Agricultural News
Emerging Segment in Beef Pipeline Gains Importance- Don Close Explains Grow Yards
Sun, 03 Feb 2019 19:13:16 CST
When it comes to the beef cattle industry, we are quite familiar with the different sectors of the supply chain that become standard; those sectors being the cow/calf, stocker, feedyard and packer. However, a new report out from Rabo AgriFinance, suggests that a new sector has started to emerge in the industry. Rabo Senior Analyst Don Close sat down with Radio Oklahoma Ag Network Farm Director Ron Hays this week in New Orleans during the 2019 Cattle Industry Convention and Trade Show to talk about this rising niche market, dubbed "grow yards," and the role they are taking on within the beef industry's changing landscape. You can listen to their complete conversation by clicking or tapping the LISTEN BAR below at the bottom of the page.
"We're seeing that as the commercial feed yards have gotten bigger, both in size of yards and with the number of yard ownerships per company - just having the ability to handle either lightweight or high-risk cattle - is becoming increasingly difficult for those commercial feeders," Close explained, setting up the current situation that continues to develop. "So, as a result they are turning more and more to the grow yard to have their cattle conditioned."
The benefits of doing this, Close says, is that it enables companies to have a central collection point and provides them the opportunity to buy multiple weights of cattle instead of cattle from one narrow and highly competitive weight range, specifically those 800 weight cattle. While this means significant opportunity for established grow yard operators and emerging ones, Close also suggests that the growth in this sector could have ripple effects throughout the supply chain.
While the grow yard model mirrors that of the typical stocker or backgrounder operation, Close says grow yards will focus more on the 600 to 700 weight calves whereas stockers typically prefer 400 to 500 weight cattle. However, Close says this will create more demand and increased competition in the stocker market.
"It certainly provides more competition not only on price or number of buyers but it also enables the cow/calf guy some versatility in that he doesn't have to sell his calf crop the same day as every one of his neighbors are," he said. "So, we see some benefit there."
In addition, as more cattle are diverted off the farm and out of the feedlot via grow yards, Close says this also creates more room for herd expansion as well. It also gives the high labor, low cost operators an opportunity to break into the business. And, given that operators in this segment generally do more regional business, Close contends that growth in this sector may also help advance the beef industry's traceability agenda, too.
"Whether an individual producer chooses to be a participant or not, I think the real driver is economics and that requirement to be more efficient," Close said. "So, that sector could really be influential."
To review that report referred to by Close, visit your local Rabo office.
Our coverage from New Orleans and the 2019 Cattle Industry Convention and NCBA Trade Show will be powered by Corteva Agriscience, delivering solutions to help you manage weeds and brush- learn more by clicking here for their website- www.RangeAndPasture.Com.
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