“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” —Winston Churchill
Yet, as an amazing example of the above quote, Churchill led his country with optimism as prime minister of Great Britain during a very troubling time.
My intent in this article is not to represent myself as a price forecaster or weatherman to predict calf prices or weather. Rather, I will present some key positive points about the cow-calf industry, along with a few challenges as we look forward to another year.
Key positive points
1. The U.S. cow-herd inventory is down. One does not need to look far to read or hear a report on the declining number of cattle in the U.S.
Here’s one report by Ron Plain from the University of Missouri following the semi-annual USDA cattle report in July of 2012: “As expected, USDA’s semi-annual cattle inventory report for July 2012 says the herd reduction which began in 2006 is continuing.
This was expected given that slaughter of cull cows was 4.3 percent higher during 2011 than in 2010.
This year’s calf crop is expected to be the smallest in 63 years. Although cattle prices have been strong in recent months, record high feed prices, a severe drought and the weak U.S. economy are likely to cause further reductions in the cattle inventory.”
As I see it, there are several positive aspects to the reduced inventory. First, the simple law of supply and demand has kept prices of cattle high and will very likely continue to do so, since it takes years to grow the inventory and demand for beef remains relatively strong.
Second, this situation presents our industry with an opportunity to repopulate the cow herd wisely. There are many tools available to producers today to select, develop and manage heifers. These tools provide a bright future for the U.S. cow herd.
2. Value is being rewarded more than ever before. The 1990s saw an increase in opportunities for cattle producers to achieve a greater reward for the quality of the cattle they produce.
Marketing alliances and supply chains have evolved that now provide real mechanisms for producers to recoup a portion of the value they have bred and managed into their calves.
Premiums of up to 5 to 8 percent of the calf’s traditional weaning value are common. Cow-calf producers should consider these opportunities if they are not already doing so.
3. The cow-calf segment is good at what it does. Available tools have developed in the cattle industry over the past decades to enable cow-calf producers, and the entire production chain, to produce at levels never before achieved.
How else could we be producing roughly the same amount of beef with so many fewer cows? At a recent meeting, I heard a speaker present information from the U.N. Food and Agricultural Organization (FAO) stating that, by the year 2050, we will need to produce 100 percent more food than we do now.
In order to achieve this need, the FAO concludes that 70 percent of the world’s additional food needs can be produced only with new and existing agricultural technologies.
I list just a few of the ways that I believe cow-calf producers are doing what they do so well:
- Controlling costs in an era of high feed and other input costs.
- Managing the land resource for a balance between productivity and long-term sustainability.
- Using genetic prediction information to assemble cattle that are productive and match their production environment better than ever before.
- Using strategic nutrient supplementation practices to keep cows in a productive state while controlling input costs.
- Applying appropriate reproductive management tools and technologies when and how they will improve overall profit, not merely because these technologies are available.
- Attention to marketing opportunities to help them realize their fair share of the value from their calves.
Key challenges
1. Uncertainty: Production agriculture has always faced uncertainty and producers have learned to manage risk effectively.
However, with the global society we now function in, the impact of things beyond our control seem to have increased.
By the time this article is published, the results of the presidential election will be history and the future of U.S. administration will be decided for the next four years.
So, hopefully, the area of political uncertainty will have been clarified to a degree by then. However, other areas of uncertainty will remain, specifically the status of drought in the U.S.
As has been seen during 2012, there is a close linkage between precipitation and feed prices – and when this is coupled with energy policies, the volatility in agricultural markets increases. Uncertainty will continue and cow-calf producers must learn to navigate within this arena.
2. Advancing age of producers: Demographics of cow-calf producers show that the mean age is advancing to become older and older.
A challenge for the future is to provide opportunities and methods for young people to enter this segment of the cattle industry – as well as into agriculture in general. I believe that this is beginning to occur. Let me mention one example of this:
About a year and a half ago a program, funded partially by a USDA grant targeted at beginning farmers and ranchers, was developed among the three states of Colorado, Nebraska and Wyoming.
This program is called the Tri-State Ranch Practicum and follows a hands-on model of ranch practicums developed several years ago in Nebraska.
There are currently 17 bright, aggressive, determined young cattle producers enrolled in the Colorado portion of this program, with more in each of the Wyoming and Nebraska portions of this program.
My recent experience with these young producers convinces me that there is a supply of eager, knowledgeable people in the younger generation that will meet the need as cow-calf producers in the future. We simply need to foster this opportunity.
In summary, I see the outlook for 2013 for cow-calf producers as bright. There will continue to be uncertainty, yet there are many opportunities and circumstances that I believe will enable producers to attain profit levels seldom seen in the past. As Churchill stated, there are “… opportunities in every difficulty.” 
PHOTO
With premiums reaching 5 to 8 percent of the calf’s traditional weaning value, producers should consider value opportunities for their crop. Photo courtesy of Progressive Cattleman staff.
