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Economic Analysis Shows Cow/Calf Producers Hardest Hit By Impact of COVID-19 Pandemic

Wed, 15 Apr 2020 15:48:52 CDT

Economic Analysis Shows Cow/Calf Producers Hardest Hit By Impact of COVID-19 Pandemic Cow/calf producers will be hit hardest by the estimated $13.6 billion in damages from the COVID-19 crisis. That's the summary of an economic analysis by a blue-ribbon committee of economists chaired by Derrell Peel, Extension Livestock Marketing Specialist at Oklahoma State University. The panel was established by the National Cattlemen's Beef Assoc. to assist USDA in determining how best to allocate CARES Act relief funds to cattle producers.

Radio Oklahoma Agriculture Network Farm Director Ron Hays talked to Peel following release of the panel findings.

The total projected losses for 2020 has cow/calf producers leading the pact at $8.1 billion, or about 60 percent of the total loss.

If you look at all individual sectors, the cow/calf producer will see losses in two segments, Peel said.

One area is in the current year damages which amount to $3.7 billion, and this works out to about $111 per head for mature cows and bulls, Peel said.
Add in the loss going forward, producers will see lower values of those cattle since they are long term assets, Peel said. This amounts to another $4.4 billion loss.

For stocker cattle, the loss is estimated at $2.5 billion or about $160 per head.

Feedlots will experience a $3 billion loss based on 14.6 million head for an average of $206 per head.

Making it even more difficult for cow/calf producers is the fact they have fewer risk management options.
There is no futures market for them, Peel pointed out.

Cow/calf production is also a long-term business which means they are exposed to more long-term impacts, Peel said.

The OSU economist said it is now up to the policy makers to decide how to allocate the $9.5 billion included in the CARES Act for relief in the cattle industry.

Peel added, because of the uncertain nature of this pandemic, there really are no good answers to help producers with a market strategy.
That's the hardest question, Peel said. For the next 30 to 60 days I see little prospects for it to get any better. Beyond that, I think in the second half of the year there will be a turnaround, if it happens at all, but we really don't know, Peel said.

Click on the LISTEN bar below to hear Ron's complete interview with Dr. Peel.

   
   





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