Drought's effects felt from the cow to the feedlot
By Jennifer M. Latzke
Any successful feedlot manager will tell you that the ultimate success of a calf on the rail can be traced back to the mother cow in the pasture and the feeding efficiency of the feedlot. That combination of genetic selection and available feed decides what will eventually wind up on the plate.
Any wobble in the balance of the two factors can translate into greater challenges for the rest of the industry.
The long-term drought that began in 2010 has taken historic tolls on cowherd numbers, and thus feedlot placements.
Faced with dwindling water and feed resources, cow-calf producers have culled their herds as much as they can these past few years. More cows have gone to slaughter, which means successively smaller calf crops over the past two years. This has also added to the near-term beef supply.
According to the U.S. Department of Agriculture Economic Research Service's Livestock, Dairy and Poultry Outlook of Feb. 14, inventories of all cattle and calves at Jan. 1 were 89.3 million--the lowest level since 1952. On Jan. 1 there were 29.3 million beef cows in the United States--the lowest since 1962. Total commercial cow slaughter for 2011 and 2012 was about 16 to 17 percent of the last two year's of cow inventories. Combined with fewer heifers returning into the beef cowherd, this means that the Jan. 1 beef cow inventory was 2.9 percent lower than the revised 2012 inventory.
With more than two years of continuous drought, cow-calf producers need some wet weather to bring back pasture conditions to sustain cows and their calves. Rebuilding the herd to pre-drought levels will depend on if crops and pastures develop through the second and third quarters of 2013, according to the USDA-ERS Livestock Outlook.
And the drought's reach extends on through the cattle feeding chain. The Jan. 25 Cattle on Feed Report out of the National Agricultural Statistics Service showed cattle and calves on feed for slaughter market in the United States totaled 11.2 million head as of Jan. 1, down 6 percent from a year ago. Feedlot placements during December 2012 were at 1.66 million head, down 1 percent from 2011, and net placements were 1.59 million head. That was the seventh consecutive month that feedlot placements were on the decline. Marketings of fed cattle in December were 1.75 million head, or 2 percent below 2011. With poor pasture conditions, those feeder calves that are coming into feedlots are coming in at lighter weights and earlier, which means more feedstocks must be purchased.
This all has meant some hard economic decisions for cattle feeders and processors.
In late 2012, Pratt Feeders, Pratt, Kan., idled its 20,000-head Hays, Kan., facility because of the drought and limited supplies. Others, like Lubbock Feeders, Lubbock, Texas, are at half capacity and are making adjustments to their sourcing of cattle and feedstocks.
"No doubt, with the herd inventory going down there are only so many cattle to go around," said Kyle Williams, manager. "We place a lot of Mexican cattle too, but they're in the same situation and have been for several years." The economics will just not work out for as many Mexican cattle to cross the border for feeding in the U.S. as in years past, he added. The February USDA-ERS Livestock Outlook showed cattle imports in 2012 were about 2.25 million head total, with 65 percent coming from Mexico. However with the drought extending across the southern border, Mexico's calf crop in 2012 was relatively small, which means that fewer Mexican cattle are expected to make the one-way trip to the U.S. for feeding.
The heat and drought played a role on the input costs for Lubbock Feeders in the last two years. "In 2011 we saw some respiratory issues in calves that were probably due to drought," Williams said. Many were spending time in the hot summer months in sale barns, he added. "And some probably weren't getting the colostrum and nutrients they required to keep healthy."
There was a spot of good news in 2012 for Lubbock Feeders, Williams said, with a little more timely rains in his area that helped grow more hay and feedstuffs. Unlike 2011 where the area practically ran out of hay and what was left was pricey, he said.
Then, in January, the Texas Panhandle was rocked with the news that Cargill was idling its Plainview, Texas, beef processing facility Feb. 1. In a statement, John Keating, president of Cargill Beef, Wichita, Kan., attributed the idling to the strain from the reduced cattle supply. "While idling a major beef plant is unfortunate because of the resulting layoff of good people, which impacts their families and the community of Plainview, we were compelled to make a decision that would reduce the strain created on our beef business by the reduced cattle supply." Increased feed costs from the drought, herd liquidations and over-capacity with four major beef plants in the Panhandle were all causes for the idling.
Lubbock Feeders is one of the many feedlots around Plainview that sent cattle to the facility for processing. This idling will affect not just its business but also the small bedroom communities in the region that rely on plant workers as their tax base.
"If you remove a packing house that processes 900,000 head of cattle, those were cattle that were going to be placed in the area and now will be fed some place else," Williams said. "There will probably be not as many yards that close, but they will slow down and become more efficient and may run at 50 percent capacity for a while to make it through.
"The way that this affect the economics of the Southern Plains region is that so many live in small towns near us, and people will think nothing of driving 40 to 50 miles to work in a packing house," Williams added. "That facility, I'd heard, was built sometime in the early 1970s and it ran for about 40 years. It had processed nearly 35 million head in those 40 years." That's quite an economic impact on the region, he added.
Still, despite the bleak numbers there are opportunities to be found in cattle feeding if feedlots can weather the drought. The February USDA-ERS Livestock Outlook said that if we resume normal weather patterns in 2013, then stockers can grow calves out on pasture, thus spreading out feeder cattle placements more uniformly. If cow-calf ranchers see some rain they may keep back more heifers out of the feeder cattle supply, which should also rebuild herd numbers in the next few calf crops. And, improvements in feeding efficiency at the feedlot from 2011 to 2012 added 18 to 19 more pounds to average dressed weights.
"We're all searching that there has to be some opportunity to that will come out of this and I don't know if it's jumping out in our area just yet," Williams said. "No doubt we will become more efficient and innovative through these struggles and no doubt we will all become better.
"But, through all of this, I'm reminded of the importance of that mother cow," he added. "How there are so many of us that have a living because of that mother cow. She's a very important part to our industry and so many support jobs rely on her. You just don't realize it until you get into one of these situations how many people she really supports."
Jennifer M. Latzke can be reached at 620-227-1807 or email@example.com.