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Beef Industry In 2012 Holds Both Opportunities, Challenges

The future of the beef industry is filled with both opportunities and challenges due to the 2011 drought in the Southern Plains, high price of grains, volatility in the commodity markets and fewer dollars available for research and education.

The future of the beef industry is filled with both opportunities and challenges due to the 2011 drought in the Southern Plains, high price of grains, volatility in the commodity markets and fewer dollars available for research and education. According to Steve Swigert, Ag Consultant at the Noble Foundation, the consolidation of the industry will continue with more beef produced by fewer producers and with fewer cows. Supply chains will continue to be more and more prevalent and, in general, the beef industry will have fewer participants. We are already seeing this trend as the largest 10% of the cow-calf producers raise 54% of the cows, the largest 2% of the feedyard ownership groups feed 86% of the fed cattle and the three largest packers harvest 82% of the fed cattle.

In the second half of 2011, drought conditions have caused historic reductions in cow numbers across Oklahoma and Texas, and there is practically zero stocker grazing expected due to the lack of wheat. Even though relocation to northern grass has kept some cows in production, many went to slaughter. With Oklahoma and Texas comprising approximately 23% of the U.S. cow herd prior to the drought, a significant reduction of cow numbers in the Southern Great Plains could lead to the reduction of U.S. cow numbers to 30 million cows or less.

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