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Protect Your Herd From High-Sulfate Water

Connee Quinn’s terse note to herself from the summer 2002 is as searing as the drought that withered that year’s shortgrass prairie: “Hot and dry,” she wrote. “Lost 12 head.”

It wasn’t the first time she and her husband, Reuben, had learned how devastating the Great Plains environment can be on livestock. It was worse in 1998, when 15 head died of mysterious causes, while others got sick.

For the Quinns, who ranch in southwestern South Dakota and live near Chadron, NE, it was like a multiple-choice test question with no good answers. “The symptoms of the cows that were still alive indicated some type of central nervous disorder,” Connee says. At first they suspected poisonous plants. Their veterinarian’s early suggestion was selenium poisoning, a good guess since selenium poisoning is an ongoing problem in the area.

But the final answer to a question with life and death consequences was sulfates in the water.

With the summer 2008 shaping up to be hot and dry for parts of the nation’s rangeland, sulfate loads in livestock water may again be a concern. Couple that with the recent use of distillers grains and other corn byproducts as a feed supplement, which can also be high in sulfur, and the question becomes even more critical – how much sulfate in the water is too much for cattle?

Research results vary slightly, but Ted McCollum, Texas AgriLife Extension beef specialist in Amarillo, says generally, sulfate levels below 600 parts per million (ppm) is considered good, safe drinking water. Concentrations up to 1,000 ppm begin to move you into marginal water quality. “As you move up from that, you can potentially start having various types of problems,” McCollum says.

Those problems are substantial:

  • Several South Dakota State University (SDSU) studies show water sulfate levels of about 3,000 ppm or greater reduced performance and health of growing steers in drylot during summer months.

  • Steers grazing native rangeland had lower gains when supplied water with sulfate levels of about 4,000 ppm or greater.

  • In studies involving cow-calf pairs, water averaging 2,600 ppm sulfates resulted in little impact on calf growth or milk production, but did result in small reductions in cow bodyweight and body condition scores.

  • In another SDSU study on cow-calf pairs, animals on high-sulfate water (averaging 3,045 ppm sulfates) had lower 12-hour milk production in August (7 lbs. vs. 9 lbs. for low-sulfate water). Calf average daily gain tended to be higher for low-sulfate treatment groups (2.56 lbs./day compared with 2.45 lbs./day). A greater percentage of cows on low-sulfate water became pregnant during the first 25 days of the breeding season (81% compared with 64%) and final pregnancy rates were higher for the low-sulfate group (92% to 83%).

  • A three-year SDSU study found no differences in the incidence of polioencephalomalacia (PEM) between steers on high-sulfate water receiving supplemental thiamin, and those on high-sulfate water receiving no thiamin supplement. Thiamin injections are often used to treat sulfate-induced PEM in beef cattle, but the SDSU study was looking at what role supplemental thiamin might have on PEM.
Bottom line. “Usually around 3,000 to 4,000 ppm of sulfates in your water, expect some bad consequences,” McCollum says. Those consequences may include unexplained reproductive problems and health problems, reduced gain and, at the extreme, unexplained death loss.

Minnesota research found sulfate levels of 1,000-2,000 ppm may result in diarrhea and limit copper availability. Levels from 2,000-3,000 ppm may cause a substantial reduction in copper availability. That’s important in herd health, McCollum says, as the effects of mineral deficiency come to the fore.

One of those effects is a severely compromised immune system, according to John Peirce, veterinarian with AzTx Cattle Co. in Hereford, TX, a cattle feeding and ranching operation. In Peirce’s experience, calves originating from ranches with high sulfates in the drinking water simply don’t respond to a vaccination program.

And in research from Saskatchewan, sulfate concentration at 7,000 ppm results in death due to sulfur toxicity or PEM. The Quinns can testify to that. At the time they were losing cattle, their waterholes tested from 5,500-13,500 ppm sulfates.

Also at the time they were losing cattle, it was summer and a drought – two factors that can substantially increase the potential for sulfur-toxicity problems. Cattle may drink more than 2 gals. of water/100 lbs. of body weight when temperatures exceed 80° F, more than twice the intake of a 1,000-lb. animal at a temperature of 40° F.

Then factor in drought. As tanks draw down, the salts will concentrate. “Under normal rainfall, ranchers may not have a problem (with sulfate concentration in waterholes),” McCollum says. “But in times where those ponds are drawing down and concentrating, they may see some problems.”

The same thing can happen with wells. And if those wells draw from a stratum with a high mineral content, that’s going to show up in the water.

Just like surface tanks, minerals can concentrate in the well water as the water table draws down. Conversely, if the water column moves into a stratum containing less sulfate-bearing minerals, water quality may actually increase.

The point is, McCollum says, you don’t know unless you test your water. And while it’s not necessary to retest every year, it might be advantageous to test your water every couple of years, especially if you’re battling drought.

That’s even more important if you’re looking to add distillers grains or corn gluten feed to your supplement menu. If your water is running 1,000-2,000 ppm sulfates, you can usually get by with minimal consequences, McCollum says, as long as no additional sulfur intake occurs.

“Then you start using corn gluten feed or distillers grains as a substantial portion of the diet, which increases the overall sulfur intake from the feed,” McCollum says. “And you’ve suddenly gone from a situation where you used to not have a problem and now you do.”

Feed research. Research is underway at SDSU to find a feed additive that can help reduce sulfur toxicity, says Ken Olson, SDSU Extension beef specialist in Rapid City. When an animal ingests a sulfur compound, free-range hydrogen ions roaming around the rumen cause a conversion to hydrogen sulfide, which is the toxic agent.

If researchers can find an agent that binds those hydrogen ions, they hypothesize that they can reduce the production of hydrogen sulfide and reduce the effects of sulfur toxicity.

Work last summer looked at Zeolite, a mineral compound fed to dairy cattle and swine that binds ammonia in the gut and reduces the amount of available ammonia in the manure. However, when fed at levels recommended for an ammonia response, no response was found in the level of sulfur toxicity.

“So our silver bullet is still waiting out there for us to discover it,” Olson says. They’ve done some lab work over the winter to get a better idea of dose rates and will run a second set of trials this summer.

If they do discover an agent that reduces hydrogen sulfide, Olson says it may also allow greater use of distillers grains and other corn milling products in both feedyard and pasture operations.

Management considerations. If you’ve got pastures with high sulfate concentrations in the water, about all you can do is figure out how to live with it. That’s what the Quinns do. “The way we handle it is to go into those areas with poor water when the demand for water is less,” Connee says. “That would mean winter, early spring. We stay out of those areas in the hot summer.”

Since mature animals are slightly less susceptible to sulfates than young, growing animals, McCollum says another option is to use pastures with poor water for cows and run your steers or replacement heifers in pastures with lower sulfate water.

And if no other options are available, Olson says you may have to haul or pipe good water to your pastures. Then you can either mix it with the high-sulfate water or shut off the wells and provide alternative drinking sources with the imported water.

While the Quinn’s experience was difficult, they say it’s raised awareness that water quality is a bigger issue than some producers had realized. If you’ve got high-sulfate water, your options are limited and there are no good choices. But the dose makes the poison and while you may have to suffer through some summer sulfate problems, help may be on the horizon.
Beef

9 Tips For Preventing Pasture Bloat In Cattle

tips to reduce bloat in cattle

Pasture bloat is primarily a disease of cattle that graze pastures where legumes make up greater than 50% of the total forage. You may hear pasture bloat referred to as “frothy” bloat due to the large amount of froth or foam produced in the rumen, which the animal has difficulty eructating.

Legumes with the highest likelihood to cause bloat include white clover, alfalfa, annual medics and Persian clover. Red clover, crimson clover and subterranean clover would be classified as moderately likely to cause bloat, while berseem clover and arrrowleaf clover are low risks for causing bloat. Legumes that don’t cause bloat are birdsfoot trefoil, sainfoin and crownvetch.

Because treatment for bloat can often be too late, prevention is the key. Here are nine tips for preventing bloat:

  • Offer poloxalene to cattle for at least three days before they’re turned out on pasture that has a potential to cause bloat. It’s best to use poloxalene in a daily feed to ensure uniform intake, but availability is a problem. That’s why molasses/salt-based blocks (Bloat-guard®) are the most commonly used form of the preventive product. When using these blocks, remove all other sources of salt and mineral to ensure that the poloxalene-containing blocks are consumed.
  • Fill cattle with dry hay before turnout onto legume pasture.
  • Turn cattle out after midday when pasture is dry (no dew or excess moisture).
  • Turn cattle out and leave them. Don’t pull them in and out daily. Otherwise, cattle will “learn” that they will be moved to the legume pasture and may wait to eat until moved. While the popular perception is that the ideal way to introduce cattle to high-legume pasture is to turn them out for an increasing amount of time each day, research doesn’t support the practice.
  • Continue using poloxalene while grazing legumes, and locate the product near water for increased intake.
  • Interseed pure legume pastures with an appropriate grass to dilute the legume’s bloat-causing effect. Add legumes that don’t cause bloat or are less likely to cause bloat to pastures.
  • Don’t clip a grass-legume pasture and then immediately turn cattle out onto it. This is especially true with a pasture high in white clover; once the taller grass is removed, the short, highly palatable white clover, which has a high potential to cause bloat, can then be easily grazed by cattle.
  • Observe cattle frequently the first few days on new legume pasture.
  • Some cattle have increased susceptibility to pasture bloat and these animals are candidates for culling. Eliminate their genetics from the herd.

80+ Picture-Perfect Summer Pasture Photos
There’s nothing more beautiful than watching cow-calf pairs grazing peacefully in the rolling hills of lush, green pastures in the summer months. View the photos here.

Pasture bloat is a mostly preventable disease of grazing cattle. If you follow these recommendations, the chance of having an animal bloat is greatly reduced, but there’s still a possibility you could see a case.

As most seasoned cattle producers know, frothy bloat is a true emergency; having an “emergency kit” on hand could well pay dividends. Talk to your veterinarian to see if it would be wise to have a few supplies on hand, and be sure to get proper training on their use to give you the best chance of dealing with bloat in pasture cattle.

 

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Union Targets Oregon Feedlot; Whole Foods Caves

Amidst record high feed and fuel prices, the Beef Northwest feedlot in Boardman, OR, has found itself battling an additional challenge – pressure to unionize from a California-based group called the United Farm Workers of America (UFWA).

Currently there are no unionized feedlots in the country, but that hasn’t stopped the UFWA from setting its sights on the beef industry. After finding success in unionizing workers at Threemile Canyon Farms, Oregon’s largest dairy, about a year ago, UFWA began pressuring Beef Northwest’s 320-acre feedlot, which has 80 employees and a capacity for 37,000 head – making it Oregon’s largest feedlot.

The feedlot is a family business owned by a fifth-generation Oregon ranching family who dispute that their employees want union representation. They say the biggest concern cited by workers is having to pay 2% of their paycheck to union dues.

As both sides continue to argue whether unionization should occur, the pressure is taking its toll on the beef industry. This week, Whole Foods Markets announced it will stop ordering beef fed at the Beef Northwest facility.

That decision impacts Country Natural Beef and its cooperative of 120 cattle ranchers who currently have about 14,000 head of cattle at the Beef Northwest feedlot and were a major supplier for Whole Foods. A Whole Foods spokesman says it has asked Country Natural Beef to look into using other feedlots.

Meanwhile, Country Natural Beef has remained silent and not taken sides in the dispute. But the loss of Whole Foods as a customer represents 70% of Country Natural Beef’s business and $34 million in gross sales.

The next step. Because ag workers are the only private-sector employees not covered under the National Labor Relations Act, which guarantees workers the right to form unions and engage in collective bargaining, the two parties involved – UFWA and Beef Northwest – must make their own agreement on how to proceed.

Representatives of Oregon Gov. Ted Kulongoski encouraged the two sides to continue working toward a resolution in a June 4 meeting.

Union organizers are calling for a union election using what is called a card-check process in which workers sign union cards and a third party oversees the vote. At least 50% of workers need to agree to union representation.

Beef Northwest owners want the vote taken by secret ballot, in which workers vote anonymously without union involvement. It also would be overseen by a third party.

A statement by John Wilson, owner of Beef Northwest, says he doesn’t have a problem if the workers want to unionize. He just wants the workers to decide for themselves without union pressure.

In its tactics against Beef Northwest, the union filed a lawsuit on June 1 against the feedlot for failing to pay overtime to three workers in its milling operation. Last month, it also filed a sexual discrimination lawsuit, stating the company failed to hire women in certain roles.

UFWA efforts with Beef Northwest mirror those used against Threemile Canyon in 2003, when the union pressured the Tillamook County Creamery Association, the dairy’s biggest customer, to boycott, while also filing several lawsuits against the dairy.

After years of turmoil, Threemile Canyon’s owners eventually agreed to a card-election process, which resulted in a collective bargaining agreement signed last year, governing about 250 workers – the first such ag contract in the state.

UFWA was founded in California by Cesar Chavez in 1962 and now has about 500 members in Oregon and Washington. It is active in 10 states and is known for its network of supporters, stretching across college campuses and religious organizations.
-- Compiled by Kindra Gordon

Preventing pasture bloat

Pasture bloat is primarily a disease of cattle that graze pastures where legumes make up greater than 50% of the total forage. You may hear pasture bloat referred to as “frothy” bloat due to the large amount of froth or foam produced in the rumen, which the animal has difficulty eructating.

Legumes with the highest likelihood to cause bloat include white clover, alfalfa, annual medics and Persian clover. Red clover, crimson clover and subterranean clover would be classified as moderately likely to cause bloat, while berseem clover and arrrowleaf clover are low risks for causing bloat. Legumes that don't cause bloat are birdsfoot trefoil, sainfoin and crownvetch.

Because treatment for bloat can often be too late, prevention is the key. Here are nine tips for preventing bloat.

  • Offer poloxalene to cattle for at least three days before they're turned out on pasture that has a potential to cause bloat. It's best to use poloxalene in a daily feed to ensure uniform intake, but availability is a problem. That's why molasses/salt-based blocks (Bloat-guard®) are the most commonly used form of the preventive product. When using these blocks, remove all other sources of salt and mineral to ensure that the poloxalene-containing blocks are consumed.

  • Fill cattle with dry hay before turnout onto legume pasture.

  • Turn cattle out after midday when pasture is dry (no dew or excess moisture).

  • Turn cattle out and leave them. Don't pull them in and out daily. Otherwise, cattle will “learn” that they will be moved to the legume pasture and may wait to eat until moved. While the popular perception is that the ideal way to introduce cattle to high-legume pasture is to turn them out for an increasing amount of time each day, research doesn't support the practice.

  • Continue using poloxalene while grazing legumes, and locate the product near water for increased intake.

  • Inter-seed pure legume pastures with an appropriate grass to dilute the legume's bloat-causing effect. Add legumes that don't cause bloat or are less likely to cause bloat to pastures.

  • Don't clip a grass-legume pasture and then immediately turn cattle out onto it. This is especially true with a pasture high in white clover; once the taller grass is removed, the short, highly palatable white clover, which has a high potential to cause bloat, can then be easily grazed by cattle.

  • Observe cattle frequently the first few days on new legume pasture.

  • Some cattle have increased susceptibility to pasture bloat; these animals are candidates for culling. Eliminate their genetics from the herd.

Pasture bloat is a mostly preventable disease of grazing cattle. If you follow these recommendations, the chance of having an animal bloat is greatly reduced, but there's still a possibility you could see a case.

As most seasoned cattle producers know, frothy bloat is a true emergency; having an “emergency kit” on hand could well pay dividends. Talk to your veterinarian to see if it would be wise to have a few supplies on hand, and be sure to get proper training on their use to give you the best chance of dealing with bloat in pasture cattle.

W. Mark Hilton, DVM, is a clinical associate professor of beef production medicine at Purdue University in West Lafayette, IN.

Editor's Note: For more on controlling pasture bloat in cattle, go to www.beefcowcalf.com and type “bloat” into the “Search For” box on the opening page.

The changing corn environment

The changing corn environment

Part II: Short-term management implications

The bottom line to the changing corn environment is that feedlot costs of gain (COG) will increase substantially the rest of this decade and probably beyond. That changes the profit prospects of various post-weaning production/marketing alternatives for ranchers.

Each month, I prepare a set of planning-price projections for 12-18 months ahead, and then examine their management implications. Eight different short-run production/marketing programs for marketing 2007 calves are summarized below; these were generated in mid-April with corn that was priced at 30¢ off that month's futures price. Projected COG and breakeven prices are also included:

  1. Selling 2007 calves at October 2007 weaning: (COG is $112/cwt. of calf produced. Breakeven selling price is $112/cwt.).

  2. Backgrounding 2007 calves to 800 lbs. marketed in late January 2008: (Corn @ $3.26/bu. with COG at $66/cwt. Breakeven selling price is $106).

  3. Finishing 2007 backgrounded calves in a custom feedlot marketed in June 2008: (Corn @ $4.74/bu. with COG at $87/cwt. Breakeven selling price is $92).

  4. Marketing 2007 calves as calf-feds at 1,175 lbs. in May 2008: (Corn @ $4.32/bu. with COG at $77/cwt. Breakeven selling price is $100).

  5. Marketing 2007 calves as grass cattle off grass in September 2008: (COG is $54/cwt. Breakeven price is $101/cwt).

  6. Placing 550-lb. calf-feds mid-April 2008 to be harvested October 2008: (Corn @ $5.85/bu. with COG at $93/cwt. Breakeven selling price is $106/cwt).

  7. Placing 800-lb. feeders on feed mid-April 2008 to be harvested June 2008: (Corn @ $5.03/bu. with COG at $91/cwt. Breakeven selling price is $96/cwt).

  8. Harvesting finished steers mid-April 2008: (Corn @ $3.26/bu. with COG at $74/cwt. Breakeven selling price is $102/cwt).

Figure 1 summarizes and compares my profit projections for these eight production/marketing alternatives. In general, I find it very difficult to add value to 2007-born calves beyond weaning. The only two positive post-weaning production/marketing alternatives listed above were finishing 2007 backgrounded calves with a projected profit of $4/head, and running 2007 calves as grass cattle during summer 2008 with a projected $15/head profit (after paying for grass).

Alternatives for 2008 calves

Meanwhile, my projection for 2008 calves is for an $11/cow profit when selling at weaning (compared to $69/cow in 2007). Lower gross income per cow in 2008 generates the projected drop in net income per cow.

High corn prices keep me from finding a way to add value to 2008 weaned calves with a profit. I project a $53/head loss for backgrounding 2008 calves. Finishing these backgrounded 2008 calves projects a loss of $37/head, and marketing the 2008-born calves as calf-feds projects a loss of $61/head. (A $5.19 market premium is needed to project a breakeven calf-fed production/marketing alternative.)

Comparing my projected marketings of 2008 calves vs. 2007 calves offers some optimism for cattle feeders. It appears feeder-calf and feeder-cattle prices are ever so slowly adjusting to return a profit back to the post-weaning profit centers, including the cattle-feeding sector.

The feeding sector

High corn prices are putting post-weaning profits under severe economic pressures. The reality is feeder-calf and feeder-cattle prices haven't yet adjusted to the new price equilibrium of $4, $5 and possibly $6 corn. These corn-price levels suggest feedlot COGs in the $70s, $80s and $90s, respectively. The cattle industry has never seen these feedlot COG levels.

First-quarter 2008 cattle feeding losses were substantial — $138/head in January, $128 in February, $132 in March and $148 in April. Such losses could lead to feedlot closings and sales of feedlots at 50¢ on the dollar, both of which lead to further feedlot consolidation.

Record-high post-weaning COG brought about by record-high corn prices must eventually be reflected in feeder-cattle and feeder-calf prices. This, however, hasn't yet happened to the extent needed to return profits back to cattle feeding.

Feedlots continue to overbid cattle due to an oversupply of bunk space. Once a feedlot shuts down, a feedlot owner's balance-sheet equity takes a huge hit. This equity loss probably won't be felt as long as the feedlot is operating — even if operating at a loss. Eventually, these kinds of feedlot loses will take their toll on the feedlot sector.

High feeder-calf and feeder-cattle prices relative to projected COG result in my projecting little or no post-weaning profits with 2007 or 2008 calves. My current short-run projections suggest that profits to be made with 2007 and 2008 calves will be made by weaning time.

Ranchers, take note! Your unit cost of producing (UCOP) a cwt. of calf has become all-critical! Yet, most of you aren't even measuring UCOP. Without this measure, you can't be sure you're actually operating your lowest-cost production/marketing alternative.

Ranchers may be already locked into their production/marketing programs for 2007 calves, but there's still time to push the pencil on the production/marketing of 2008 calves. Now is the time to re-evaluate your complete ranch production/marketing program; today's demand-driven corn prices won't be coming down as they have in previous supply-driven run-ups. The biofuels era is different!

Harlan Hughes is a North Dakota State University professor emeritus. He lives in Laramie, WY. Reach him at 701-238-9607 or [email protected].

This election could devastate us

Don't get excited, I won't give my opinion of the candidates or look at how they stand on issues important to the cattle industry and agriculture in general. In fact, this year's election, if nothing else, serves as a stark warning that agriculture and the livestock industry are simply not even on the radar screen of any presidential candidate or their party.

Certainly, exploding food prices are starting to be felt by consumers, but the response there has been disconcerting, as well. While riots over food prices have hit the streets of developing countries, and the United Nations and other groups warn about catastrophes, the response has been different in the Washington Beltway.

The widespread perception was that higher food prices would force people to take food less for granted, thus increasing their interest in agriculture. But the reaction appears that the powers are content to allow food production to move outside our borders.

This has always surprised me from a national-security perspective. If people are frustrated over military spending and the dispatch of U.S. soldiers to foreign lands to ensure a continuing flow of oil, just think of the implications when our nation is forced to do the same to ensure the flow of food into our country.

Is ag an evolutionary step?

Some argue that agriculture is an evolutionary step in an economy, and that outsourcing food production will stabilize other regions of the world, providing them income and raising their standard of living. America, they say, has evolved to where it doesn't need to raise its own food. A model might be the state of New York, where the bulk of its food needs are imported, leaving the populace to focus on higher-outcome activities. While this is a topic that deserves some serious conversation, it's not the thrust of this article.

The potential devastation I refer to as a result of this extended election cycle is simply its effect on beef demand. It began with the invisible “depression” that started about eight months ago.

Any analysis of the basic underlying economic numbers of the economy showed slow growth, but it was growth. Our current economic downturn is largely the creation of politicians and the media, as it served their political purposes. It was a self-fulfilling prophecy — reality eventually matched the perception that was built.

Consumer confidence is plummeting. According to some recent polling data by ABC News, nine in 10 Americans now give the economy a negative rating; 51% say it's in “poor” shape — the worst sentiment about the economy in more than 15 years.

The economy replaced Iraq

The thing is, as the news coming out of Iraq turned decidedly favorable, the political campaigns sensed Iraq was moving down the list of electorate concerns. Thus, they turned to the economy. As a result, a 60-day period ending in mid-April saw the biggest decline in response to people's perception of the economy since the monthly poll was initiated in 1985.

In fact, one political analyst remarked that with consumer confidence falling so sharply, we could actually be in a full-blown recession by fall. What's disconcerting is this person actually viewed that condition as a positive relative to their election goals.

This political race, on both sides of the aisle, has largely been about change — who can best position him or herself as the candidate to bring about change? Sure, that's been the major theme of just about every election since the beginning of the republic, but this campaign season has seen politicians not only position themselves as the candidates of change, but also focus on making the case for change — to the detriment of the nation.

And their case for change is simple — the present isn't good. While that may be good election-year politics, it's not good for beef demand. We need to get this election over so that we have a shot at rebuilding consumer confidence.

Troy Marshall is editor of Seedstock Digest and a weekly contributor to BEEF Cow-Calf Weekly, a free weekly newsletter delivered by email every Friday afternoon. To subscribe to BEEF Cow-Calf Weekly, which provides timely news, opinion and analysis of events and trends of particular importance to the cow-calf production segment, visit www.beefmagazine.com.

Cattlemen SPEAK

While U.S. beef producers are worried in the short term, they're mostly optimistic in the long-term about the future of the industry. The majority also feel federal subsidies of grain-based ethanol production are responsible for rising grain costs, and government subsidies and mandates on ethanol production should be eliminated.

In addition, the vast majority is making changes in their management and procurement strategies to reduce feed costs, and about 70% say they will maintain or reduce their herd size in 2008. In addition, 80% say they prefer Republican John McCain over Democrats Barack Obama and Hillary Clinton come November.

Those are some of the aggregated responses from 1,000 BEEF magazine readers responding to a 20-question electronic survey conducted in early May. The responses provide a snapshot into the thinking processes and actions of a cow-calf sector scrambling to deal with rising production and energy costs in the face of squeezed calf margins.

  • 49.2% of respondents reported being less optimistic this year compared to last year regarding the “short-term future” — the next two years — of the U.S. beef industry. 37.1% reported “about the same” level of optimism, and 12.7% said they were “more optimistic.” See graph

    Broken out by states, respondents in the far West (CA, OR, WA, UT, NV and HA) were the most optimistic overall (15.7%), while Southeast respondents (KY, GA, AR, FL, MS, TN, AL and LA) were the least optimistic (54.9%).

    A similar question posed to BEEF readers in spring 2006 found 38.4% of respondents at that time claiming to be “less optimistic,” while 52.1% were “about the same” and 8.8% were “more optimistic.”

  • Regarding long-term prospects (five years and beyond), 45.7% of respondents in the May 2008 survey said their optimism level was “about the same” as last year. Meanwhile, 26.7% reported being more optimistic, and 26.6% said they were “less optimistic” than last year. See graph

    The New England/middle Atlantic (NE/MAT) states (VA, NC, PA, SC, NY, WV and MD) led the geographic regions in optimism in the long-term (31.6%), while the Southeast was less optimistic (32.3%). See graph

    In the 2006 survey, 51.4% reported their level of optimism as being “about the same,” while 21% were “more optimistic” and 26.9% were “less optimistic.”

    In both the long-term and short-term (2008 survey), the most cited reason for growing pessimism was increased input costs, followed by availability of feed and forage, government regulations and oversight, and consumer demand. Industry consolidation/concentration and market access rounded out the list. See graph

    “I believe animal agriculture is going to be a scapegoat for the environmental and ‘green’ movements,” wrote one. “Difficulty of younger farmers and ranchers to get started and be profitable,” said another. “Urbanization. The land is too valuable for ranching,” was another comment.

  • In this latest survey, 77.2% of respondents said their level of concern regarding bioterrorism and the U.S. beef industry was unchanged from last year, while 11.6% were “more concerned,” and 10.6% were “less concerned.” See graph

    In the 2006 survey, 61.3% indicated their level of concern regarding bioterrorism and the U.S. beef industry was “about the same” as the previous year. 22% claimed to be “more concerned,” while 15.8% said they were “less concerned.”

  • However, perhaps owing to the recent media coverage precipitated by undercover videos of inhumane handling of “downer” dairy cows, 29.8% of respondents reported being “more concerned” than last year about domestic terrorism/animal activism. 64.1% reported “about the same” concern as last year, while 5.4% said they were “less concerned.”

  • Regarding increased consolidation and concentration in the feeding and beef packing sectors over the past year, 85% of respondents indicated being “somewhat concerned” to having a “major concern.”

  • 50.4% of respondents believe federal subsidies of grain-based ethanol production are responsible for rising grain costs. A short supply relative to global grain demand was cited by 30.5%; and the weakness of the U.S. dollar was cited by 18.6% of respondents. See graph

  • 85.6% of respondents believe biofuels have had “some impact” to “a major impact” on their operational expenses; and 48.6% favor the elimination of both the 51¢/gal. tax credit to ethanol blenders and the 54¢/gal. tariff on imported ethanol. See graph

    Unsurprisingly, respondents from the Midwest states (KS, NE, MO, IA, IL, MN, WI, OH, MI and IN) are the most supportive of the current ethanol policy and the least likely region to cite federal subsidies of grain-based ethanol production as the main reason for rising grain costs.

  • 87.6% of respondents are making changes in their management and procurement strategies in a move to reduce feed costs. Altering forage management was the most cited strategy (67.7%), followed by reducing cattle numbers (37.2%) and putting more weight on cattle before sale (36.8%). See graph

    More far West respondents (76.1%) indicated they were altering forage management as a tactic, while Southeast respondents led the way in putting more pounds on cattle before sale (51.6%). Respondents from the Southeast and far West most cited herd reductions (43.5% and 43.7%, respectively).

    NE/MAT respondents most cited pooling buying needs to secure volume discounts as a tactic (19.6%), and the West (CO, SD, MT, WY, ND, ID) and Midwest are most utilizing futures contracts to hedge (16.4% and 15.8%, respectively).

  • 64.5% of respondents say they individually ID their animals using a system that doesn't include hot-iron brands; 57.5% say they've registered their livestock premises under an official state or tribal livestock ID program. See graph

  • 62.2% of respondents maintained their herd size in the past year, while 36.8% expanded their numbers. Regarding expansion plans for 2008, 41.3% of respondents say they will stay the same size, while 14.1% plan to reduce their herd size by 1-10%, and 14.2% plan to reduce it by more than 10%. Another 21.5% say they will expand their herd by 1-10% this year, and 7.8% plan to expand by more than 10%.

  • Cattle persistently infected (PI) with bovine viral diarrhea (BVD) is attracting more producer attention. As it did in the 2006 survey, BVD-PI again topped the list of health concerns deserving of more government resources in surveillance, testing and prevention (61.8%), but that's a 15-point jump from the 2006 survey (46.8%). In descending order, other diseases of concern mentioned in the latest survey were: BSE, Johnes, brucellosis and tuberculosis.

  • Regarding free trade, 54.5% of respondents say their viewpoint on free trade is unchanged from last year. Meanwhile, 21.6% say they've grown “less in favor of free trade” in the past year, while almost an equal percentage (21.5%) say they've grown “more in favor of free trade.” See graph

  • Regarding the national presidential race, respondents vastly prefer the likely Republican nominee John McCain. In head-to-head match-ups, McCain bested Democrat Barack Obama by 80.3% to 14.8%, and his rival Hillary Clinton by 79.6% to 15.7%. See graph

When responses are separated by organizational affiliation, members of the National Cattlemen's Beef Association (NCBA) show a support level of McCain vs. Obama by 86.8% to 9.6%, and McCain vs. Clinton by 86.4% to 9.3%. Meanwhile, members of R-CALF and the U.S. Cattlemen's Association (R-CALF/USCA) preferred McCain over Obama by a margin of 79.1% to 16.5%, and McCain over Clinton by a margin of 76.5% to 18.3%.

NCBA members claimed to have grown more in favor of free trade (28.9% vs. 18.3%) than their R-CALF/USCA counterparts. Conversely, R-CALF/USCA respondents claimed to have grown less in favor of free trade over the past year (40.9%) than their NCBA counterparts (9.3%).

To see all graphs and charts, click here to view charts

Money talks

A sage once told me that if you want to know what the government is thinking, don't listen to what it's saying; look at what it's doing. The same applies to business.

In this case, if you listen to what folks are saying, optimism in the future of the U.S. beef business is tougher to come by than an animal rights activist with common sense.

As of Jan. 1, the nation's beef cowherd was the smallest in at least four decades. Input costs are soaring. Between urban sprawl and acres converting to grain production, forage is getting tougher to come by.

The average age of beef cattle producers continues to climb, as does the equity requirement for entry into the business. Beef producers and beef operations continue to dwindle. The nation's economy is in a tailspin, and domestic beef demand is static at best.

Contraction — reducing excess cattle feeding and beef packing capacity to fit fewer cattle numbers — is the logical conclusion.

Brazil enters the picture

Yet, the Batista family of Brazil — their business, JBS — chose this time to invest $3 billion in the U.S. beef business. It came with the announced purchase last May of Swift & Company, followed by acquisitions of National Beef Packing Company, LLC and Smithfield Beef Group Inc., announced in March. The acquisitions also made JBS owner of Five Rivers Cattle Feeding, the world's largest cattle feeding organization.

Understand, the packing companies JBS acquired were carrying substantial debt. According to company reports, about $1.2 billion of the $1.4 billion Swift price tag was debt. JBS paid $560 million in cash and stock for National, also assuming the company's debt and liabilities; total value of the deal was pegged at $970 million. JBS gave $565 million for Smithfield Beef Group, which subsequently stated net proceeds would primarily go toward debt reduction.

Keep in mind that the Batistas, whose fortune began in the 1950s harvesting one head of beef/day, didn't have $3 billion lying around. They liquidated 49% of the equity in their family companies through an Initial Public Offering in Brazil. Since then the value of those stocks has increased.

Some cattle producers are concerned about the increased consolidation and concentration that goes with a single entity buying what had been the third-, fourth- and fifth-largest beef packers to quickly become the nation's largest. The U.S. Justice Department is reviewing the acquisition, just as JBS knew it would.

“Would you rather have five or six of the largest beef packers barely getting by, or three firms possessing the financial and intellectual wherewithal to take your product, harvest it and retrieve the most value for it from the global market place?” asks Chandler Keys, JBS-Swift vice president of government and industry relations. “The packers most innovative, efficient and adept at marketing are the ones who will win in the global marketplace.”

Moreover, Keys points out current excess feeding and packing capacity in the U.S., relative to cattle numbers, still means cow-calf producers are in the driver's seat, whoever owns the capacity.

The world's largest

If the acquisitions pass Justice Department scrutiny, JBS will be the world's largest beef processor, harvesting 80,000 head/day, or 10% of all cattle processed worldwide. Upon completion of the deal, they will have plants in Brazil, Argentina, the U.S., Australia and Italy, as well as production and distribution facilities in Europe, Russia and four African countries.

Operating with little debt obviously opens the doors to maximum efficiency. But Keys emphasizes JBS has also begun aggregating value to beef carcasses in this country with innovations they developed in Brazil. As an example, JBS sorts, grades, packs and markets beef intestines for sausage casings. Globally, the company is the leading provider of beef essence — basically a paste used to add beef flavoring to such things as bullion cubes.

“It's the right cut at the right time in the right place. That's their philosophy,” Keys explains. He says the Batistas invested in the U.S. beef business for two reasons:

  • To be a player in the global marketplace, they know they must have a U.S. presence, just like the purveyor of any other kind of product.

  • And JBS is enthusiastic about the future of global beef demand because of the growth potential in a growing global economy. As personal incomes rise, consumers want to improve their diets, and they do that with animal protein.

So, argue for the demise of the U.S. cattle business all you want. At least one family's sizable new financial commitment says otherwise.

Beef Tech

Portable load chute

The WW Portable Load Chute from WW Livestock loads at ground level or 24, 36 and 48 in. Total chute length is 14 ft. with a 12-ft. load ramp. To ensure solid footing, panels are sheeted 36-in. high with a non-skid Rumber floor, and steel cleats every 18 in.
(Circle Reply Card No. 101)

Broad-spectrum insecticide

Novartis Animal Health has received EPA approval for OxyFly®, a broad-spectrum insecticide for control of adult flies in livestock, poultry and pet housing areas. It also controls fleas, ticks, litter beets and cockroaches.

OxyFly provides rapid knockdown of adult flies as well as long-lasting residual activity. The product is odor-free and has a low toxicity profile. Its micro-encapsulated formulation offers convenience and ease of use via spray or paint-on applications.
(Circle Reply Card No. 102)

Website for contracting feedstuffs

Forty-Five Cattle has launched FeedsandFeeding.com, a website designed to help cattlemen decide which feed, byproduct or commodity is most nutritional and cost-effective. Visitors to the site can check spot prices and compare cost from month to month. The site also offers feed evaluation and feeding cost calculators.
(Circle Reply Card No. 103)

ATV crossover

The Cross Over from USC, LLC can be installed in existing fence lines with fencing connected to the upright pedestals. Heavy-duty, sturdy steel construction makes up the Cross Over's 320-lb., all-in-one construction.
(Circle Reply Card No. 104)

Livestock marking paints

Prima Tech adds to its line of livestock paint colors with Prima Glo, a set of bright fluorescent, glow-in-the-dark paints. The 500-ml spray cans come in a wide range of marking colors — orange, green, hot pink, yellow and purple — and can spray accurately from any position, even upside down. The paints remain visible on an animal for 2-4 days.
(Circle Reply Card No. 105)

Time To Pull Leather?

It doesn't take Bill Mies long to roll out his best-case scenario for the next 18 months. That's because the beef management consultant with Elanco Animal Health has always been a realist — and the reality is that change is in the offing.

“I think the best-case scenario is we have a significant strengthening of the dollar against world currencies so that grain exports are slowed,” he says. Looking at it from a feedyard manager's perspective, he says that may put a little stability under the grain market, which would infuse a little stability in the cattle market.

A little. “When you're a margin operator, as feedyards are, you need to be able to predict your margin when you take risk. We can't do that today because we have no idea what the risk will be by the time we get a set of cattle finished, given the rapid way that energy and grain prices are changing our input costs.”

A strengthening dollar would also help domestic beef demand, he says, though he thinks demand in the next 18 months will have more to do with the price of pork and chicken than beef.

“I think we've reached spreads between pork, poultry and beef in retail and food service that will probably impede us from adding a lot more to the value of beef until the price of pork and chicken comes up to follow it. The differences are starting to get a bit high, and when consumers have fewer dollars to spend, they tend to make the choice of the lower-cost product,” he says.

So in a best-case outlook, Mies says, “we'll quit hurting so bad. It doesn't mean we're going to quit hurting at all; we're just going to quit hurting so bad and we'll inject a little more stability into our business.”

Reality check

A more realistic assessment of the next 18 months is more sobering. The feeder-cattle market has been whipping and spurring its way to an unprecedented run of profitability for cow-calf producers. However, the bronc has begun to buck and it may be time to grab the saddle horn and ride it out.

Although a number of factors come into play, Mies thinks the most important is the need for the packing and feeding industry to adjust its size to supply realities.

“Emporia (KS) was the first plant closed. I don't think it will be the last,” he says. “I think the packing industry will adjust itself, not absolutely to the supply of cattle, but closer to the supply of cattle than what they are today.”

Feedyards also likely will adjust, something that sector has never done before. We've let pens go empty, Mies says, but in almost every previous case when a feedyard went broke, rather than locking the gates for good, it was resold, refurbished, refilled with cattle and cranked up again.

“And about five years ago, they started pouring more bunk space, and we're dramatically overbuilt for the supply of cattle in this country in the feedyard sector.” That's been good for the cow-calf producer, Mies says, with feedyards bidding up the price of feeder cattle to fill pens.

“But it's kept margins low to nonexistent in the feeding area. And the feeding area simply can't bear much longer the financial beating it's been taking on the last several turns of cattle,” he says.

So, for the first time to any significant degree, some feedyards may close for good. Others will refocus and become backgrounding facilities, providing feeder cattle to larger finishing yards, or replacement heifers to nearby dairies. And some will be sold, probably for cents on the dollar. “One way or another, we're going to reorder bunk space for finishing cattle to adjust it down closer to the realities of a 97-million-head cattle business in this country,” he says.

Input costs

As cattle feeders adjust to a volatile grain economy, and feedyards and packing plants go through a shakeout in capacity, Mies says the guy who's going to pay for ethanol is the cow-calf producer. “The price of his product will get adjusted down to the realities of the cost of feed and the cost of beef going out the back door of the packing house.”

However, he doesn't think that will decrease the size of the cowherd or cause ranches to go out of business. “We've seen cow-calf guys go through bad times before and they're tough. They stick in there and they ride it out and the calves keep coming.”

Exports and demand

Beef demand, both in export markets and domestically, will continue to rise slowly, but Mies thinks there's misplaced optimism in terms of the increase in demand that exports will afford.

With the recent Korean beef agreement, our export future does have some shine to it. But it's not a done deal yet, dependent on if the U.S. upholds its end of the bargain and Congress passes the Korea-U.S. free-trade agreement (FTA).

Some senators, he says, are beginning to make noise about auto-industry issues. “But if we don't pass the FTA, our ability to put meat over there, regardless of what agreement we have, is going to be very difficult,” Mies says. “I think there are a whole lot of phytosanitary standards that have never been employed that could be brought to bear to keep meat out of that country if they really want to bad enough. If we don't do an FTA, they may want to bad enough.”

And it's not a lock that Japan will follow Korea's lead. More mistakes in shipping illegal product and that market may remain largely closed.

“I think exports are going to go up, but not as much as most folks predict,” Mies says. “Exports will be a nice backstop in our market, but won't be the market leader in terms of runaway pricing.”

Regulatory, political arena

After a long and contentious fight, the House and Senate passed a 13th hour farm bill last month containing language to make country-of-origin labeling (COOL) a little more palatable for cattlemen. But only a little.

“COOL will happen this year, but we're not even close to ready,” he says. If USDA writes regulations that allow COOL to be implemented gradually and gives cattlemen time to get up and running, Mies says maybe the industry can work its way through it.

“But we won't do it without cost, and we won't do it without pain. Stack that pain on top of a time when the profit is falling out from under you, and it's going to make it that much worse.”

Watering the corners

When you irrigate a square field with a circular center-pivot sprinkler, the four corners go unattended. When times are tough in the grain business, farmers water the corners to get all the production they can.

“That's where we are in the cattle industry right now. We've got to water the corners. We've got to use every last ounce of resources we can dream or scare up to cheapen this thing down as much as we can.”

The next 18 months won't be dull, he says. “You'll want to stay tuned because it's going to move fast and furious. You're going to have to be tough to make it through the next 18 months — tough, smart and quick.”

The next five years

High and volatile input costs — ethanol-driven grain and demand-driven fuel — may well force fundamental structural changes in the beef industry that will last for years to come, says industry consultant Bill Mies.

Take fuel, for instance. “Always before, if there was green grass somewhere, we could get cattle to harvest it. That may not be the case in the future with energy costs as high as they are. Our ability to go to grass will be affected by energy and transportation costs in ways we've never seen before.”

Then there are grain costs. “One of the things this ethanol ramp-up has taught us is the importance of being able to use as many cheap byproducts in the (feedyard) ration as we possibly can,” he says. That's counter to the mindset of the past 35-40 years, where feedyards tried to produce a ration as energy-dense as possible.

But ethanol-driven feed costs will force a major change in how cattle are fed. “We'll have to look at every byproduct possible,” and not just grain byproducts, he says. Food processing byproducts, like reject candy, broken cookies, snack chip waste, bakery byproducts — anything that has a usable calorie in it — is on the table. “We're going to have to figure out ways to handle them in the feedmills, and in our feeding practices, in order to cheapen rations down over the long haul.”