Farmers are concerned with how low cattle inventories will increase imported meats and bring higher costs to consumers.
(Devan Ridgway - WFIU/WTIU)
According to the latest inventory report from the USDA released in January, 87 million cattle are being worked by ranchers in the United States.
The number represents a 1.9 percent decrease from last year, and the fifth consecutive year of declining population.
Farmers haven’t seen inventories this low since 1951.
And, according to Hoosier farmers like Dave Fischer, there are a few different reasons for the decline.
“The shortage is really from years of droughts out west,” he said. “And farmers are just scared to repopulate, even now that some of the areas don't have the drought. Most of the drought areas are where some of the largest cow/calf producers are.”
Those drought areas include Texas, Oklahoma, Montana, South Dakota, and other states that are leaders in beef production nationally.
Dave Fischer gives a tour of their on-site beef processing facility. (Clayton Baumgarth - WFIU/WTIU)
According to Fischer, as the droughts continued, farmers responded by reducing herds and selling cattle en masse, sometimes for as low as $1,000 per head. Since then, the price to purchase beef cattle has hit record-highs.
“Now, if they're looking to repopulate, well, everybody's looking to repopulate,” he said. “So now you're talking to close to $3,000 a head. So you can do the math, imagine some big farmer out there that has 1,000 cows, how much of an impact that's going to have on them financially.”
Fischer is a cattle farmer in Saint Anthony, Ind. He and his family handle about 450 cattle for beef production.
And as he puts it, one challenge in managing the population of cattle is that bills need to be paid. While rearing a new calf to grow a herd might be the preferred thing to do, sometimes selling off the heifer before then is more beneficial to the farm.
In doing so, other areas of the business might take a hit.
“When you have a large farm like that, and you sell off your cows, not only are you selling off your cows, but you have to lay off your employees and so forth,” he said. “It's really a business, and now that business has to start back up again. And obviously, that's not really easy to do.”
Fischer’s biggest concern about low cattle inventories is that it may cause an increase in imported beef, taking that money away from domestic workers.
Butchers processing beef at the Fischer's facility. (Clayton Baumgarth - WFIU/WTIU)
The low population also has some consumers wondering if they’ll start seeing price increases at the grocery store. Tanner Beymer, the senior director of government affairs for the National Cattlemen’s Beef Association, said there’s no need for concern yet.
“Geopolitical things tend to motivate purchasing behaviors and some of those supply-and-demand dynamics, but everything else held constant, I would imagine that these retail consumer beef prices are going to stay manageable,” he said. “And that's good, because we still have very high beef demand.”
Beymer said some pricier cuts of beef such as sirloin and ribeye have already seen modest price increases while ground beef has held constant.
He wanted to make clear to consumers that while low population is a concern, it doesn’t mean there is a shortage of beef products.
“Since the late 1960s, we are currently producing over 60 percent more beef,” he said. “And a lot of that has to do with improved genetics, improved feeding rations, and a lot more efficiency developed by cattle producers over the intervening decades.”
(Courtesy of the National Cattlemen's Beef Association)
Beymer said the cattle market goes through a fairly predictable 10-year cycle of herd build-up and decline. The two cattle inventory reports released each year help farmers determine where the industry cycle is and allows them to plan accordingly.
But on April 12, the USDA announced that due to budget cuts, the second and final cattle inventory of the year, typically released in July, would not be released this year.
“They cited budget constraints as the reason for eliminating (the report),” he said. “The cost savings that the agency would realize from nixing this report is minimal compared to the industry costs that are associated with not having access to this data.”
Other important reports are on the chopping block as well, including many county-level crop and livestock estimates, which are vital in estimating the economic impacts of natural disasters.
In 2016, the July cattle inventory report was also nixed due to budget cuts. Backlash from the industry as well as lawmakers on Capitol Hill prevented that from happening. Beymer is hopeful the same will happen this year.
So, for the moment, consumers should be safe from high beef prices. But if the cattle population continues to decline, and the price per cow continues to increase, and farmers lose access to ways to track both of these issues, something will have to give.
