"A Catch-22"
North of Parnell, MO, in Worth County, where the tumble of the hills grows too steep for row crops, Deb Thummel has raised Black Angus yearlings on a family farm her whole life. Despite decades in the industry, speaking one evening during this fall’s calving season, Thummel said it’s been a remarkable year for cattle farmers; it’s the prices.
Years of drought and economic factors caused many ranchers to shrink their operations, and the US cattle herd is at its smallest size in eight decades. As supply has contracted, consumer demand is holding steady, and both beef and cattle are getting top dollar.
The prices, said Thummel, “have gotten to a place where it presents the question: ‘Gosh, with these high prices do you retain heifers, or do you go ahead and sell your heifers because I’m older and I’m tired and it’s a good time to be done?’
“It’s a Catch-22,” Thummel said.
Wesley Tucker, a field specialist in agricultural business with the University of Missouri Extension said producers are getting “are record prices that nobody believed we could possibly see.”
“Everyone, when they go to sell their calves, has a smile on their face when they pick up the check,” he said, “but the question that everyone wants to know is how long these prices are going to last.”
The current prices incentive farmers to keep selling their cows and bring in some profit after years of economic hardship. But if the economy the industry will need more cows to bring beef prices down.
“The consumer side is where the weakness for beef prices will come from, at least in the near future,” said Bill Brooks, who teaches agricultural business at Northwest Missouri State University. If family budgets tighten, consumers will switch to a cheaper meat.
“We have seen that depending on the socio-economic class we’re talking about, but in general for the middle class and up, beef is still the thing,” he said.
As the economy appears on edge, it is unclear how long demand will hold, and that question has direct impacts for the choice facing farmers: sell or grow.
One issue complicating the picture is the timeline involved. “It takes multiple years from when a heifer is selected and kept as part of the herd before she produces a calf that enters the food chain,” said Tucker. Farmers are forced to guess what the economy will look like in two years’ time. On top of that, holding back a heifer to produce more cows, rather than sending her to slaughterhouse, will reduce beef supply even further in the short term.
So, Tucker said, if farmers hold back heifers on a large scale “we could even see prices go higher.”
An industry of small farms
Each beef producer faces the “Catch-22” for their own operations. Unique within the agriculture industry, cattle farming remains dominated by small, independent producers. The economics of row cropping are partially set by government subsidies and commodity pricing; commercial pork, chicken and dairy operations, meanwhile, have consolidated under corporate ownership.
Beef, said Thummel, “is the last frontier” when it comes to corporate consolidation and government intervention. “I’m not saying any of that is bad, but beef has been the last one because of its high capital, its high labor, its high land need,” she said.
The independence of cattle farmers is a point of pride for the industry and the prospect of government intervention is largely unwelcome. That was evidenced in October when the Trump Administration, seemingly caught on to headlines about the high cost of beef, said it would broker a trade deal with Argentina. The deal will increase beef imports, and, Trump said, relieve consumers.
Reaction in the industry was immediate. Tommy Runyan, who runs the Maryville Livestock Auction in Maryville, MO, and has been buying and selling cattle for 33 years, said in the last two months he had seen farmers “starting to buy some good replacement heifers,” the sort of investment animal which would grow a herd for years to come.
As soon as Trump announced his intentions to broker a trade deal, Runyan said interest in those animals tanked. Whether or not the plan materializes, “that kind of rhetoric will slow down what little herd expansion people were feeling good about,” he said.
It comes back to the independent spirit of the industry.
“We’re just not like the dairy farmers and the [corn and soybean] farmers that get all those government subsidies because the cattle guys just don’t get it. And we don’t want it. So that’s why you get a quick reaction when he says something like that. Or any president, any government,” Runyan said.
Looking back, and ahead
Ten years ago, the industry was in a similar position: Low herds, high prices.
“In 2014 prices were fantastic and what did producers do?” Tucker said, “they turned around and they grew too fast. It was blazingly fast. So, I think this cattle cycle will be very different than it was ten years ago.”
From watching the industry, Brooks concurred. “We maybe are getting to the point where we’ve bottomed out and are seeing slight upward growth,” he said. “But it’s not to a rate that we’re going to see the herd grow by leaps or bounds.”
For her part, Thummel said she’s happy with the size of her herd and has no plans for rapid expansion. She’s thinking more about winding down her career than ramping it up. Thummel noted the size of cattle going to slaughter has increased significantly over the years, so more meat is now produced from each cow.
Age could be a contributing for many farmers. Runyan, at 55, recognized he’s “young in this industry,” and with high investment costs, hard work, and little promise of profit in the typical year, few young people are entering. “That’s what worries me,” he said.
Dale Buhman, a rancher in Clarksdale, MO, spoke similarly. “My age is at a point where I don’t know if I want to grow [my herd] much larger. If it was five or ten years ago, I wouldn’t hesitate a bit. I’d probably hold back as many heifers as I could,” he said.
But, Buhman added, he’s not done just yet.
“I still enjoy it,” he said. “There are times when its 30 degrees out and I’m walking in the mud and it’s not very fun.”
“But right now,” he added, “with these prices, it makes you swallow all of that a little better.”
