue their decline leading to higher retail beef prices as long as retail demand is constant or improving.

“The lower available supplies by definition means that per capita beef consumption will decline. It is important to recognize this consumption reduction will not be uniform across households, the amount of beef that shoppers will buy will vary by income and the overall value individual households place on beef offerings.

Beef price increases are linked to fewer cattle on U.S. farms and ranches. The size of the U.S. cow herd has been down for several years – first because beef production was not profitable – and the past three years, because drought reduced forage and feed supplies, forcing producers to sell off their herds. Fewer cattle translated into less beef, which helped spur the higher prices.”

Glynn Tonsor, livestock marketing specialist with K-State Research and Extension

Beef production is a long-term commitment.  It takes a producer years to produce the animals that bring you steak and hamburger.  Here’s the timeline.fig18

From the birth of a heifer (young female) calf to the time she can have her first calf is two years.  She can have a calf every year for her productive life, but many cows (a female after she has her first calf) will only have a few calves, so they must be replaced frequently.  To increase a cattle herd to supply more beef takes many years.  In the initial build up phase, heifers will be held out of the beef supply further decreasing the amount of beef available.  Then as the beef supply increases, the price for beef decreases until it is no longer profitable to produce beef.  The sell off of breeding and potential breeding animals pushes the price of beef further down.

To further complicate matters, high beef prices lead to fewer people buying beef, thereby cutting demand.  When beef prices decrease demand increases.  The cycle can drive a beef producer crazy.  Then throw in droughts, blizzards and disease and it’s a wonder that anyone wants to be a beef producer.  Still, when you love cattle, you do anything you can to stay in the business.

Being in livestock production is a tough business, and it will not make you a lot of money on average.  Those that do it, are in it for the love of being with animals, and you have to admit, cattle are a whole lot more fun that hogs or poultry.

Michael

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