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RSS By: Steve Cornett, Beef Today

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Feeders Face Challenges Beyond Cattle Prices

Nov 03, 2009

By Steve Cornett
 

Here’s the deal facing cattle feeders: They are the bad guys in all that the activists find wrong with beef. They’re the ones with the “factory farms.” They’re the ones who use antibiotics. They “fatten” cattle. They concentrate manure. They buy corn the happyfacers claim would otherwise feed the starving masses in Africa.

Two stories I read last week bring the feeders’ plight to mind. One was billed as “The Carnivore’s dilemma” in the New York Times. The other was in London’s Times Online and suggested people should “give up meat to save the planet.” (Click here to read the latter.). The article suggests that as the population increases, people will have to eat less meat. If you buy into the United Nation.’s overblown concerns about the effects of cattle on global warming, that would be a logical conclusion.

It’s unthinkable to us that the whole world would give up beef—the king of foods—but not long ago it was unthinkable that we would all wear seatbelts and give up smoking and be so good about naming a designated driver before a night on the town. I’m from a day when town milk tasted nasty, so it’s not too hard for me to believe that implausible changes are possible.

The New York Times piece written by “natural” food activist Nicolette Hahn Niman argues that consumers could avoid all that environmental damage by eating grassfed beef. She chose not to argue with the logic of doing away with meats. Rather, people should just eat the stuff she and Niman Farms believe in.

Those two pieces coincidentally coincided with the Texas Cattle Feeders Association annual convention. There aren’t many folks in the world with more at stake—at risk—in this argument than the 500 or 600 people at that meeting.
 

But I didn’t pick up a lot of worry from those in attendance. Not about the future, anyhow. They’re so swept away by their current problems I can’t imagine how they'd have any worry synapses left to devote to some English lord making vegetarian suggestions to future generations.

Informa calculates that the cattle feeders in Texas, Oklahoma and New Mexico, and TCFA claims almost all of them as members, have shed about $1.85 billion in equity since the downturn began. That’s just from the three states—responsible for a little more than a quarter of all the cattle fed in the U.S.

And, overall, there wasn’t just a lot of happy predictions from the podium.

Things are hardly hunky-dory for anybody in the cattle business. But cattle feeders are roasting in their own level of hell these days, when you think about it. The economy has slashed demand for beef—by 10 to 15% according to Randy Blach of Cattle-Fax. And he warned that so long as the general economy stays so sorry, there’s not much hope for a lot of recovery.
Cow producers can at least take solace in the supply side of the industry’s supply and demand equation—they’ve got the smallest cow herd since 1949 and the best batch of pasture conditions in almost as long. But for cattle feeders, those short numbers are just more bad news. They’ve got feedyards to keep full, and the short supply of calves just makes them compete that much harder with each other and with all that green grass offering an alternate home for weaners.

On top of that, ethanol continues to keep grain prices high, and with oil prices back on the rise and the EPA poised to increase the amount of ethanol allowed in U.S. gasoline, there seems little good news there. 

The press for fed beef has been especially negative the last few months, and few feeders feel like they have a lot of supporters in the current administration. They are scared to death of Carol Browner and Cass Sunstein—the former staunch in her desire to see a “cleaner world” and the latter an “avowed animal rightist,” as one speaker said.

That’s a bunch of problems facing a business, you know? If they were calves in a feedpen, you’d want to pull them I think. Maybe not to doctor, but at least to temp.

Maybe, since I was here before there was a commercial cattle feeding industry, I’m among a minority of active cattle industry members who can imagine a future without one. Ms. Niman is correct in assuming that many ranchers could operate without the year-round market offered, and filled, by feedlots.

But she might find that her niche market was no longer profitable once the well-heeled consumers who buy her product were offered a ton of generic grassfed product.             

I’m personally convinced that the commercial feedyards have been good for everybody in the cattle business. It makes a better tasting product. It allows cost-efficiencies in several ways. It provides a year-round supply of beef and year-round markets for rancher’s calves.

Sometimes I wonder if the commercial feeding industry will survive attacks like these from within and without. I wonder what it would mean to cow-calf producers if regulators and activists finally pushed feeders out of business.
 

Steve Cornett is editor emeritus at Beef Today. You can reach him via e-mail at scornett@farmjournal.com.

This column is part of the Beef Today Cattle Drive e-newsletter, which is delivered to subscribers biweekly and includes beef industry analysis, market information as well as the latest beef headline news. Click here to subscribe.


 

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COMMENTS (1 Comments)

Charlie Hart
Steve your concern for a fading business model is appropriate as change is always a bit dangerous; but as you and I remember farmer feedlots were the 50s and early 60s business model and can be again. The 21st century seems likely to reverse things getting simpler and more limited but complex businesses will develop. Wind and solar farms for energy is an example. Cattle may be produced in a more diversified manner but beef will remain a favorite food. Lets look for opportunity instead of shivering in our boots.
10:18 AM Nov 4th
 

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