Export figures recently released by USDA show U.S. beef exports are beginning the decade with new records, according to the U.S. Meat Export Federation (USMEF).
"Although U.S. prices were relatively high in 2000, U.S. beef exports rose 10 percent in volume and 11 percent in value over 1999, a remarkable industry achievement," says Philip Seng, USMEF president and chief executive officer.
The U.S. beef industry exported 1,225,344 metric tons (mt) of beef and beef variety meats in 2000, topping 1999 by 10 percentage points. U.S. beef exports were worth more than $3.5 billion in 2000, an 11 percent increase over 1999.
Among Japanese retailers and foodservice companies, U.S. chilled beef products have steadily gained a reputation for excellent palatability, Seng says. "U.S. frozen beef is in demand for thin meats for the burgeoning beef bowl and Korean-style barbecue markets."
Seng also points out that: "All the leading markets for U.S. beef exports purchased more U.S. beef products in 2000 than in 1999. Consumption is rising, but our exports are rising at a higher rate. The world has recovered from the 1998 currency crisis, and most developing countries had a positive growth rate, although many of the world’s economies remain fragile. Beef production is declining in countries without a large forage basis. Beef and pork production is easier in large, less densely populated countries such as the United States."
For more about beef exports, check out the following just-food.com stories.
A fight over Western water and the laws based on the prior appropriation and beneficial use doctrines has been settled in a recent decision of the Supreme Court of Idaho.
The court reversed an earlier ruling that would have allowed the federal government to set aside "federal reserved water rights" when it created wilderness areas in Idaho. The case was brought by the small towns of Salmon and Challis, ID, through the Mountain States Legal Foundation (MSLF) to provide water for their day-to-day needs.
"Had the efforts of the Clinton Administration to assert federal rights over Idaho’s water been successful, the two central Idaho communities would have not have been able to meet the water needs of their residents and visitors," says William Perry Pendley, MSLF chief legal officer.
While this case does not necessarily set widespread precedence, it does put the federal government on notice that it cannot arbitrarily lay claims to water appropriated under decades-old water law and more than a century of legal doctrine.
The Idaho court agreed with MSLF that there is no language in the Wilderness Act of 1964 that there must be federal reserved water rights to fulfill the purposes of the act. While the Clinton Administration had intended to fight this water battle through the U.S. Supreme Court, there’s no indication the Bush Administration will proceed with the case.
For more information on this case and other legal battles affecting water and private property rights, visit the MSLF Web site at www.mountainstatslegal.com.
Former Mountain States Legal Foundation (MSLF) attorney Gale Norton was chosen by President George W. Bush as the first female Secretary of Interior. Norton, who worked for MSLF from 1979-1985, follows in the footsteps of former MSLF president James G. Watt, who became Secretary of Interior in 1981.
Norton later distinguished herself as an attorney for the USDA and Interior Department before being elected Colorado’s attorney general in 1990. She had a private law practice in Denver when she was picked to head the Interior Department.
The National Cattlemen's Beef Association has compiled BSE information – including a timeline of actions to prevent BSE in the U.S. and a world map of documented BSE cases in cattle. To download this document, click here.
Additional information about BSE is available at the following Web sites:
Animal health officials in Texas are watching with concern the relentless westward march of foot-and-mouth disease (FMD), the most recent outbreak of which was confirmed in late February at several sites in England, where livestock operations already have been financially ravaged by the brain-wasting disease, BSE (bovine spongiform encephalopathy) and outbreaks of the viral infection, hog cholera.
Additional cases of FMD have been detected among cattle, sheep and swine in Great Britain (encompassing England, Wales and Scotland). In addition to the loss of thousands of animals, British farmers may lose as much as $73 million just from the week-long ban (which could be extended) on the transport and marketing of livestock susceptible to the disease.
FMD, which has not been seen in the U.S. since l929, is caused by a highly infectious virus that can cause death or disabling blisters and sores in and around the mouth, muzzle, teats and feet of livestock with cloven or "split" hooves.
Cattle, pigs, sheep, goats and deer are highly susceptible, and can exhibit clinical disease signs after an incubation period of only three to eight days. To stop the spread of infection, affected or exposed animals must be slaughtered, then burned or buried. Premises and equipment must be disinfected to prevent disease spread.
For a map showing FMD outbreaks worldwide, click here.
Cyclically strong cattle prices are forecast for the cattle feeding industry the next two years. Just how strong those prices will be depends on two major factors.
Shrinking supplies are a key. In fact, year-to-year declines in cattle slaughter and beef production are expected throughout 2001 and 2002.
Producers are expected to start expanding herds in 2001. The aggressiveness of that expansion will determine how sharply slaughter supplies decline next year and the impact on slaughter and feeder cattle prices.
Growth in beef demand during 1999 and 2000 was tied to strength in the U.S. economy. Another likely factor was improving consumer attitudes about beef, though it’s not clear just how large a role this played in the beef demand rebound.
Evidence is growing that the U.S. economy will continue to slow during 2001. Since part of the beef demand improvement was tied to strong economic growth, it could cause beef demand growth to slow down.
As a result, look for domestic beef demand to keep on growing, but at a slower pace than in either 1999 or 2000.
Rising U.S. prices over the next year mean importers will shift some purchases from the U.S. to other countries and to competing meats, such as pork and chicken.
Beef exports could remain soft throughout much of 2001. That means U.S. beef and cattle prices will not receive much support from export growth.
U.S. beef import tonnage will also be influenced by developments overseas. The worldwide economy and BSE problems in Europe and other regions may redirect more beef to the U.S., especially from the Southern Hemisphere.
Competing meats and poultry supplies will likely be more important over the next two years than in 2000. Record U.S. pork production is forecast in 2001 (19.7 billion lbs., a 3.6% increase over 2000). As a result, pork prices will become increasingly price competitive with beef.
Broiler output, meanwhile, will likely increase only modestly in 2001, but poultry prices will be increasingly attractive given rising beef prices.
Feed grain prices pose a risk to calf and yearling prices. Low feed grain prices were bid into calf and yearling prices in 2000. Any negative impacts will emerge with the new crop year.
At least until the 2001 corn is planted, feeder cattle prices will remain strong. Still, corn prices may have already posted their lows for the next two years and could move higher even without a significant crop failure.
From January-August 2000, cattle feeders placed more cattle on feed than in 1999, partly by borrowing against future supplies of feeder cattle. As a result, supplies of heavyweight feeders tightened up in fall 2000.
Feeder cattle supplies remained tight the first two months of 2001. As a result, the odds are high placements will fall below a year ago.
Reductions in placements on feed will lead to a gradual tightening of fed cattle supplies this coming winter and next spring.
Some of the year-to-year decline in slaughter will likely be made up for by heavier average slaughter weights.
For the year, U.S. beef production is forecast to be 2-3% below 2000. As a result, average fed cattle prices could reach the high $70s, possibly even $80s, in the first half of 2001. For the year, fed cattle prices are expected to average in the low to mid $70s/cwt. Look for yearling steer (700-800 lbs.) prices to be mostly in the high $80s to low $90s/cwt.
Spring calf prices are expected to exceed the highs established in spring 2000 when the mid-point of the weekly price range at Dodge City topped out near $103/cwt.
For calendar 2001, yearling steers (700-800 lbs.) in the Southern Plains may average near $90/cwt., slightly above 2000. Steer calf prices could average in the high $90s, even as high as $100. Overall, a 1-4% year-to-year increase in yearling and calf prices is forecast.
The stage for 2002 cattle prices will be set by developments in 2001. Preliminary forecasts suggest another modest decline (1-3%) in 2002 U.S. beef production, larger pork production through at least the first half of 2002 and continued modest to trend growth in poultry.
Without reversal of recent beef demand trends or some other shock, 2002 fed cattle prices will likely post a year-to-year gain. Higher fed cattle prices, a normal corn crop and tighter feeder supplies should provide modest increases in calf and yearling prices, with 2002 bringing the highest calf prices of the current price cycle.
- Compiled by Clint Peck from information of the Livestock Marketing Information Center, Lakewood, CO.
We all know the cattle market runs in cycles. One year, calves may be cheap, so you have to sell more calves to make more money. In a year of high prices, fewer head return more money, giving you the chance to retain some heifers to rebuild or expand your herd.
Riding those waves of the market is a lot like living paycheck to paycheck. It's also not the most profitable strategy for retaining heifers, according to an Iowa State University (ISU) study. Instead, using an average dollar value to determine how many heifers to keep each year could be a better deal, the ISU study found.
It's a tactic patterned after the investment strategy of dollar-cost averaging. A term you've likely heard your investment banker use. Simply put, dollar-cost averaging means you invest a certain amount of money regularly, regardless of high or low prices.
When dollar-cost averaging with heifers, you'll be buying more heifers when the price is low and fewer head when the price is high. Over time, you rebuild your herd at a lower cost/head and generate more profits.
“It follows the principle of ‘buy low, sell high,’” says John Lawrence, an ISU Extension ag economist. “You are trying to be counter-cyclical. You'll be doing the opposite of everyone else.”
Lawrence led the ISU study that compared the profitability of four heifer retention strategies over a 30-year period (1970 to 1999). Researchers used a starting inventory of 82 bred cows, 18 bred first calf heifers, 21 virgin heifers being developed and five bulls. They then retained heifers based on:
Steady size (SS): Producer retains the same number of heifers each fall to maintain the same size cowherd.
Cash flow (CF): This producer's objective is to maintain the same cash flow each year. All steer calves, cull cows and bulls are sold. Next, enough heifers are sold to reach the cash flow objective. Any remaining heifers are retained for the breeding herd. If there aren't enough heifers to achieve the cash flow objective, additional cows are sold.
Dollar-cost averaging (DCA): The producer retains the same dollar value of heifers each fall. As mentioned above, when calf prices are low, the producer retains a higher number of heifers. For this study, the annual amount invested in heifers was equal to the average SS investment in heifers, but the timing of the investment was different.
Rolling average value (RAV): Producer retains the 10-year average value of heifers each fall. For this study, the 10-year average value was equal to 21 head of heifers — the same number of head retained yearly in the SS strategy.
At the end of the study, producers using the DCA and RAV heifer retention strategies had more money in their pocket than producers trying to maintain a constant herd size or a constant cash flow. (see Table 1.)
Heifer retention strategies aimed to meet a constant yearly cash flow had the lowest average revenue.
Producers retaining the same number of heifers annually did see increased revenue, but it didn't grow as fast as the DCA and RAV strategies, Lawrence says.
“Looking at annual profitability over the long haul, DCA and RAV came out on top,” Lawrence says.
He credits this to two factors. First, when heifers are higher priced you are selling more of them and thus getting higher returns. Second, the higher number of low-cost heifers comes into production during the higher price time of the cycle; thus, you sell more calves at the higher prices.
Lawrence says producers purchasing bred or open females should follow the DCA or RVA concept, too. “Prices for bred cows and heifers also follow the market's ups and downs, so buy more when they are cheap,” he says.
“I agree that the ‘averaging’ concept will work,” says Harlan Hughes, a professor emeritus of agricultural economics at North Dakota State University.
He adds, “I even suggest producers should cull deep on the downward side of the cycle so they can greatly reduce culling on the upside of the beef price cycle and also sell every calf born.”
By selling more calves when prices are high, Hughes says producers will build a financial reserve to get through the next down time.
It's a strategy Lawrence and Hughes say producers should act on right now.
“With heifers as high as they are now, producers should be selling now,” Lawrence says.
Hughes predicts prices will dip later this decade. “My current projections are for a down time to hit in 2007,” he says.
One major point to consider if you plan to increase production in the profitable years and reduce production in the unprofitable years is your land base.
The DCA and RAV method will vary your herd size considerably over the cycle, Lawrence points out. That means it's best suited to a flexible land base that can be increased or decreased at the going rental rate. Or, for producers with a fixed land base, a stocker enterprise — or some other option to utilize the forage — may be necessary.
“A stocker enterprise serves as a shock absorber for excess forages as the size of the cowherd fluctuates based on investment decisions,” Lawrence says.
If changing your land base isn't an option, Lawrence suggests staying with the steady size strategy. It's also the simplest to implement, he adds.
A final point to ponder: Lawrence says producers who implement the DCA or RAV strategies must be prepared financially to weather wider swings in cash flow.
“This is for people who can manage resources (land, forages) and capital to do what others aren't or can't,” Lawrence concludes.
If you plan to implement a dollar-cost average approach to your heifer retention program, you'll need to determine how many head to keep each year.
To decide the dollar value to invest annually, determine the number and weight of heifers you would retain under the steady size system then multiply by long-run average heifer price.
For example, if I plan to retain 20 head of 500-lb. heifers each year and the 20-year average October heifer price is 73¢/lb., I would invest 500 × 73¢ × 20 = $7,300/year. If 500-lb. heifers are selling at 95¢/lb. in the fall ($475/head), I would keep $7,3004475 = 15 head. The year that heifers are 60¢/lb. ($300/head), I would keep $7,3004300 = 24 head.
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The issue of the environment had a great impact on the outcome of the 2000 elections. Roper Starch Worldwide (RSW) reported environmental concern in 2000 was the highest since the company began measuring this concern in 1982.
In the 2000 elections, many who view the environment as an important reason to pick a leader cast their votes for Ralph Nader. It happened in enough states with close elections to cost Al Gore the election. But is it a bellwether issue for ranching? Will it be an issue in the next few years in Washington, D.C.?
With a Congress closely divided among Republicans and Democrats, and a president elected without the clear mandate of a popular vote, it's unlikely much will come out of Washington. America is so weary of the political process that, other than cutting taxes, no one is asking Washington to fix much.
With President Bush hailing from a state that places tremendous emphasis on private land ownership and ranching — and Vice President Dick Cheney coming from Wyoming, a state dependent on public lands ranching — it's unlikely the White House will propose anything detrimental to ranching. Furthermore, Cheney now has the tie-breaking vote in the Senate.
Despite high levels of environmental concern, the majority of Americans (62%) believe ranching should be protected by allowing grazing on federal lands. These findings are documented in an RSW “Green Gauge 2000” study on environmental attitudes and behaviors.
Public support for ranching may relate to concern about open space. The study found that seven in 10 Americans view the loss of farms and ranches to the development of subdivisions and malls as a serious personal issue. Only 25% don't agree. Fifty-five percent of Americans disagree that “reducing grazing on public lands to improve environmental conditions, even if it may cause ranchers to go out of business” is appropriate.
But while the new administration and Congress do not appear to be a strong threat to the ranching industry, it will remain critical to the industry to have lots of friends in many places.
Numerous lawsuits have been filed throughout the West by groups trying to reduce (or end) cattle grazing on federal lands. Looking further ahead, the federal mid-term elections loom in 2002. The U.S. House and Senate could swing to the Democrats, which isn't usually advantageous to ranching interests.
Like good business people, cattlemen should use the good times to build and maintain coalitions. We'll need it for the bad times that always seem to lurk around the corner.
As senior vice president and global director of the Reputation Laboratory at Ketchum Public Relations in New York, David Rockland analyzes public opinion and corporate image for a number of agricultural clients.
There's more money made or lost in forage at seeding time than any other time of the year. That's because decisions made at seeding affect crop performance in year one and for the lifetime of the crop, says Surya Acharya, forage breeding researcher at the Lethbridge Research Centre.
Acharya provides these six “golden rules of forage establishment” to ensure better forage stands and productivity. For alfalfa, up to two tons of dry matter are achievable in the first year (three tons under irrigation) by applying these rules, he says.
Choose the right crop to get the best yield. Look for the correct forage species and variety for the purpose and local conditions. For maximum hay production, pick a species with good yield, even if it has a shorter life span. For the best economic return, choose varieties that yield well for three to four years. For a long-term stand, select for good winter hardiness and disease resistance.
Under irrigation, it's important that species have high levels of disease resistance. For pasture, look for grazing tolerance. Plants with tolerance to grazing are very different from those best for hay production.
Prepare the seed. Some forage crop seed requires preparation through scarification or inoculation before planting. Forage crops such as alfalfa or cicer milkvetch have hard seeds with waxy layers that do not absorb water well.
To ensure successful establishment, they have to be scarified. Otherwise they can sit in the soil for three years without germinating because the seed coat is so hard,” says Acharya. Scarification may cost more, but it's worth it, he advises, even if it costs up to 10-20% more.
Legumes fix their own nitrogen but, to be effective, legume seeds should be inoculated with nitrogen-fixing bacteria. Treated seed will establish better and produce healthier plants.
Seed early. “Research clearly demonstrates that the earlier you seed in spring, the better the stand,” says Acharya. “Seeding cereal crops first and forage last is not economically viable. If forage is seeded early, you can potentially get three tons of alfalfa (dry matter) the first year. No wheat or barley crop can compensate for that.”
Seed pure forage stands. Don't plant cereal or canola as a companion or “nurse” crop, says Acharya. Research shows companion crops vigorously compete with the forage crop for valuable nutrients, water and sunlight.
“Even after four or five years, the effect of the companion crop shows up in reduced yield,” he says. “The increased forage brings in more income than that from the companion crop.”
Seed shallow. For best results, plant forage seeds at a 1½2-in. depth. Because most forage seeds are small, there's not much energy in those seeds to poke through deep profiles of soil. On irrigated land, irrigate the seedbed three to four days before seeding. On dry land, direct-seed or harrow the field, then cover and pack the seed well.
Mow the crop for weed control. Mow the forage crop when the seedlings are about 1-ft. high. This reduces competition from annual weeds and helps the crop stool out and quickly cover the ground. If weeds are mowed, herbicides should be unnecessary.
For more information contact Surya Acharya, Lethbridge Research Centre at 403/317-2277, or visit their Web site at http://res2.agr.ca/lethbridge.
Japanese brome, a weedy annual grass, sometimes makes up as much as 40% of the available spring forage in the Northern Great Plains and is a nutritious, palatable forage for cattle. However, using it as feed for cattle can be very unpredictable.
Annual brome grasses produce anywhere from 20-600 lbs. of forage/acre, and studies show it provides adequate nutrition only for a short window of time. But, grazing animals on brome-infested pastures too early and too long can hinder the development of perennial grasses, the mainstay of livestock nutrition the rest of the spring and summer.
But, now Agricultural Research Service (ARS) researchers are developing a tool to help ranchers make the most of Japanese brome without depleting native grasses.
Besides studying how brome affects the production of preferred perennial grasses, the researchers are measuring soil moisture, soil nitrogen and precipitation to determine how well these factors predict brome productivity.
They will use this information to produce a decision-support system to help ranchers plan grazing strategies based on each year's environmental conditions.
For more information contact Marshall R. Haferkamp, ARS Fork Keogh Livestock and Range Research Laboratory, Miles City, MT, at 406/432-8211 or e-mail marshall@ larrl.ars.usda.gov.
Ranchers trying to re-establish native shrubs on rangeland stripped by fire may get some help from a mini-greenhouse and windbreak.
ARS researchers designed small, plastic tubes containing a soil mixture and a seedling grown from seed in the greenhouse for two weeks.
Made of ½-in.-diameter, scored, clear plastic, the tube is pushed into the ground, with up to 3 in. remaining above ground, depending on the length and configuration of the tube being used.
The tubes serve as tiny greenhouses, protecting seedlings from wind, sandstorms and rodents. This allows the seedling to be field-planted sooner than traditional transplants, and it cuts greenhouse costs to make it more competitive with direct seeding costs.
In experimental plantings, the tubes achieved 70% seedling survival and proved effective with sagebrush, winterfat, bitterbrush, four-wing saltbush and prairie flowers. Tubes decompose in two to three years.
Bitterroot Restoration Inc. in Corvallis, MT, has established a cooperative agreement to develop a commercial revegetation system using the tubes.
For more information, contact D. Terrance Booth, ARS High Plains Grassland Research Station, Cheyenne, WY, at 307/772-2433, or e-mail firstname.lastname@example.org.
“Research Roundup” is compiled by Diana Barto at 952/851-4678 or email@example.com.