Looking at last year’s Tyson plant fire, the bovine spongiform encephalopathy (BSE) event of 2003 and even the dairy termination program of the ‘80s, Close considers COVID-19 to be the most disruptive market event all the way back to the Nixon price freeze in 1973.
“Never in my lifetime have we seen a market disruption with this kind of running,” Close said. “This is a mega, mega disruption in the market, and we’ve got some very substantial issues to work through.”
On a normal day, the beef industry harvests approximately 120,000 animals, but more recently, the high has hovered around 70,000 with a backlog of 40,000-plus animals due to packing plant closures and labor constraints. As this continues, Lawrence expects to see some extremely heavy cattle this summer and even coming into the fall.
“We are already at an all-time high for dressed carcass weight, and if we have cattle sitting around on feed or even a maintenance or what someone thinks is a maintenance diet, we’re not going to see light cattle come in, we are going to see giant cattle come in,” Lawrence said. “Looking at the average weight for a live steer [May 4] was 1,503 pounds, that could easily be 1,703 to 1,803 pounds come August.”
In addition to heavier fed cattle, Lawrence also predicts calves coming into the feedyard at heavier weights as more producers will likely choose to graze out wheat and other crop residue.
He suspects that fall prices will be depressed at minimum and much less than what producers are looking to achieve.
“I think the cow-calf producers are going to feel that backlog of unneeded cattle this fall, and it’s going to take a while to chew through that,” Lawrence said.
Packing plant problems
Addressing some of the chatter in the industry about producers building or investing in their own packing plants, Close and Lawrence agreed it is a terrible idea, and one that doesn’t come without a lot of risk.
Lawrence said, “I am a unique person in that I grew up on a ranch; I am extremely familiar with the fed industry, and I run a small packing house on a university campus. Candidly, I typically tell people you don’t want to do that because you’ll most likely go bankrupt, and the third buyer of your structure is the one that will benefit the most. It is not an easy business to be in. There is a reason that we have only a handful of packers built on an economy of scale. If you want to get in this business, you better be prepared for a battle that you never anticipated – and it’s not going to be an easy one.”
While Close does see the need for a few additional packing houses in the beef industry, he doesn’t think we need more of the “monstrosities” that are operated today at the 4,000 to 6,000 head per day level. He suspects plants of the future will be 1,800 to 2,200 head facilities, as labor constraints will make larger facilities restrictive. He also predicts more robotic technologies will pop up in these larger facilities with the inability to add more labor to the facility.
Lawrence on the other hand, is a little more skeptical about robotic technologies. With previous experience as a research manager at Smithfield Foods, Lawrence tested some of these technologies without much success. He said, “Robotics sounds fun, it sounds cool, but it’s not quite that simple because not every animal is the same.”
If implemented, Lawrence doesn’t think robotic technology could remove more than 10% of the labor force at maximum. By and large, the beef industry will continue to be a very labor-intensive, hands-on process, he said.
With some concern around the talk of building new slaughterhouses and minimizing trade, particularly imports, Close reminded producers that the U.S. has the most efficient, high-quality beef in the world. He said, “To take generations of background to just ‘throw the baby out with the bath water to reinvent the wheel,’ I don’t agree with that at all. It’s a stable industry long term.”
While the industry works through some of these substantial issues, consumers can expect meat to be rationed at the grocery stores, and consumers will be shocked at just how high meat prices can get. Close said, “We don’t have a livestock shortage; we have a temporary meat shortage, and those supplies will be back on.” 
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Cassidy Woolsey
- Editor
- Progressive Cattle
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