Dropping cow numbers an opportunity for Virginia cattlemen

By JANE W. GRAHAM
AFP Correspondent

BLACKSBURG, Va. — Virginia Cooperative Extension Agent Matthew Miller got his audience’s attention here Dec. 19 when he asked what the figure seven billion means to them.
Miller, addressing the monthly meeting of the New River Valley Cattlemen’s Association, was met with a long silence before someone said “dollars” and he shook his head no.
Then from the back of the room someone almost whispered “people, right?” the speaker fired back.  “People. Who’s going to feed them?”
Miller was not there to discuss the report USA Today made on Oct. 31, 2011 that the global population had reached seven billion.  He came to talk about the cattle market this year and trends that may occur in coming years. He blew holes in some of the revered beliefs cattlemen developed over the past 60 years and pointed out that the growing population, rapidly approaching 10 billion people, is an opportunity for cattle.
“Those people have to eat,” he declared. “Unless you are in the ground or have been for six months you know cattle prices have taken off. It’s been absolutely phenomenal what the market has done in a year and half.”
Miller said 2011 has perhaps been the best ever and reported that nationally the cow herd is the smallest it has been since the 1940s and 50s.
But this is all not good news for all farmers, he added. Drought in Texas and Oklahoma that has either killed cows or forced sales and 12 percent of all the breeding age cattle in Texas are gone.
High prices and decreasing numbers of cattle are among the factors influencing a very volatile situation, Miller stressed.  He said around 600,000 cows are gone from the two top beef-producing states.  In Canada, where there are not as many cows, numbers are also down, he said.
“I’m not sure we are going to see the cattle cycle like we’ve historically seen in the last 60 years,” Miller stated. He said cow numbers for 2011 were 1.4 percent below 2010 and predicted that number could rise to five percent in 2012.
“Lots and lots of calves went to feed early,” he said.  “This helped the feed lot numbers.” 
He reported that larger numbers of heifer calves went to market this year and issued a word of caution.
“You can’t expand if you don’t have heifers,” he stressed, pointing to a sell-off of about five percent more heifers than usual.
He recalled that when prices went up in the past, people kept heifers back and expansion happened in the industry.
“There are not enough heifers for you all to make cows out of,” he told the group.  He also said farmers are producing more meat more efficiently with fewer cows.
As the world population grows, U.S. farmers may have to change their ways, he said. With many ways to sell cattle, Miller suggested that one of the methods that may be seen as sacred in Virginia by some cattlemen, the Retained Ownership Program or ROP, may require some re-thinking.
“Look at what cattle are really worth, then look at ROP,” he told the folks there who use this marketing method. “You are getting underpaid. Some of you all need to get rid of those cattle.”
He added that anyone who says they know where the market is going needs to look at the fundamentals. 
“There’s something crazy going on every day,” he exclaimed.
Miller reported the U.S. exports have done well but producers need to concentrate on quality and let other countries worry about quantity.
He also cautioned that fewer cattle could mean loss of infrastructure in the industry and it will be harder and more expensive to replace if numbers do rebound.  He urged producers to look at risk management programs to protect themselves.
He said to look at how much the markets fluctuate from week to week and pay attention to the price volatility.  Grain, livestock and fuel are some of the factors to watch in an industry that has lots of challenges, Miller noted.
He stressed that the cattle industry has lost its voice on the national front to the corn lobby.  He said there are fewer breed associations with only the Angus producers having enough money and market to make a difference.
He also noted some other countries are much better at tracking their livestock and said it’s too bad to get less money for an animal because someone was too lazy to put in an ear tag.