Agricultural News
Looking for Ways to Survive and Prosper in Today's Beef Business
Thu, 25 Oct 2012 15:16:41 CDT
How do beef producers thrive and prosper in 2013? OSU Extension Livestock Market Economist Dr. Derrell Peel says cow-calf operators, stocker producers, and feedlot operators all need to be ready to embrace change.
"I do think we've kind of turned the corner into a different way of operating as an industry. From a very long-term view I don't expect grains to be as cheap in the future as they have been in the past. And in a world of higher-priced grains, that really implies structural change in the beef industry.
"Over the last really long period of time, 40 years or more, we've evolved from a more forge-based industry to a very grain-intensive industry. And the reality of high-priced grain and high-priced fuel and fertilizer that goes along with that implies that we probably go back to being a more forage-based industry.
"So, when you break that down, I think what it means for the cow-calf sector, the main thing for the next five or so years is going to be just the fact that cattle numbers are so tight we have a need to rebuild at some level. And, so, there will be incentives. The calf prices will be there. I think the real challenge for cow-calf producers will be cost management. And whether or not high prices translate into profits will really depend on the ability to manage the cost side more than anything else."
"The stocker side probably has the best opportunity of anybody in this because there is such an incentive in a world of high-priced grain to utilize more forage. And the place you use more forage in the live cattle production process is at the stocker level. You increase placement weights. You've got a wider range to work in. You've got more flexibility to utilize different kinds of animals in a stocker program and different kinds of stocker programs. And so I think there's a significant opportunity in that respect, even though input costs will be somewhat high.
"The next step up is where it really gets tough- Numbers are tight. Feed is expensive. And so I think the struggle will continue there for feedlots."
He said he expects a number of feedlots to close over the next one to two years eliminating some of the excess capacity in the industry. But all is not lost, Peel says.
"I think the trick is to anticipate where there are opportunities in all of this and embrace those rather than just trying to hang onto what has worked so well in the past but may not work so well in the future."
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Network- but is also a regular audio feature found on this website as well. Click on the LISTEN BAR below for today's show- and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
This is the last in a series of Beef Buzz shows featuring Dr. Peel and his comments about the beef and cattle markets. If you want to hear our complete conversation with Dr. Peel now, click here for our Ag Perspectives Podcast with Dr. Derrell Peel.
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