Industry At A Glance: Cattle regain top billing in farm gate receipts

After taking an ethanol bath, cattle receipts have regained top billing.

Nevil Speer

June 29, 2015

2 Min Read
Industry At A Glance: Cattle regain top billing in farm gate receipts

As a category, cattle and calves historically represented about 20% of total farm gate receipts – the category historically has been the single largest annual contributor to farm receipts. Moreover, in recent history (2000 to 2006), from a direct perspective, receipts for cattle and calves exceeded the combined value of corn and oil crops by an average of approximately $10 billion annually. 

That balance shifted for the first time in 2007, corresponding to the introduction of the ethanol mandate, as the combined value of corn and oil crops surpassed cattle and calves by more than $8 billion. The cattle deficit peaked at $57 billion in 2012 – the turnaround represents nearly a $70 billion value reversal versus 2005, when cattle receipts exceeded combined corn and oil crop revenue by more than $12 billion.   

annual farm gate reciepts

USDA is forecasting a new record in 2015 for annual cattle farm gate receipts approaching $86 billion.  Meanwhile, corn and oil crop receipts are forecast to be $46.6 billion and $38.4 billion, respectively. If those predictions turn out to be accurate, it will be the first time in eight years that cattle receipts beat combined corn and oil crop receipts.  

From a broader perspective, that’s a significant shift in the relative contribution of cash receipts to farm revenue. Where do you see these trends headed in the future? Will cattle regain its longer-running advantage relative to corn and oil crops in the years to come? Or will 2015 reflect more of a new normal in which cattle receipts are roughly equivalent to combined corn and oil crops receipts? What impact might this have on diversified operations and subsequent investment in the beef industry’s infrastructure going forward? 

Leave your thoughts in the comment section below. 

Nevil Speer is based in Bowling Green, Ky., and serves as vice president of U.S. operations for AgriClear, Inc. – a wholly-owned subsidiary of TMX Group Limited.  The views and opinions of the author expressed herein do not necessarily state or reflect those of the TMX Group Limited and Natural Gas Exchange Inc.

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About the Author

Nevil Speer

Nevil Speer serves as an industry consultant and is based in Bowling Green, KY.

Nevil Speer has extensive experience and involvement with the livestock and food industry including various service and consultation projects spanning such issues as market competition, business and economic implications of agroterrorism, animal identification, assessment of price risk and market volatility on the producer segment, and usage of antibiotics in animal agriculture.
 
Dr. Speer writes about many aspects regarding agriculture and the food industry with regular contribution to BEEF and Feedstuffs.  He’s also written several influential industry white papers dealing with issues such as changing business dynamics in the beef complex, producer decision-making, and country-of-origin labeling.
 
He serves as a member of the Board of Directors for the National Institute for Animal Agriculture.
 
Dr. Speer holds both a PhD in Animal Science and a Master’s degree in Business Administration.

Contact him at [email protected].

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