All Bets Are Off

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

 

The latest edition in the torrent of recent political attentions directed at the cattle and beef industry includes allegations of market manipulation against the beef packing industry.  Beef packers are the one segment that has been most negatively impacted in the current market, incurring huge losses due to poor margins and limited cattle supplies.  Using logic that only works in the office of a politician, packers are supposedly wielding unacceptable market power while paying record high cattle prices and artificially raising beef prices…but not enough to avoid losing a couple hundred dollars on every animal they process – certainly many millions of dollars.  If beef packers had any significant ability to exercise market power, I am certain that we would not have record high cattle prices and packers would not be losing money. 

 

Having identified high beef prices as a political issue, the federal administration is desperate to find a scapegoat since current cattle market conditions ensure that beef prices are inevitably and unavoidably elevated until such time as the cattle industry can rebuild – another 2-4 years at least.  Federal government attacks on beef packers are aided and supported by a vocal minority of the cattle industry (and a few sympathetic politicians) who view packers as a perennial villain and always worthy of attack anytime the opportunity is presented.  These attitudes have been a factor in the beef industry for well over a century.  Ward (2002) noted a quote by Senator John B. Kendrick of Wyoming in 1919 that said “This squall between packers and the producers of this country ought to have blown over forty years ago, but we still have it on our hands…” The timing of such attacks this time is particularly puzzling as dismantling the packing industry would certainly jeopardize current record high cattle prices and the best economic returns most producers have ever enjoyed.  I guess some cowboys just can’t stand prosperity.

 

The majority of cattle producers, on the other hand, understand that the cattle and beef industry is extremely complex and all segments of the industry are critical and essential (Peel, 2021).  Most of my ongoing discussions with cattlemen includes questions and concerns about the potential loss of vital infrastructure due to the losses currently faced by beef packers.  Proposals to bulldoze the packing industry will negatively impact cattle producers and beef consumers and cripple the cattle and beef industry for many years.

 

Concentration in any industry leads to the potential for market power.  The ability of concentrated firms to utilize market power depends on controlling supply.  Large firms do not control demand and can only influence price by controlling supply relative to demand.  Beef packers’ ability to manipulate cattle or beef prices is severely limited owing to the fact that they do not control supply…packers do not own cows.  Packers inevitably purchase and process all available cattle at any point in time – whether too many or not enough cattle.  The current situation is way not enough and packers can’t change that. If there were more cattle to process, they would, and beef prices would decrease.

 

The beef packing industry has been the subject of repeated and intense scrutiny for many years.  The sizable body of research was summarized by Peel, et.al (2020):

 

“Agricultural economists recognize the potential for market power to be expressed in highly concentrated industries. The cattle and beef industry, and the beef packing industry in particular, has been researched in multiple studies to understand the impacts of market concentration. The evidence shows 1) market power does negatively impact fed cattle prices, but the impact is small and 2) the cost savings due to size economies are at least 10 times greater than the negative market power impacts. Cattle producers and beef consumers receive net benefits from the cost efficiencies of the current market structure in the form of higher cattle prices and lower beef prices than would exist in a less efficient industry.”

 

Though the outcome of current political actions is uncertain, the potential for long-term harm to the industry is substantial.  Anytime politics trumps economics, the strong supply and demand fundamentals that have determined the outlook for the industry to this point become irrelevant.  Expectations for prices and production going forward are now completely clouded…therefore… all bets are off.

 

• Peel, Derrell S. (2021) “How We Got Here: A Historical Perspective on Cattle and Beef Markets.”  Chapter 1.  In The U.S. Beef Supply Chain: Issues and Challenges. Proceedings of a Workshop on Cattle Markets.  Bart L. Fischer, Joe L. Outlaw and David P. Anderson, editors. Agricultural and Food Policy Center, Texas A & M University 2021.
• Peel, Derrell S., David Anderson, John Anderson, Chris Bastian, Scott Brown, Stephen Koontz and Josh Maples. (2020) “Price Discovery Issues and Considerations” Circular E-1053, Oklahoma Cooperative Extension Service, November 2020.
• Ward, C.E. (2002) “A Review of Causes for and Consequences of Economic Concentration in the U.S. Meatpacking Industry.”  Current Agriculture, Food and Resource Issues, Issue 3, No. 28.

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Build Back Better – Replacement Heifers Series

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

 

In spite of market volatility over the past three weeks, the strong market fundamentals and current status of the U.S. beef industry remain unchanged, and can be distilled down into a few short bullet points:

• The lowest beef cow inventory since the early 1960s
• The lowest number of feeder calves in the production chain since the 1950s
• Strongest consumer demand for beef in several decades
• Very little evidence (over past several calf crops) of heifer calves being retained to develop as the next generation of cows

These factors indicate the robust values of all classes of cattle (and beef) we are seeing now should continue for several years. Why? Because of the biological time lag between heifers selected now to develop as replacements, and the 24 months before they would potentially wean their first calf to enter the production system. Furthermore, it is most likely the beef cow inventory of 2026 will be lower than 2025.

 

This current status is the result of droughts, the threat of New World screwworm, the resilience of cattle producers, high input cost and the great success story of cattle breeders improving the additive genetic merit of U.S. cattle to consistently yield a high quality, great tasting beef product to meet consumer demand.

 

The existing cow inventory will age out of production; thereby, replacement heifers are needed! In the weeks ahead, Cow-calf Corner will include a “Build Back Better” series of articles targeting cow-calf producers who are motivated by sustainable profit. Analysis of your production system, proper breeding objectives, mating decisions and development ensure the replacement heifers you are bringing into production are the right fit for your environment and set your operation up for success over the long-term.

 

Heifer Development

In order to maximize profit potential it is important to have heifers calving at two years of age.  Research shows heifers becoming pregnant early in their first breeding season, (specifically the first 21 days) remain in the herd longer and produce more total calf weaning weight over their lifetime in production.

 

How do we select and manage replacement heifers so that they are having fertile heats and ready to conceive by 14-15 months of age? Genetics, photoperiod, level of nutrition and growth rate all influence when beef heifers reach puberty; that being said, heifers that have reached 65% of their mature weight by this age should have reached puberty and be ready to breed. Obviously, age should be taken into account, (along with other selection criterion covered last week), when selecting replacements, with older heifers having an advantage. Heifers calves born earlier in the calving season, are produced by cows that conceived earlier in the breeding season.

 

After heifers are selected, how do we arrive at the target weight they need to gain from weaning until their first breeding season? First we need an accurate estimate of the average mature weight of the cowherd that produced the heifers. This can be calculated from weights taken at weaning time on the 4 to 7-year old cows and adjusting to a Body Condition Score (BCS) of 5. If developing purchased heifers, target an optimum plane of growth having the heifers in a BCS of 6 by 14-15 months of age.

 

What is the best way to feed to reach that Target Weight? In a normal Oklahoma year, spring born heifers weaned in fall can be grown on wheat pasture typically available by late November and gain 1.5 lb. per day (or better) to reach target weight. With wheat pasture conditions currently sporadic in Oklahoma, it is comforting to know that heifers can grow very slowly through the winter months and fed harder for the couple of months going into breeding season in order to reach target weight by breeding season. In regard to gestating bred heifers due to calve next spring. Target a body condition of 6 and 80% of their mature weight at first calving. 

 

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Sesbania vesicaria: A Toxic Plant for Oklahoma Cattle Producers to Watch

Barry Whitworth, DVM, Oklahoma State University Extension Livestock Health Specialist

 

Driving around eastern Oklahoma, individuals may notice a tall, single-stemmed plant known as bladderpod or bagpod. The scientific name is Sesbania vesicaria. Although the plant may appear desirable at certain times of the year, the seed pods are toxic. Cattle producers should be scouting pastures for any plants.

 

S. vesicaria is a legume that can grow up to six feet tall. It has pinnately compound leaves with numerous small, oval leaflets. Bladderpod produces bright yellow flowers with hints of red or pink. Following flowering, the seed pods develop. The seed pods are green to yellowish in color. By late summer or early fall, the pods turn brown and often rattle when shaken, signaling that the plant has reached its most toxic stage.

 

The plant is found in sandy soils in southeastern and central Oklahoma. It may appear in areas where it is not usually seen following wet summers or in areas that have flooded. Generally, bladderpod grows as scattered individual plants but, on occasion, will form dense stands.

 

Although many animals are susceptible, intoxication primarily occurs in cattle. The toxin is not well characterized but is thought to be a saponin contained in the seeds. The saponin causes gastrointestinal irritation. The hazard is more prominent during the winter when forage may be scarce and the pods are readily available. Cattle accustomed to the plant will seldom eat it; however, newly introduced cattle are more inclined to consume pods. Recently introduced cattle may eat large amounts of pods. About one pound of pods can kill a 500-pound calf. If cattle eat the pods slowly, the irritation will limit intake, which decreases the likelihood of intoxication.

 

Following ingestion of the seeds, clinical signs may appear within a few hours. Common clinical signs include anorexia, diarrhea, labored breathing, and colic. Mortality is usually high.

 

Animals suspected of ingesting bladderpod should be treated with activated charcoal to help absorb any remaining toxin and fluids to address dehydration. Prevention is much more effective than treatment. Producers should scout pastures for any bladderpod plants. Any plants found should be removed or mowed. Herbicide applications early in the growing season can eliminate the plant. Producers should maintain good forage cover to reduce weed establishment, as overgrazed pastures are more prone to Sesbania infestations.

 

Since Oklahoma experienced a very wet summer, S. vesicaria may be a problem this winter. Cattle producers need to be scouting pastures for any bladderpod plants. For more information about S. vesicaria, cattle producers should consult their veterinarian and/or local Oklahoma State University Cooperative Extension County Agriculture Educator.

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Taking Advantage of Grain Sorghum in Feeding Programs

Paul Beck, Oklahoma State University Extension Beef Cattle Nutrition Specialist

 

There are reports of grain elevators turning away grain sorghum this fall due to lack of bin space. Many elevators are prioritizing storage for wheat and corn because of poor export demand for grain sorghum and soybeans. This situation has widened the local basis for grain sorghum, lowering its price but creating opportunities for livestock producers willing to feed it.

 

Unprocessed grain sorghum is one of the least digestible cereal grains for cattle. Sorghum has a hard outer seed coat and a dense endosperm where starch is tightly bound to proteins. This starch-protein matrix resists microbial digestion in the rumen, and when fed whole, much of the grain passes through undigested. Total tract starch digestibility of whole sorghum is typically 40 to 60 percent, with total digestible nutrients (TDN) of about 65 to 70 percent. This corresponds to an energy value roughly 70 to 75 percent that of whole corn.

 

According to the Nutritive Value of Feeds for Beef Cattle factsheet (ANSI-3018; ), whole corn averages 88% TDN, while unprocessed grain sorghum averages 70% TDN—only about 75 to 80% as good as corn. Processing sorghum by rolling or grinding increases TDN to about 86%, improving energy value by roughly 25%. That improvement can significantly impact both rate of gain and feed efficiency in backgrounding or finishing programs.

 

Grain sorghum can be economical when priced at 90% of corn, but it must be processed to capture its full feeding value. In some areas of Oklahoma, sorghum is currently priced at only 75 to 80% of corn—making it an attractive, cost-effective feed option for supplementation and feeding programs this winter.