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.
Price level doesn't mean expansion
Burdine explained that there are many areas that were forced to reduce numbers because of weather, and they will want to expand again once weather conditions improve. In Texas, beef cow numbers have decreased 22 percent since 2011 and much of that land is not well suited to row crop production.
It’s important to note that producers don’t just automatically expand when prices reach a certain level.
“It’s true, calf and feeder prices are at an all-time high,” Burdine said. “It’s also true that production costs have dramatically gone up as well. To really signal an expansion, prices will have to rise enough to translate into increased profits at the cow-calf level.”
When it does come about, expansion could actually happen pretty quickly in the early stages. Heifer retention gets a lot of attention in expansion talks.
“We’ve actually seen increased heifer retention over the past several years,” Burdine said. “But, this hasn’t really been enough to offset the reduction in beef cow numbers brought about by higher than normal culling.”
Expansion is a long-term process that involves cattle that are likely to remain in production for 10 years or more. A producer who purchases additional bred heifers, or one who holds back their own heifers, makes an investment that requires several years to pay back. The upfront cost is high, and producers don’t know what the conditions will be throughout the time it takes to recover the investment. Those long-term profit expectations are what most farmers are using to guide their expansion decisions.
Burdine and Halich also asked the question, “Do farmers and ranchers really have to expand the herd?”
“It’s assumed that there are folks out there ready to expand when conditions are better,” Halich said. “But there is a growing concern that fewer and fewer of the next generation are willing to take up the challenges and opportunities of raising cattle. Fewer cattle farmers coming up through the ranks and a decrease in large tracts of land suitable for cattle will make it more difficult to expand the cattle herd in the future.”