Cattle Producers Getting Green Light for Herd ExpansionThu, 07 May 2015 15:13:38 CDT
It’s a great time to be in the cattle business and two different studies have confirmed that. Several land grant university livestock market economists have collaborated with the Livestock Marketing Information Center (LMIC) in looking at the rate of return on investment for cattle producers. This number indicates just how healthy the economic environment is for cow-calf producers. Kansas State University Agricultural Economist Glynn Tonsor has found right now it’s a great time to be a cow-calf producer because of the strong return on investment.
Radio Oklahoma Network Farm Director Ron Hays featured Tonsor on the Beef Buzz. Click or tap on the LISTEN BAR below to listen to today's Beef Buzz.
The U.S. Department of Agriculture’s Economic Research Service (ERS) also studies the profitability of cow-calf producers. As of May first, ERS released their latest numbers. In 2014, ERS estimated the total value of production minus operating costs to be $391 per cow. That’s up from $108 return per cow in 2013. Tonsor said USDA has confirmed returns have increased almost $300 per cow over variable costs from 2013 to 2014.
In looking specifically at the “Prairie Gateway”, which encompasses Kansas, Oklahoma and Texas, producers have received even higher margins. Tonsor said USDA estimates the value of production over operating costs of $437 per cow. That’s up from $155 in 2013.
Whether you look at the whole country or the “Prairie Gateway” region, the story remains the same. Tonsor said margins were a lot better in 2014 than 2013 and the numbers from 2013 were strong in comparison to historical averages. He said having strong returns in the region are important as Kansas, Oklahoma and Texas were three of the four states that added 20,000 or more heifers in 2014 according to latest USDA cattle inventory report.
“I’m highlighting that because this story of extra-large increase in returns over variable costs from ’13 to ’14 being an ‘economic carrot’ to rebuild and expand the herd,” Tonsor said. “We’re seeing that fairly strongly in that ‘Prairie Gateway’ and these numbers are consistent with that.”
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.
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