Producer Cycles
I’m Susan Allen reporting from Cashmere Washington for Open Range. By now most of you have heard that the US cattle herd is shrinking and also that beef prices are forecasted to go higher. While much of this movement in the cattle industry is cyclic I’ll be back after the break with why some industry experts believe other components might be at play. The current demand for more cattle tends to bring dreamers and schemers out of the word work but investing in cattle is not for the faint of heart. Economists point to many reasons that the US herd is at an all time low; two being less land for expansion because of competition from other crops and the high price of farm land. Another statistic impacting the industry is age demographics. The old timers don’t want to take on additional risks and grow their herds often because they don’t want the extra work load while young producers struggle to acquire enough working capital to start or grow herds. Todays higher investment costs and tight profit margins combine to create dangerous risks for young ranchers or entrepreneurs. Derrell Peel, Oklahoma State University Extension agent contends that there must be a cycle of producers as well as for the industry to grow. While the outlook at first glance appears rosy due to the growing global demand for red meat, Peel stated recently in an article for Drovers that, The market is trying to encourage increased production but so far has been unable to overcome the challenges of input market shocks; changing land use patterns; more stringent financial requirements and producer age demographics.
