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 BALE CHOPPER--Rodney Derstein, Beef Stocker Unit assistant manager, demonstrates a bale chopper used at the Beef Stocker Unit at Kansas State University. The demonstration was part of the tour at the Beef Stocker Unit. (Journal Photos by Doug Rich.) Livestock industry enters a volatile, high risk era"Brazil did not sit around and wait for us to get it together," Schroeder said. "We better have a product that is high in integrity," Schroeder said. By Doug Rich "We are in a new era of volatility," Ted Schroeder, Kansas State University Agricultural Economist said at the 2007 Beef Stocker Conference. In the past a record corn crop was good news for the livestock industry. Today, however, that corn is being gobbled up by the ethanol industry and not by calves in feedlots across the High Plains. Schroeder said the U.S. is harvesting the largest corn crop in his lifetime this fall at the same time the corn supply is historically small. The livestock industry in this country is facing a paradigm shift. Iowa will very soon be an importer not an exporter of corn. By 2025 the U.S. will be a net importer of corn. If the U.S. reaches its ambitious goals for ethanol production, 60 percent of the nation's corn crop will go to ethanol production. Today we are using only 20 percent for ethanol production. This will have strong implications for the cattle industry. Schroeder said the feed grain market will be volatile with corn prices swinging between $3.20 and $4.00 per bushel; cattle will spend fewer days on intensive grain diet and more days on forage; producers will substitute corn with more ethanol byproducts; there will be higher production costs and higher prices for beef; which will discourage exports and encourage imports.
Byproducts In 1998 this country produced 1 million tons of distillers dried grains (DDG). By 2010 that total is expected to reach 16 million tons. Can this byproduct replace corn in cattle feeding rations? "If the ingredient will pencil into the ration we need to take advantage of it," Sean Montgomery, a nutritionist with Corn Belt Livestock Services, said. Montgomery shared his experiences with DDG in receiving and growing rations at the Beef Stocker Conference. He said that not all byproducts are created equal. The byproducts from dry milling process and the wet milling process are very different. Most of the ethanol plants now in production use the dry milling process. "Wet byproducts feed better than dry," Montgomery said. Although most of the byproducts from the ethanol industry are being used in feedlots, Montgomery said there could be an opportunity to supplement cattle on grass with DDG. "It does appear it can work on native grass," Montgomery said. Research has shown that for every one pound of DDG dry matter fed, forage dry matter intake decreases by 0.5 pounds. This might allow for increased stocking rates. Performance in the feedlot was not affected by supplementing DDG during the stocker phase. In his experience Montgomery has not had the same results with DDG in steam flaked rations as with rations using rolled corn. He is not sure why this happens. To manage sulfur in diets using DDG Montgomery suggests testing your water for sulfur and knowing the sulfur concentration of the other ingredients in the diet. Montgomery is actually growing cattle with no corn in the ration at all. "Economics will dictate the level of byproduct in the ration," Montgomery said. "A smaller cattle industry is possible," Schroeder said. "There is a lot of risk out there." Three areas of opportunity for beef producers during this time of high risk are fresh branded case-ready products, meal packages such as single dish quick fix meals, and food service. These opportunities require product integrity, a high level of accountability from the input supplier; product safety assurance; production practice assurances; traceability and; consistent supply. "We better have a product that is high in integrity," Schroeder said.
Information Information flowing up and down the supply from producers to consumers will be key to making these work. "There must be vertical cooperation about everything we know about these animals and it must flow both ways." What won't work according to Schroeder is relying on visual sorting for quality differentiation; buying/selling cattle without knowing how they will perform, with as little information transfer as you can get away with and; marketing cattle on average live or dressed weight basis for the same price Schroeder said that from 1980 to 2007 there was a 10 percent decline in the U.S. cow herd. This was directly related to a drop in beef demand. "We did not offer the consumer what they wanted," Schroeder said.
Global Market The U.S. beef industry is part of a global protein industry. World beef consumption as a share of the total protein market dropped from 28 percent in 1996 to 24 percent in 2007. The U.S. competes with other beef producing countries for a share of this shrinking market. "Brazil did not sit around and wait for us to get it together," Schroeder said. Brazil has increased their imports even during a period of time when they were dealing with an outbreak of Foot and Mouth Disease (FMD). From 2000 to 2007 Brazil has increased its beef production at the rate of 5.3 percent on an average yearly basis. "Brazil will continue at this rate for five to seven more years," Schroeder said. "At this rate they will pass the U.S. in total beef production." Schroeder said most of the beef production in Brazil is still grass fed. He added that many of the ranch managers in that country are under 40 years of age, highly educated, multi-lingual, and risk takers. "We need to figure out a way to get back in the game," Schroeder said.
Doug Rich can be reached by phone at 785-749-5304 or by e-mail at richhpj@aol.com.
10/8/07 Date: 10/3/07
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