Texas Cattle Ranchers Face a Trifecta of Worrying Issues, Which Means Higher Beef Prices in 2013
This year will mark the 136th time the Cattle Raisers Convention has met, but it's in a climate that these cattlemen haven't battled for a long time. More than 2,500 ranchers and landowners are convening in Fort Worth this March to discuss a trifecta of issues that won't easily be solved.
Ranchers throughout Texas -- and, increasingly, the rest of the country -- are now faced with three distinct but interwoven challenges: a deepening financial crisis that is decreasing consumer demand for beef, the lowest cattle supplies since the 1940s and a lingering drought that has expanded to other parts of the country. This time last year, we explored that last issue in our cover story, "Meat Market."
During the worst of the 2011 drought, more than 80 percent of Texas cattle ranchers were forced to cull or entirely liquidate their herds. Tough news for a state in which cattle ranching accounts for an enormous portion of our total agriculture industry. It exceeds the value of all other Texas crops -- from cotton to corn -- combined.
Just last week, Cargill Inc. -- the largest privately held corporation in the United States, which supplies roughly 22 percent of the domestic meat market -- announced that it was closing its beef processing plant in Plainview due to the decreasing numbers of cattle. The plant employed 2,000 people.
"Ranchers are headed toward an unprecedented crossroads that is sure to be a critical point in the history of the Texas cattle industry," said Joe Parker Jr., rancher and TSCRA president.
A lone cow waits at a livestock auction in Longview in 2012.
Photo by Groovehouse
As predicted in our cover story, beef prices have been rising sharply since the drought of 2011 and will continue to do so, thanks to an overall decrease of 4.8 percent in beef production -- the second largest year-over-year decrease in 35 years, according to Science Daily. It's a simple matter of supply and demand: With fewer cattle to meet the beef demand, those that are left fetch more at auction -- even though the demand itself is down too.
CNN reported in December that "global beef prices are expected to rise to record highs in 2013," despite a "lethargic world economy" and domestic demand that is decreasing by the year.
At the Cattle Raisers Convention this coming March, Parker has gathered speakers whom he hopes will help address and assuage concerns that the beef industry is faltering. Economist Don Reynolds will address ranchers at the opening general session to discuss the global economy, the financial crisis and what role the cattle industry will play moving forward. Kevin Good, senior analyst for CattleFax, will discuss how the drought in the Midwest has affected feed costs as well as the improving export markets and the continued contraction of the U.S. cattle herd.
And rounding out the convention will be climatologist Evelyn Browning-Garris, who will present research on past weather patterns and hopefully provide insight as to when the drought might end. In the meantime, the predictions of ranchers such as Ronnie Bartley -- who was spotlighted in our story after he was forced to sell of half his herd and lay off his two sons -- are sounding increasingly less far-fetched.
"Six, ten years from now," Bartley predicted, "we won't be able to afford to eat a steak here in the United States if this continues on."
There is a silver lining, however -- but not for cattle ranchers. As reported by Food Business News, there was a 52 percent increase in chicken breast on menus in the last three years, and a 22 percent increase in vegetarian items -- both of which were in response to increasing cattle prices.
Maybe now is a good time to look into chicken ranching.
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