For the last half dozen years, the weather and market conditions have treated the U.S. cattle industry with all the tenderness given to Rocky Balboa’s face in the early rounds of that famous boxing match in the first Rocky movie. Battered first by an epic drought, it was bloodied by the highest feed costs cattlemen have ever seen.
Taking the worst hits were the southern plains; Texas, Oklahoma and southern Kansas gave new meaning to the term “high desert country.” Herd liquidation was unprecedented in those areas as many cattlemen got out of the business or moved their herds north.
You’ve heard that phrase, “There are old pilots and bold pilots but no old, bold pilots?” Well, this business is a little tougher than that. We have old cattlemen, bold cattlemen and even a few old, bold cattlemen – anybody seem Paul Engler, lately? But the weather and feed prices have taken the starch out of some of the best of them.
A turn-around is on the horizon, though, and it’s time to take a serious look at the future of the industry. Rebuilding will happen and Dr. Peel thinks it could come much quicker than usual. He’s one of the sharpest observers of the industry and has a great vantage point at the Department of Agricultural Economics at Oklahoma State University in Stillwater. He looked at the horizon and didn’t see a haboob – one of those massive and horrendous dust storms that have pounded Phoenix lately. It looked more like opportunity to him.
Drovers/CattleNetwork published his thoughts last week. I read it and had a bunch of questions. So I contacted him and asked a few. Here are his responses.
Q. Derrell, there has been a lot of discussion about the size of the herd today and most of it has been of the gloom and doom variety. Although you agreed with the data that it's the smallest it has been since the early 1950's, you seemed to be optimistic about the future, citing an increase in replacement heifers during the recent drought-driven cull. What effect will those heifers have on herd size and how quickly can a significant increase happen?
A. In the years 2009-2011, the number of heifers entering the herd was increasing despite the fact that the January 1 inventory of replacement heifers was falling and despite the fact that elevated beef cow culling was more than enough to result in declining herd inventories. This suggests that, while external factors such as severe input market shocks and recession were forcing net herd liquidation, producers perceived those shocks to be short term and they continued to invest in more replacement heifers.