What is in this article?:
- Next cattle expansion will be complex
- Price level doesn't mean expansion
- Long-standing drought in the Southern Plains has reduced conditions to a modern-day Dust Bowl. But that’s not the only thing affecting cattle numbers. Many things will determine when and if a cattle expansion occurs.
Cattle numbers in the United States are the lowest they have been in more than 50 years.
“There has always been variation in cattle inventory from year to year,” said Kenny Burdine, agricultural economist with the University of Kentucky College of Agriculture, Food and Environment. “There was an upward trend from the 1930s to the 1970s, followed by a sharp and then more gradual reversal that has continued through today.”
So many factors play into the current situation, not the least of which is a massive, long-standing drought in the Southern Plains that has reduced conditions to a modern-day Dust Bowl. But that’s not the only thing affecting cattle numbers. Burdine said many things would determine when and if a cattle expansion occurs.
“There’s really no single factor that drives a producer to decide to expand or reduce their cow herd size,” he said. “Producers respond to a wide array of market signals, and they operate within a wide range of constraints as well. Regardless, I believe the next expansion is going to be very complex.”
Even though Kentucky has not experienced the same harsh drought conditions as the Southern Plains in the past couple years, drought was an issue in 2007, 2008 and 2012. Kentucky’s cattle inventory has decreased by about 195,000 cows since 2007 according to the U.S. Department of Agriculture. According to fellow UK agricultural economist Greg Halich, however, conversion of pasture ground to row crops is probably the main reason for the reduced numbers in Kentucky.
“Record prices and profitability in row crops has led to this conversion, and most of this ground will not come back to pasture very easily,” he said.
As corn and soybeans gained popularity for their profitability in the past several years, cattle producers opted for row crops over cow numbers. If grain prices decrease and grain profitability declines, producers may start to convert row crops back to pasture and increase their herds again.
“That really just illustrates a basic economic principle that farmers are going to allocate their land to what is going to be most profitable for them,” Halich said. “Cattle obviously compete with other land uses. In Kentucky, we’ve historically run cattle and produced hay on ground that is also suitable for row crop production, particularly in the central part of the state.”
It’s easier to convert pasture to row crops than to convert row crops to pastureland. Halich said it’s not really that simple to “switch” back. Re-establishing forages takes time. And then there are the fences that many farmers removed to make row crop management more efficient.
“Once those fences are gone, the cost of returning the land to pasture dramatically increases,” he added. “Fencing is very expensive, and producers will only make that investment when it is justified by the market.”