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When It Comes to Beef's Future, Think Global

Think big. That's what Gregg Doud, chief economist of the National Cattlemen's Beef Association, told beef producers at a Cattlemen's College seminar during the 2010 Cattle Industry Convention in San Antonio.

"We're not a one-nation world anymore, and beef producers have to come to grips with that," says Doud. "We have to start thinking about the U.K., Canada, China, Japan, South Korea, Mexico, and Australia. All for different reasons, but they all have an impact on beef."

Yesiree. Shrinking beef demand in the U.S. is pushing the cattle herd to lower and lower inventories, all to find a supply that will produce sustainable profits. We're not quite there yet, but we might be in a couple of years when we shrink the herd to 1950 levels. It appears the only way we will grow the beef industry is by exporting more product.

That's another problem, as we're not alone in trying to figure out how to find beef profits. Australian beef prices are down 11% in the last year, making their products more competitive in international markets.

Brazil is the one country in the world with a growing beef herd. As the world economy rebounds, they'll have product to sell.

Russia was the number two importer of world beef last year (most from Australia), with much of it actually being funneled through South Korea. Meanwhile, the Canadians and Mexicans are not happy with U.S. country of origin labels. They may retaliate.

Is it any wonder that cattle producers are being told to think globally?
In another session, John Lundeen, NCBA market researcher, said the U.S. recession may be in decline, but it is still greatly impacting consumer spending.

"In grocery store surveys, 82% of shoppers say they are still trying to stretch their dollars, and 28% are cutting back on beef," he says. "Most consumers think this recession will go on for a while -- maybe another three years."

In a very interesting production session at the Cattle Convention, experts tackled this question: What's the best mature cow size?

With more exotics, cheap feed, and packer incentives, cattle have gotten bigger over the years. The average mama cow size has followed along.

Now with feed more expensive (relative to the last 40 years), do we need smaller, more efficient cows?

Texas A&M specialists looked at every study ever done that might have some relevance to the question. They say that, in theory at least, bigger animals should have some advantage in that they use energy more efficiently. For instance, 100 cows that weigh 1,000 pounds each are equal to 87 cows that weigh 1,200 pounds in terms of maintenance feed requirements. That means the bigger cows have 20% more weight but only take 13% more feed.

But their bottom line is, after looking at all the data, cow size doesn't have much to do with profitability, provided the cows are within certain guard rails (1,000 pounds and 1,400 pounds). If you have cows that work for you and your market, stick with them.

Says Jen Johnson of Texas A&M, "The industry can absorb all sizes. We don't need better cow sizes for our managers; we need better managers for our cows."

For years, cow-calf producers have been encouraged to retain ownership of calves through the feedlot. "We've promoted it as the gold standard of producing cattle," says Barry Dunn, speaking at the Cattle Convention. "It's cutting out the middleman and capturing profits of other segments of the industry."

But despite that, he says, only 20% of producers do it, and the number is dropping.

Dunn believes the other 80% (those who don't retain ownership) have rational reasons that aren't widely discussed. Here's his list:

  • Debt increases with retained ownership.
  • Cash flow problems mount.
  • There's loss of flexibility and control of your own animals.
  • There's increased risk with owning cattle longer.
  • There are lost opportunities to sell and merchandise calves.

Think big. That's what Gregg Doud, chief economist of the National Cattlemen's Beef Association, told beef producers at a Cattlemen's College seminar during the 2010 Cattle Industry Convention in San Antonio.

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