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NCBA President J.D. Alexander Says Drought, Industry Trends, and Politics Top Concerns for Cattle Producers

Thu, 26 Jul 2012 12:46:59 CDT

NCBA President J.D. Alexander Says Drought, Industry Trends, and Politics Top Concerns for Cattle Producers
It's no secret the cattle industry is currently getting hammered from multiple directions. From the drought which is affecting the heart of cattle country, to regulatory nightmares, to stalled farm legislation, the cattle industry is having to do what it has always done: adjust.

As a cattle producer and feedlot owner himself, J.D. Alexander, the current president of the National Cattlemen's Beef Association, is weathering the storms right along with his organization's membership. He spoke with Ron Hays as part of our coverage of the Summer Cattle Conference in Denver, Colorado.

Alexander says he's seen a lot of things in his many decades in the cattle business, but this year's serious drought across much of the Midwest and throughout Nebraska, where his feedlot is located, is a first.

"It's something I've never seen in my lifetime. We've seen tremendous crops and conditions in the past several years and, lo and behold, this year it is totally turned upside down. We've got silage that is being cut a month early. The crop is just not performing very well at all."

He said the drought which plagued much of the Southern Plains the last two years before expanding northward will have long-lasting ramifications for the cattle industry.

"The movement of cattle went, in the last several years, from the south to the north, right into the heart of America because that was where the good pastures and the good crops were. Ironically we thought that if the herd was to expand it would be in the middle of America and that's where it would start.

"Now the drought has moved up there so, as far as expansion goes, we're not going to see that probably for several years now. The market will dictate that, but it really is pretty sad to see that right in the area where they thought that we'd be doing better, with expansion and increasing our herd, now we're in the middle of the drought."

As the U.S. cattle industry is liquidated due to increasingly hard-to-find forage, Alexander says he's a little nervous about the future.

"The real concerning thing is I don't see any way around the higher-priced beef to our consumer. Our numbers are down. It's a simple thing. I'm in the feedlot business. When you've got reduced acreage of corn, higher-priced corn, I don't care what the reason is the corn is high, but the higher-priced corn, the higher-priced the cost of gains to get your cattle to the finishing position. So, coupled with the shortage of feeder cattle that are being paid up for that, the cost of gain, I just think that it's going to kind of snowball here for several years until we get this straightened out."

Alexander says the talk up and down the halls at the Summer Cattle Conference has been the weather. He says the veterans remember similar wide-spread drought conditions in 1955 and '56. He says he hasn't heart anyone boasting of perfect weather conditions anywhere in the country this year. He says ranchers' biggest concern is if this drought turns into a multi-year event.

Cattle prices also have his organization's members concerned.

"Prices, we were maintain quite well and then they dropped. What you've seen is that the feeder cattle have dropped very hard, mainly because of the increased cost of gains the feedlots are going to have to paying with the higher-priced corn. It's a direct correlation. We've seen good markets for the past couple of years. We're going to be in a down cycle now. It's just very cyclical and very volatile industry which we've always known.     

"The challenge is going to be, we are going to reduce our numbers. Eventually that will turn around. When you've got tight numbers, you're going to probably eventually see increasing prices."

While Alexander says he doesn't believe we'll see a wholesale restructuring of the feedlot industry due to drought and market conditions, we will see some fallout.

"I think what we're going to see, actually, is a reduction in numbers. When you look at your own numbers you're going to see that first off you've got to have feedstuffs to feed in the feeding industry. It's been a challenge, literally, to find corn. The people that have it, if they have any left, are worried about this next year's crop. If they've got commitments to various things that they've presold and they don't have a crop, they're going to have to take some of their storage and deliver it.

"So you've got a combination of people uncertain about what they're going to grow and also you've got prices that are skyrocketing, so it puts a lot of people in a little tough situation."

Another challenge facing the industry, Alexander says, is the growing pressure from activist groups outside the cattle industry who are clamoring to change, or even eliminate, modern beef production. He says activists capitalized on the media-manufactured Lean Finely Textured Beef crisis and the Bovine Spongiform Encephalopathy scare to advance their message via social media. He says the beef industry was slow to respond to these attacks, but that his organization and others have been working behind the scenes to build a more solid foundation to withstand such attacks in the future.

"We're working on a lot of things now where we actually bring people out to the ranches, the feedlots and so on to actually show them firsthand what we're doing. And I think that's going to be the key down the road. We're a big industry with not a lot of people in it, but we have a great story to tell and we have to get it out there."

Another topic of informal conversation that one hears up and down the halls at the conference, Alexander said, is the upcoming November elections. He says an increasingly burdensome regulatory environment has cattle producers very concerned.

"We've always taken a pretty good stance that we don't endorse or whatever, but people realize that the people that you put into positions are going to have the ones that oversee the regulations and so on. Everybody's alert to it and we're going to have to go and, either way, make do.

"That's why we believe in a strong NCBA and a strong membership organization because we can and do influence things in Washington D.C."


Click on the LISTEN BAR below to hear the full interview with J.D. Alexander.


   
   

Ron Hays talks with J.D. Alexander at the Summer Cattle Conference in Denver
right-click to download mp3

 

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