When anxious bull customers call on Bridgewater, IA cattleman Dave Nichols, he's quick to share his optimism: cow efficiency, domestic demand and export strength.
He uses logical perspective to diffuse short-term concerns.
“From the time you turn a bull out to the time that (resulting) calf is ready for slaughter is two years,” Nichols says. “So there's never any short-term solutions to the beef problem; they're all intermediate or long-term.”
His optimism is based on the cow that will be bred this spring. However, today's realities are based on what the operating environment was a year or two ago — a shrinking cowherd and increasing commodity prices.
A dreamy plateau at $7 corn, $15 beans, $10 wheat and $1 fats encouraged producers to turn pasture into cropland — a mistake Nichols believes producers will regret because of high input and interest costs. This spring he'll spend over $100/acre for seed corn.
Given those factors, “We're going to see that the cow is still the best, most efficient use of marginal lands.”
Despite a return to pasture, Nichols doesn't forecast an increase of cowherd numbers. Mimicking the dairy industry, whose cow numbers have been stagnant since the 1950s, beef will strive to be more productive. “We're going to produce more beef every year through the use of genetics, herd health and genetic selection via DNA technology,” Nichols says, anticipating feed efficiency will make a big impact.
Producing more beef with a smaller factory will also put an emphasis on innovation and carcass utilization at the packing level. The reality today is current feedlot utilization between 60-70% and excess packing capacity.
Another bright spot Nichols sees is sustained domestic demand for beef. “I still have a 20-minute wait when I go eat at a steakhouse,” Nichols says. People love the taste of beef and will seek it out on special occasions; thanks to the beef checkoff, consumers will continue to eat it at home.
Lastly, Nichols firmly believes America is the most efficient beef producer in the world and that export markets will trend back up. In his most recent newsletter, Nichols points out that during the global financial panic, every major currency in the world dropped except for two: the Chinese yuan and the American dollar — both of which have had a significant increase in value.
“The world's smart money is betting on America, and so am I,” Nichols wrote. More to the point, he's betting on America's beef industry.