No question, these are defining times of your farming and ranching career. You'll point back to it for the rest of your life and say, "Remember when..."
Among livestock producers, who has it worse? You or your pork and poultry neighbors? Some say those other guys, with no alternatives to grain, while cattle can eat lower-valued forages and by-products.
I can make the case that cattle producers have it worst in these extraordinary times. Ranching is a land-based business, with the same run-up in fuel, equipment, fertilizer, and land costs as grain farming. While $7 corn and $14 soybeans will pay for a lot of $5 diesel fuel, you have no such luck with your cash crop, feeder calves. They'll average about $1.15 a pound this year, down from $1.30 two years ago. It's like a corn farmer paying $800 a ton for nitrogen, $5 for diesel, and $300 an acre for land rent with corn still at $2 a bushel.
Not only do you face the run-away input costs, but also your cows have to compete for acres. Think about the state of Missouri, number two in beef cow numbers with about 2 million head. It's also a major grain state (fifth in soybeans), with plenty of tweener land -- could be pasture, could be soybeans or corn or wheat.
Even 30-bushel soybeans, at $14 a bushel, produce gross returns over $400 an acre, 50% to 100% more than a 500-pound calf. Or, say you're the absentee landowner renting to a beef rancher for $70 an acre. While not grade A land, it can grow 100-bushel corn. Which way do you go?
This isn't just nervous fretting. The fact is, Missouri is losing cows, perhaps 10% to 20% this year, says an industry fieldman.
Is there some greener grass for the beef business in this story?
Yes. The cattle business has one giant ace in the hole: grasslands. While some grasslands might switch to corn or beans, millions of acres won't -- too fragile, too wet, too dry, too shallow, too wooded. And no other meat animal can use them to the degree of cattle.
With work, those must-be-grass acres might support the cattle industry at its present size. Forage experts in Missouri say that, on average, pasture and forage lands work at about half speed, due to inefficient grazing, wrong forage species, poor fertility, and flat-out waste.
If they're right and you're average, you could run your present cow herd on maybe half the acres. Plant corn on the rest if you must, but fine-tune your forage skills and keep the cows.
You will be especially glad you did about three years down the road. We're about to see a run-up in livestock and meat prices that proportionally will rival $7 corn. When the shakeout is complete, calf prices could exceed previous highs by 50% or more -- 500-pound calves worth $1,000 right out of the pasture. And if you enhance your grassland efficiency, your costs will be lower.
It's a matter of managing your forage crops with row-crop intensity. It'll help your cattle profits immediately, and in about the year 2012, you'll be sitting in some real tall grass.