Even With Higher Cattle Prices, Some Segments Still Struggling

R-CALF United Stock Growers of America, CEO Bill Bullard breaks down the economic challenges that producers face and what it could mean for the future of the cattle industry.

“We have extremely high prices because of the incredibly tight supplies, and that means the feeder cattle that would be moving into feedlots are in short supply, and so those prices have skyrocketed to never before seen prices. However, the fat cattle market is not keeping pace with the feeder cattle market. That means there's a lot of independent feeders out there that would like to fill their feed yards, but they can't pencil out a profit, nor can they hedge their purchases.”

Small to mid sized feed lots are sitting empty while Packer owned lots remain full, according to Bullard, and he warns that this trend could lead to a continued decline in independent Farmer Feeders, shrinking a market outlet for cow, calf and yearling operators. It's an unusual scenario driven by tight supplies and ongoing drought conditions.

“This tight supply isn't one that is caused exclusively by the drought, we have been reducing the size of our herd for decades, and the drought has simply exacerbated the situation. So we have got to initiate some major reforms to put this industry back on a proper course that will allow our independent livestock producers in the United States the opportunity to be profitable. And right now, even with higher prices, we're seeing some segments of our industry, the food segment is having an extremely difficult time staying in business.”