I found it interesting to note that there are around 800,000 cow-calf operations in the United States. Even more interesting is that 90 percent of those cow-calf producers have less than 100 cows and account for only 50 percent of the total beef cows in production today. Between 5 percent and 6 percent of the U.S. producers own between 100 and 199 head of cows. Those producers control approximately 17 percent of the beef cows out there. Just over 3 percent of the cow-calf producers own more than 200 head of cows. These few producers control one-third (32 percent) of the nation's cowherd.

Consolidation and expansion in cow-calf production is happening slower than in other segments of agriculture but it is happening. Economy of size continues to move beef production toward larger and
fewer farms. However, a new supply chain structure is emerging to bypassing traditional market arrangements and form coordinated links between cow-calf producers, processors, retailers and the consumers they serve. To remain competitive in today's consolidated market place, cow-calf producers who once sold calves to a commodity market will have to coordinate with other producers and other segments of the foodsystem chain to collect informa-
tion, add value and fill specific consumer demands.

Seasonally we expect female market values to trend lower through the second half of the year. But because we are moving into an expansion phase, demand for production females will support prices despite seasonal trends.
Other evidence of expansion lies within heifer placement data. At the end of 2000, Cattle-Fax reported in its feedlot placement data that 37.5 percent of placements on feed during the fourth quarter were heifers. In contrast only 33.4 percent of placements during the first quarter 2001 were heifers. May 2001 heifer placement on feed was down to 33.4 percent compared to a five-year average of 36.6 percent. These placement numbers clearly show that the demand for heifers to go back in to the cowherd is surpassing feedyard demand.

Although retention of heifers points to a move from liquidation to expansion, cow slaughter rates are averaging 7 percent above year ago levels. One reason for this is the unexpectedly high demand for lean ground beef that is pushing slaughter cow values up as high as $500 a piece. Analysts expect cow slaughter to moderate gradually through the remainder of the year as expansion possibilities attract more of the marginal cows back to the farm or ranch. As fewer cows go to market prices will likely remain above year ago levels through the remainder of 2001.