Hide and Seek for Stockers

by Jill Dunkel

Stocker operators and order buyers can see the writing on the wall — tough times ahead.
Tough times are not necessarily defined by low prices in this scenario, but more accurately a lack of supply. With the epic drought of 2011, cow numbers are drastically declining upon the heels of one of the lowest calf crops in the United States.
“Sales will get shorter because of the drought. The numbers have been so high so long,” says order buyer Arlis Justice. He operates Justice Farms in southern Arkansas.
“Ranchers have been reducing the numbers of the cow herds all across Texas, Louisiana, Arkansas and Oklahoma. It’s going to be harder to put together cattle, and that in turn could lead to higher ones yet.”
Justice says this is one of the worst droughts he’s experienced, especially with the drought occurring early in the spring, which affected all the spring crops and grasses.
“There will be a lot more cattle sold that have already been sold,” he says. “Producers made one sweep through, and they’re fixing to have to make another. When they get finished, cow numbers will really be down.”
Agricultural Economist Stan Bevers with the Texas AgriLife Extension Service foresees a long term reduction in cow numbers. “I’m going to say this could take at least three to five years to get numbers back to where calves are even starting to be somewhat abundant.
“The shortterm situation here, there are calves available because everyone’s weaning early due to the conditions. But for the next couple of years…the numbers just won’t be there.”
Bevers cites statistics that show this is the smallest calf crop in the United States since 1950, and says declining beef cow numbers has been a continuing trend for the last 40 years.
“There are three obstacles to rebuilding the cow herd, and drought is not one of them,” Bevers says. “Drought just makes it much worse.”
He believes the competition for land resources from other industry and development, the need for human capital resources, and the rising input costs relative to the maximized production on the cow/calf level all hamper an increase in cow numbers.
“Beef production is up in other stages of the cattle industry, but in the cow/calf sector, how many calves can a cow have in a year? You can’t increase that. This year, the other component is weaning weights. Weather is one of the greatest influence in weaning weights, and this year weaning weights are going to be light. That’s what I mean by maximized production at the cow/calf level.”
Justice questions if rebuilding close to pre-drought numbers will ever take place. “We need younger people rebuilding. A lot of my neighbors are selling out right now, and it would take them 10 years to build back. Prices would have to stay high, and financing would have to be available and stay with them in order to do it. But as it is right now, we don’t have many agricultural financing companies that are willing to do that.”
Justice says that some banks  now are asking for near 100 percent equity on cattle. “Some wouldn’t have to borrow that money, but those who do, it will make it real slow building back.”    ©

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