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Cowboys pour into Nashville

There are always lots of cowboy hats in Nashville, but they're even more plentiful this week.

It's the annual Cattle Industry Convention that has descended on Music City, and a record crowd is expected of over 6,000 ranchers and other industry reps. In addition to the convention, it's the annual meeting of the National Cattlemen's Beef Association, the chief sponsor of the event.

On opening day, many beef producers attended the day-long Cattlemen's College, an educational seminar with multiple meetings, and sponsored by Pfizer Animal Health. Seminar topics included farm policy, health management and alliance networking in the beef business. But most conversations here get around to one topic: Escalating feed costs and its effect on profits.

Mike Kastens, a producer from southeast Missouri, well illustrates what has happened in the last year. From his cow operation, he retains ownership of his steer calves when they are fed out in a Kansas feedyard. Since last summer, his daily bill per head from the feedyard has increased from $1.55 to $2.65.

"The yardage [non-feed costs] haven't changed," he said. "The runup is just in feed costs."

The steers are in the feedlot for 160 to 170 days on average, so the extra $1.10 per head per day has added almost $200 per head to the cost to finish each calf. The cost of gain per pound on those cattle has gone from the high 50 cents to over 80 cents. Those cattle may still make money, Kasten said, because feeder calves have gone down accordingly, from $1.30 a pound to less than $1.

"I think people are really going to feel the effects of high feed costs as we go through the coming year," said Kasten.

Paul Davis is a nutritionist for the Tennessee Farmers Co-op. He helps member producers build cattle rations from their own home-grown feedstuffs or purchased ingredients. If they buy corn from the co-op, the price today is very close to $4 per bushel.

"We have access to corn gluten [byproduct of processing for the corn sweetener market]", he said. "But unfortunately with alternatives to corn, they go up in price along with corn. Gluten that was $70 a ton a few months ago is $95 now."

And, he said, they are limited on how much gluten they can include in a ration to 20% of the total, up to a maximum of four pounds per head per day. Right now, beef producers in this part of the country don't have access to the distiller's grains from ethanol plants in the Midwest. "We look forward to the day we can get it," he said.

One of Davis' customers is Russell Harkai, the young manager of TapRoot Farms in Franklin, Tennessee, 30 miles south of Nashville. With 100 cows, they feed out 30 to 35 steers each year to sell to the local freezer market.

"We're fortunate to have a good market for that beef," Harkai said. "We're in an affluent area where people will pay pretty good for a natural product, and that they know how it was raised."

They sell steers for $1.50 a pound liveweight, with mitigates some of the effects of high priced feed. Still, they are actively looking for lower-priced feed alternatives.

In one session of the Cattlemen's College, producers were told of the importance of becoming involved in beef marketing alliances. In those arrangements, cattle of similar genetics or feeding practices or geography are pooled or marketed through retail for premium prices. The most noteworthy example of this is Certified Angus Beef, but other programs may cater to the export market, or the natural beef market.

"Today, 47% of all beef is either house-branded [by the retailer] or packer-branded," said Bill Mies of the Global Beef Group of Elanco Animal Health. "And that share is growing."

It means there are premiums that beef producers can attain if their cattle fit the branded market. But sometimes, meeting the standards comes at a cost, like with barring hormones and scaling back crossbreeding.

"What you have to do is decide what are your costs to achieve a market segment, then if it is worth doing it," said Mies. "In the future, we'll focus less on the actual prices paid for cattle, and more on profits."

There are always lots of cowboy hats in Nashville, but they're even more plentiful this week.

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