The Ups and Downs of the Beef Industry: A Rancher's Perspective
The beef industry is a tough business. It's not for everyone. Ranchers face many challenges.
Challenges Faced by Ranchers
- High Prices
- Low Profits
- Unpredictable Markets
A Young Rancher's Experience
In 1973, a young rancher learned this the hard way. He bought 20 steers. It was his first big investment. But the market crashed soon after. He lost money. Others lost more.
Beef vs. Other Proteins
Beef is different from other proteins. It needs:
- Lots of Land
- Expensive Machines
- Costly Feed
- Labor
Most ranchers have other jobs. They can't make a living from ranching alone.
Statistics
- Over 90% of U.S. cattle operations are small.
- Less than 0.5% have more than 500 cows.
- Even then, profits are slim.
Market Fluctuations
The rancher saw highs and lows. In 2014 and 2015, he sold heifers at record prices. But the market crashed in late 2015. He lost as much as he gained.
Government Help
There was no government help. There shouldn't be now either.
Supply and Demand
High beef prices aren't just about the market. They're about supply and demand.
- National Herd: At a 75-year low.
- Demand: High.
- Beef: A valuable protein source rich in iron and B-vitamins.
Rising Input Costs
Ranchers are getting record high prices. But they're not keeping the profits. Input costs are rising:
- Land
- Equipment
- Taxes
Coffee prices have risen faster than beef prices. This shows how beef's relative value has not increased much.
Trump's Policies
Trump's policies have hurt ranchers.
Trade War with China
Caused slumps in soybean and wheat demand.
Argentine Beef Imports
Agricultural machinery maker John Deere expects tough market conditions to continue. Trump's late October decision to quadruple imports of Argentine beef was a blow.
- Argentina: Had a foot-and-mouth disease outbreak 20 years ago.
- U.S.: Banned their exports then.
- Now: They're back. This poses a threat to U.S. cattle health.
Market Uncertainty
Trump's statements about beef prices caused a sharp decline in cattle futures. This created uncertainty and fear.
- Similar to 1973: Nixon's price controls caused a market crash.
- Capitalistic Approach: Let the market cycle run its course.
- Trump's Statements: Make ranchers hesitant to expand their herds.
Financial Aid
A $12 billion bridge payment for farmers is welcome. But it's just a Band-Aid. It won't fix the big problems.
Trade Group's Response
The cattle raisers' trade group acknowledged Trump's support. But they won't be played for suckers much longer.
