USDA’s annual Cattle Report found a 2% increase in the total cattle inventory on Jan. 1, 2017. That’s no surprise.  When good forage conditions and record profits cross paths, the end result is herd expansion.

Not just herd expansion, but rapid herd expansion!   In fact, even though producers culled and sent to harvest 8% of the beef cow herd, they also calved an additional 4% more heifers over those that USDA had indicated were expected to calve at the beginning of last year. These heifers represented a 14% increase in the number of heifers retained in 2014 and bred in 2015, the largest number since 1991.

So, when the numbers are crunched and the smoke clears, this has been the most rapid herd expansion since the early 1990s.   From 2014’s 60-year low, the U.S. cattle inventory has grown 6% compared to a 4% increase over the 4 years from 1990-1994.  And indications are that expansion will continue through 2017, at least.   The number of heifers expected to calve (call it bred) was up 2% from the prior year.  Again, this 2 % increase in those bred heifers is compared to last year’s 10% (6% reported by USDA + the additional 4% needed to get from the 2016 beef cow herd to this year’s cow herd).

For those who don’t care for all of this number crunching to analyze how quickly herd expansion occurred, the price of bred heifers over the previous 4 years might be proof enough!

Another key factor affecting production and your business is production efficiency.   We know how much increased carcass weights alone have added to beef production over the past few years.   Those heavier weights are not a temporary phenomenon.  This is a trend as evidenced by the fact that in 2015, we produced as much beef as we did in 1975 with 43 million fewer cattle.

Using beef production per cow as one proxy to measure production efficiency, the industry went from 416 lbs. per cow  in 1975 to 614 pounds in 2015, a 48% increase over the four decades, or a 1.2% average annual gain.  

This gain in production efficiency can be attributed to nutrition, genetics, animal health, feed quality, feed conversion, and last but not least production management, just to name a few factors.   And that trend is true across U.S. agriculture in crops, livestock, dairy, and poultry production. 

Agricultural production efficiency is significant and important, not only to producers but to consumers as well.   Simply put, we can produce more with less, i.e. more beef with fewer cattle.  And this beef is increasingly of higher quality, thus value.  Markets are sensitive to production efficiency and market response reflects that efficiency.  This is where we are at in 2017 and going forward.