Take a look at that headline. That is the question that goes through my head as I read articles, listen to speakers and podcasts, and talk to producers about U.S. beef cow herd inventory numbers. Recent record prices paid for fed cattle, feeder cattle and cull cows and bulls have a lot of industry folks talking and thinking we are at the bottom of the “10-year cattle cycle” and that we could see expansion in the future. But who is going to own them?
The latest USDA Census of Agriculture, taken in 2022 and released in early 2024, shows that the number of producers with beef cows fell by 14.7% while the overall beef cow herd shrank 7.9% since the previous data was released in 2017. If you take the census beef herd size in 2022, divide it by the number of producers and compare those same numbers to 2017, the average producer’s herd grew by 6.8%. It’s the smaller producers that have gotten out.
With the current average cow herd size at approximately 47 head, it’s the smaller producers that have been the lifeblood of the U.S. beef industry. If we look at the biannual USDA Cattle Inventory report and compare January 2022 to January 2024, the industry has lost roughly 2 million more beef cows. Many producers have exited due to age, drought, cost of production and expansion, labor restrictions, land prices and rent, feed prices, overall profitability and return on investment to time and money, uncertainty in legislation and policy, along with many other factors.
As my “day job” is working for Alltech while investing my “nights and weekends” into a small cow-calf herd along with feeding some cattle, I feel I can offer a unique perspective. I travel around the country and speak with many diverse producers, full-time grain farmers, full-time ranchers and those who both farm and run cows, as well as bankers, veterinarians, politicians and many other industry folks about the agriculture industry, all while feeling the time and financial stresses of being a producer.
What are producers saying?
The full-time grain farmer has seen his profitability drop significantly due to not only reduced grain prices but also to big increases in prices for equipment, operating and inputs. Many of those I talk to believe if it’s not now, it will be soon that a full-time farmer will need to farm a minimum of 2,500 acres to make it, and that includes a spouse working off the farm. Those who are farming less than that are working off the farm already.
The full-time rancher has struggled through drought, feed prices, cost of operating, equipment prices and labor issues. The majority I’ve spoken with have been looking for a hired man/woman for years and haven’t had much success. Due mostly to drought, they have trimmed their herds and are now running a manageable herd size for the labor they have available. They have retained enough heifers to replace their normal cull rate but certainly aren’t looking to expand. Those producers who are doing it full time say they need to run a minimum of 300 mama cows to make it pay.
Producers who are grain farming and also running a few cows are looking at the return on time, effort, energy and financials of both the grain side and cow side of their businesses. Given the recent record prices paid for cows, I have talked to many who have made the hard decision to send their cows to market. Even with record calf prices, they haven’t been able to generate a big enough return on the cows to keep them.
Simply put, the cows cost too much in time and inputs, and bring in less overall revenue than the farming side. Even the producers who were running a handful of cows for fun and to keep a few acres of grass chewed down and utilized have sold. They said that the income just wasn’t worth the time commitment, and many would rather travel to see the grandkids and/or enjoy some vacation while their health is still good.
So where are we going?
I see challenges that must be overcome to not only maintain but to expand the U.S. cow herd. Availability of labor from both outside and inside an operation, 8.5%-plus interest rates, increasing operating and equipment costs, time to dedicate to run cows and the return needed to make the investment worthwhile and the uncertainty of the future from proposed rules and regulations. These are reasons that have caused both younger and older producers to question expanding, staying in and/or entering the cow business.
At the end of the day, if we are looking to rebuild the herd, I still question: Who is going to own the cows?
