The Importance of Beef Trade to the Cattle Industry

Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist

 

A recently released report estimated the impacts of ceasing both U.S. beef exports and imports.  The report was authored by Glynn T. Tonsor, Kansas State University and Derrell S. Peel, Oklahoma State University.  The report was commissioned by the Kansas Beef Council, Oklahoma Beef Council and the Texas Beef Council.

 

Major conclusions of the report include:

• It is hard to over-state the complex and ever-growing role of beef exports and imports.  Exports and imports are, to a large extent, conducted by different firms for different reasons precisely because they are mostly different sets of products. Beef exports and imports combine to provide opportunities to increase value to the U.S. industry by exporting products that have more value in foreign markets and importing products that can be sourced more economically in international markets.
• The mix of countries the U.S. exports beef to has developed resulting in a more diverse, less concentrated export portfolio. Conversely, sources of U.S. beef imports have comparatively fluctuated less over time.
• Implied trade prices clearly show the U.S. receives a higher $/lb. value for exports than it pays for imports reflecting core differences in product type and the role of each transaction in adding economic value. From 2016 through 2020, the U.S. experienced average annual unprepared beef exports of 2.05 billion pounds, export value of $6.4 billion, and implied export price of $3.13/lb. Conversely, 2016-2020 average annual unprepared beef imports were 2.30 billion pounds, import value was $5.8 billion, and implied import price was $2.52/lb. These statistics clearly indicate participation in the global market provides a net economic gain.
• Export volume as a percentage of domestic production has grown substantially in recent decades while imports as a share of domestic disappearance have varied much less.
• If both U.S. beef exports and imports declined by 10 percent, prices and quantities of feeder cattle and fed cattle would decline significantly. The cumulative, net present value of impacts over 10 years would be an economic loss of $12.9 billion to feeder cattle sellers and $6.8billion to fed cattle sellers. Impacts would be distributed proportionately across states that produce feeder and fed cattle with the largest beef cow and feedlot states seeing the largest negative impacts of reduced beef trade.
• Extrapolating the considered 10% beef trade loss case to a more extreme, full 100 percent loss scenario would suggest catastrophic impact, broadly approximated at $129 billion for feeder cattle sellers and $68 billion for fed cattle sellers reflecting a much smaller overall industry. While the methods used here are not precise for such extreme situations, the take-home point holds: entirely ceasing U.S. beef export and import trade would be economically catastrophic.

As an over-arching summary, the report concludes that the economic importance of beef exports and imports is substantial and growing with time. In the absence of beef trade, the entire industry would shrink significantly. The report focuses on impacts of losing international beef trade on domestic feeder and fed cattle sellers and does not consider spillover impacts on other sectors such as allied industries including input suppliers (row crops, feed, materials, etc.), local labor markets, and agricultural lending. As such, this assessment likely understates the total impact involved with the possibility of losing U.S. international beef trade. The study focuses on beef trade enabling a deeper and achievable assessment, leaving trade of cattle, hides, and other aspects of the broader industry to other projects.

 

The importance of beef trade continues to grow as beef exports increased to a new record in 2021 and have increased even more thus far in 2022.  The full report and executive summary are available on the KSU Ag Manager website at:  https://www.agmanager.info/livestock-meat/marketing-extension-bulletins/trade-and-demand.

 

 

Preparing for Winter 

Mark Z. Johnson, Oklahoma State University Extension Beef Cattle Breeding Specialist

 

It’s not too early to be preparing for winter.  In recent weeks, I have covered some of the “best management practices” to deal with the drought and excessive heat that continues to plague Oklahoma cattle and cattlemen in the summer of 2022.  This week we look ahead at a checklist to consider to be ready for winter.  Many of these are typical of preparing for the winter months, some are of more significance this year.  Here goes…

 

1. Water is the most important of the classes of nutrients.  A clean and abundant supply of water is critical for the health, reproduction and production of beef cattle.  In a year when ponds are low now is the time to be planning for your winter water supply.  Evaluate your ponds or water sources now.  Whether it is pond clean out, installing automatic waterers, checking wells, windmills, etc.  Now is the time to take action before freezing temperatures are upon us.  Most ponds are at low levels.  Shallower ponds are more subject to freezing.  Plan accordingly.
    
2. Secure your feed and hay supply.  Even if we receive ample moisture before the first frost, we are running short of growing days for warm season grasses.  The warm season forage base you have now is all you will have.  As we move into the typical hay feeding season demand (and price) for hay (already scarce) will increase.  In a year like this, getting a feed analysis on your hay is more critical than ever.  If you are buying hay, ask for the feed analysis before you agree to purchase.  If your grass is short and hay inventory is low…….    
    
3. Eliminating Cow Inventory/Culling may be necessary.  Culling criteria for cows and replacement heifers has been covered recently in Cow-Calf Corner Newsletters.  In a year of record high hay and feed prices, keeping open cows and heifers around through the winter greatly diminishes the profit potential of your cow-calf operation.  Believe it or not, there are parts of the country not in drought.  If you do some checking, it may be possible to custom graze your cows in other regions.  If this is what you decide to do, don’t overlook the cost of trucking your cowherd to areas where there is grass.  The trucking bill could exceed the grazing bill.
4. Repair or Install Shelter and Windbreaks
   
   
5. Monitor the Body Condition of your cow herd.  The dry period is the most efficient time to put flesh and weight on cows that may have gotten too thin while raising a calf this past summer.  Managing now for optimum BCS at calving next spring will pay dividends in future reproductive efficiency and breed back.

 

See Dr. Mark Johnson discuss management of cow body condition scores on SunUp TV from October 1, 2022.

 

 

Will it Pay to Retain and Backgrounding Calves this Year?

Paul Beck, Oklahoma State University Extension Beef Nutrition Specialist

 

In a recent presentation by Dr Derrell Peel, we were shown that projected value of gains for growing calves this winter are in the $1.35 to $1.40 per pound range, and has the potential to go even higher based on projections for available feeder cattle numbers next spring. What this means is if we can put gain on calves for less than the projected value of gain backgrounding our calves to higher weights should be profitable. Pasture is probably not an option, so calves may have to be fed all winter. This may be difficult to do this year with reports of hay sales in the country of $150 to $170 per bale and feed prices over $400/ton. Based on these feed prices, our most common feeding program of feeding free-choice hay and about 1% of body weight of a supplement would cost about $2.60 per day and around $1.63 per pound of gain with gains around 1.5 pounds per day. Other feeding programs may be more profitable, but are much more complex and management intensive. Limit feeding a higher concentrate grower diet to about 90% of projected free-choice intake could achieve gains of around 2 to 2.5 pounds per day that would cost $1.25 to 1.30 per pound of gain.

 

Be sure to feed calves appropriately. Neither excessively thin (body condition score 1, 2, or 3) nor excessively fat (body condition score 7, 8 or 9) would be considered ideal from a marketing perspective. Excessively fat or fleshy calves will be discounted because of reduced potential for gain. Overly thin cattle may (or may not) receive premiums because of the possibility of compensatory gains, but these premiums are never enough to make up for the reduced pounds of sale weight. Moderate flesh (body condition score of 4 or 5) should be the targeted condition at marketing. Body fat accretion rate occurs at different rates depending on the animal’s frame score, sex, post-weaning backgrounding gains, and growth promoting technologies used (for instance, implants and beta agonists). 

 

How much gain should we try to put on calves during the backgrounding period? A medium frame steer weighing 450 pounds with an expected finished weight of 1,200 pounds and a beginning body fat percentage of 15% (BCS = 4) could gain 2.5 lbs/day and still only reach a body condition of 5 if marketed at 600 pounds. A medium frame heifer should only be pushed to gain 2.0 lbs/day, because fat deposits at a greater rate in heifers and expected mature weights are 100 pounds lighter. All targeted rates of gain depend on accurate estimation of mature weights previous nutrition and the use of growth promoting technologies.

 

Backgrounding programs are an important component of adding value to calves post-weaning. Cost effective nutrition programs should be designed to market these calves in the best possible manner.