From California to Virginia, ask someone involved in the cattle business for one word or phrase to describe the industry in 2013. My guess is that a popular response would have something to do with record prices as both cattle and beef prices set records over the past 12 months. While that is definitely an adequate description of the year, I would tend more to use the word “momentum” to describe 2013 because as we prepare to ring in the New Year next week, potential for more record setting in the cattle business is great.
When you combine tight beef supplies with growing global beef demand, more favorable input costs and improved forage conditions and hay supplies, you have the recipe for an optimistic outlook for 2014’s cattle industry.
After multiple years of herd downsizing, 2014 also holds potential to be the year when that trend changes. CattleFax CEO Randy Blach recently said U.S. cow and bull slaughter are down more than 3 percent year-to-date. He predicts further slaughter rate declines of about 8 percent in 2014 and 9 percent in 2015. In addition to reducing slaughter rates, Blach also said he expects producers to begin holding back more heifers, forecasting heifer retention of about 140,000 head in 2014. Herd expansion will be a slow, gradual process, but signs are pointing toward stabilization and expansion in the coming years.
The high prices experienced in 2013 will not go away when the clock strikes midnight on December 31. In fact, steers, which averaged around $165 per hundredweight in 2013, are expected to average around $185 in 2014. Cow calf producers who earned about $250 per head in 2013 are predicted to earn about $280 per head next year. Fed cattle, which averaged around $126 per hundredweight this year, are forecast to average around $130 in 2014.
Other things to watch for in 2014:
- Farm Bill – Congress is more than a year late in passing a new Farm Bill. The four principle negotiators, Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.), House Agriculture Committee Chairman Frank Lucas (R-Okla.), Senate Agriculture Committee Ranking Member Thad Cochran (R-Miss.) and House Agriculture Ranking Member Collin Peterson (D-Minn.), are working out final details related to Title I commodity programs and funding reductions to the Supplemental Nutrition Assistance Program (food stamps). Early passage in 2014 means the committees would go to work with USDA to begin implementing changes immediately.
- COOL – Whether resolved through the Farm Bill of by the World Trade Organization, mandatory country-of-origin-labeling will continue to be a contentious topic for the cattle industry in 2014.
- Midterm Elections – November 2014 brings the next midterm congressional elections. With all 435 members of the House of Representatives and one third of the Senate up for re-election, by late summer, most legislative work will take a break while members return home to campaign for re-election. Wherever your political allegiances lie, as the number of members elected who have a background in or understanding of the cattle industry (and agriculture as a whole), drops with each election, it is increasingly important to get involved in the process. Attend townhall meetings and candidate debates, introduce yourself to the candidates and talk about your operation, and most importantly, show up on November 4, 2014, and vote.
- Exports – It is expected that 2013 beef exports will surpass the 2012 record of 5.51 billion pounds. With demand increasing around the globe for beef, there is potential for increased export opportunities in 2014. Key areas to watch include the ongoing Trans-Pacific Partnership negotiations between the United States and 11 other nations.
- Sustainability – “Selfie” may have been Oxford Dictionary’s word of the year in 2013, but in the cattle industry, sustainability will be a topic to watch in the coming year. From large multi-national corporations to small family farms, finding ways to be more economically, environmentally and socially sustainable will be a trending topic in 2014.
- Millennials – The millennial generation of Americans, those born between the early 1980s and early 2000s, has topped Baby Boomers in number and will be a force for the next 40-plus years when it comes to consumer beef trends. Learning how to communicate with them, about their beef preferences and educating them about beef will serve the beef industry well in 2014 and beyond.
This list is by no means exhaustive, and could have easily continued. As you prepare for the New Year, let us know what issues are affecting you the most and how we can better provide you the information you need to be successful. We look forward to working with many of you in 2014 and for years to come.