• If you are having problems logging in please use the Contact Us in the lower right hand corner of the forum page for assistance.

Beef Boom is Over....

Mike

Well-known member
by John Boyle, [email protected]
published March 1, 2007 12:15 am
The boom in beef cattle prices is over.

The market has cooled like frozen hamburger meat over the past few months, leaving hundreds of small-time Western North Carolina cattle producers tightening their belts.

“We’ve seen a real crunch over the last 100 days in Western North Carolina — they’re taking off somewhere between $100 to $125 a head for every 500-pound feeder calf,” said John Queen, a Haywood County cattleman who was recently elected as the president of the National Cattlemen’s Beef Association.

From 2000 through the first three quarters of 2006, local beef cattle producers enjoyed their slice of a sizzling national market, driven mostly by huge demand and popular protein-oriented diets. Consumer demand increased 25 percent over the past six years, with per capita beef consumption topping 66 pounds a year in 2005, according to the NCBA.

Cattle producers, including Leicester farmer Gary Hutchins, cashed in. Hutchins said he got $1.51 a pound for one calf in 2005 and $1.35 for another — “That’s the most I’ve ever known,” he said.

But last fall’s market was a different story.

“Last year, my prices ranged from 70 cents a pound to a dollar, about 85 cents average,” said Hutchins, who worked 38 years in the insurance business for the Farm Bureau and keeps about 20 black Angus cows in his operation.

Strong supply and increased production costs at Midwestern feed lots have teamed up to drive prices down. Corn prices and other production costs went up, so the feed lots that buy calves from mountain operations cut their costs by offering less per head.

And the profit margin wasn’t huge to begin with.

“For the past 20 to 25 years, the average profit in cow-calf operations has been approximately $20 a head or less,” Queen said. “From 2000 to 2005, it jumped to the neighborhood of $150 a head, and we certainly enjoyed a great profitability within that time frame. If you take out $100 to $125 a head, then we’re back to square one.”

‘We tend to grow houses now’
Raising beef cattle is a generations-old tradition in the mountains, with families tending small herds and selling off calves for cash to supplement other income.

“A lot of our land is best suited for grazing — it’s just too steep for any other use other than timber,” said Kenneth Reeves, director of the N.C. Cooperative Extension Service office in Buncombe County.

Just about all agriculture has declined in the mountains over the past decade as farmers age and land values skyrocket. The trend holds true statewide: In 2005, North Carolina lost 1,000 farms, tops in the country along with Florida and Tennessee, according to a U.S. Department of Agriculture report released this month.

“Farm loss has become a chronic problem here,” N.C. Agriculture Commissioner Steve Troxler told The Associated Press, noting that the Tar Heel State has lost more than 6,000 farms and 300,000 acres of farmland since 2002.

But beef cattle production has remained more constant than most agricultural endeavors in the mountains, partly because the care of the animals is less demanding than other types of farming and market demand has remained strong. Mountain producers typically have cow-calf operations — they keep the cows and sell the calves, which are born in early spring and usually sold in the late fall when they range from 400 to 600 pounds (they weigh about 60 pounds at birth).

In 1996, the 17 western counties had 64,500 beef cows, a number that dropped to 47,000 last year, according to USDA statistics. Haywood and Buncombe counties are the top beef cattle producers in Western North Carolina, each with about 7,600 head of cattle, leaving them tied at 14th in the state.

“It’s kind of held steady for the time being, but especially in Haywood County — and I know the same is true in Buncombe right now — we tend to grow houses now,” said Tony McGaha, a livestock specialist and extension agent with the Haywood County office of the N.C. Cooperative Extension Service. “It’s a whole lot more profitable to grow a house than it is to grow tobacco or whatever the crop is.”

McGaha said Haywood has just nine dairies left, compared with more than 100 30 years ago, and just one apple orchard remains. Burley tobacco, another traditional mainstay cash crop, has seen a huge drop-off, down from 300 growers in Haywood three years ago to fewer than 20 now.

“That just leaves the beef cattle part of it,” McGaha said.

A thin profit margin
Max Morgan, who keeps 75 red Angus cows and calves on his Newfound area farm in Buncombe County, switched from dairying to beef cattle in 1996.

“The EPA thought we’d dairied long enough,” said Morgan, referring to Environmental Protection Agency regulations that required more stringent manure containment measures and a containment pond. “We didn’t have nowhere to put it.”

So he runs a cow-calf operation, even though he and other producers know they won’t get rich in the business.

For decades, Hutchins ran cattle and grew a small amount of burley tobacco, but he got out after the 2004 federal buyout ended a tobacco price support program in place since 1938. More than half of the mountains’ 4,000 tobacco growers have quit since the buyout.

Mountain land is good for grazing cattle — you need about two acres to support one cow and one calf — but the steep topography also imposes limitations.

“I’d say if you were surviving on a beef cattle operation, you’d probably need a 100-cow herd,” said Hutchins, 73. “And you wouldn’t be a rich farmer even then.”

McGaha said it takes about $400 to keep an adult cow fed and cared for while it has its calf and the baby grows.

“Normally, you get between $500 and $700 for a calf, but the cost you have to pay for feeding mama is $400 or more,” he said. “So it would take in excess of 200 cows to make $20,000 in a year. How many families can live on $20,000 a year?”

‘Everybody wants a mountaintop’
With mountain land in high demand for residential development and farmers aging, the idyllic image of cows grazing on hillsides may become a cherished memory after a couple of more generations.

The average age of the state’s nearly 54,000 farmers was 56.1 years in 2002 (the last agricultural census year), while just 20 years earlier the average age of the state’s 72,792 growers was 51.7.

Geoff Benson, a professor in the N.C. State University department of agricultural and resource economics, said more than 20,000 people statewide keep cattle. He said mountain beef cattle operations have remained a little steadier than other types of agriculture mainly because the operations are small and the farmers aren’t depending on it for their primary income.

“Do they make money at it? The usual answer is, ‘Not much,’” Benson said.

Queen has staked out a solid niche as a “backgrounder,” buying calves from farms or sales barns and preparing them for the Midwestern feed lots through vaccinations, weaning them and teaching them to eat and drink on their own. Cows typically eat 60 to 70 pounds of forage a day and easily drink 15 gallons of water.

He’s been a backgrounder since 1988, handling as many at 7,000 cows in a year but more typically about 2,500. A fourth-generation cattleman who grew up in Haywood County, he’d like to remain bullish on the cow-calf tradition in the mountains.

But he’s also a realist.

“I really think the feeder calf and cow-calf operation in Western North Carolina is diminishing for several reasons,” Queen said. “The main one in my mind is the appreciation of our property values — they just keep going up. So many small farms have been sold or are in the process of being sold, because the land values have gone up so high. It seems everybody wants a mountaintop with a view.”


--------------------------------------------------------------------------------

Contact John Boyle at 828-232-5847, via e-mail at [email protected]
 
A

Anonymous

Guest
Mike said:
“We’ve seen a real crunch over the last 100 days in Western North Carolina — they’re taking off somewhere between $100 to $125 a head for every 500-pound feeder calf,” said John Queen, a Haywood County cattleman who was recently elected as the president of the National Cattlemen’s Beef Association.

Must not concern him much, since he and his little group of Packerbackers are willing to give up $175 head by not allowing Creekstone etal to test and export to Asia- or open up other markets... :roll: :( :mad:
 

TimH

Well-known member
Oldtimer said:
Mike said:
“We’ve seen a real crunch over the last 100 days in Western North Carolina — they’re taking off somewhere between $100 to $125 a head for every 500-pound feeder calf,” said John Queen, a Haywood County cattleman who was recently elected as the president of the National Cattlemen’s Beef Association.

Must not concern him much, since he and his little group of Packerbackers are willing to give up $175 head by not allowing Creekstone etal to test and export to Asia- or open up other markets... :roll: :( :mad:

:D :D :D :D Yes Festus, it's all about no private testing. It has nothing whatsoever to do with corn prices or reduced beef demand(due in part to R-calf's fear mongering). What happened to the "favorable position" you would be in ,because "you don't need an export market to distribute your production"???? :D :D :D :D :D
What a Dick!! :D :D :D :D :D :D :D
 

Sandhusker

Well-known member
OT's right.

Timmy, you "forgot" what was said before the comment about not needing an export market. Hint; it was something concerning imports....
 

TimH

Well-known member
Sandhusker said:
OT's right.

Timmy, you "forgot" what was said before the comment about not needing an export market. Hint; it was something concerning imports....

Oh, please do expand on your answer Sandhuckster. Tell us how you are going to supply affordable beef to the domestic market as residential development eats up more and more acres of ranchland.
This should be good....... :D :D :D :D
 

Sandhusker

Well-known member
TimH said:
Sandhusker said:
OT's right.

Timmy, you "forgot" what was said before the comment about not needing an export market. Hint; it was something concerning imports....

Oh, please do expand on your answer Sandhuckster. Tell us how you are going to supply affordable beef to the domestic market as residential development eats up more and more acres of ranchland.
This should be good....... :D :D :D :D

Yep, lots of good ranchland around Las Vegas, Phoenix, Chicago....
 

Econ101

Well-known member
As I said before, higher prices of corn will make backgrounding more profitable. Let the cattle go to the feed, not the other way around. Top them off.

TimH, Europe provides for a lot of its own beef needs. They have worse crowding than we do.

You are totally right that the current macroeconomics are allowing houses to replace ag. production for highest use. Price of ag. goods needs to go up. I bet the run up in corn will keep a few more farmers on the land instead of selling to developers.
 

Kato

Well-known member
I read today that U.S. producers are planning the biggest corn crop in 60 years. Doesn't the saying go, "The best cure for high prices is high prices."?

If corn acres respond to the prospect of higher prices, that will be exactly what it takes to put a lid on those same higher prices. Once the tax breaks and incentives are used up, it will be back to the real world.

I also read that according to many in the ethanol industry, the targets for ethanol production set by G.W. are a bit out of touch with the real world. They don't see how it's possible to meet them. These targets are also part of the fuel for the speculators in the corn market.

Also, no one has mentioned that there is a top end to what the ethanol plants will pay for corn, and that is set by the price of oil.
 

PORKER

Well-known member
Also, no one has mentioned that there is a top end to what the ethanol plants will pay for corn, and that is set by the price of oil.

$60 crude equals $5.32 corn or the BTU. recovery rate. A rabs want a higher price and Venny swail ya wants $100.00 crude as per Chevas.
 
Top