While severe drought continues to gnaw at the U.S. cattle herd, local ranchers could actually benefit from years of high prices and profit.
It’s a precarious situation of supply and demand, driven largely by Mother Nature. Producers in drought-stricken states from the Midwest to California are selling off their animals and keeping fewer heifers on hand because they can no longer afford to feed them.
That has whittled cattle and calves across the country to their lowest totals since 1951, according to the National Agricultural Statistics Service. Yet demand remains strong, especially as Japan returns as a top export market for U.S. beef.
Ron Rowan, marketing chairman for the Oregon Cattlemen’s Association and director of Beef Northwest Feeders, said prices are high enough for ranchers to turn serious profit — if the conditions are right to support their operations. So far, northeast Oregon is in the sweet spot with decent moisture and overall adequate grazing, Rowan said.
“Guys here are in a good position,” he said. “They’ll have unprecedented prices for their product.”
There is some concern about pricing beef out of the market if supply is not recovered, Rowan said. But he commended recent marketing efforts and genetics that have customers stocking their freezers with burgers and steaks.
At the producer level, the Beef Quality Assurance program provides guidelines intended to raise consumer confidence in beef. Genetics are becoming more sophisticated at breeding certain traits, Rowan added, that ensure a better product.
Meanwhile, figures from the National Cattlemen’s Beef Association show exports hit 2.5 million pounds in 2013. Top markets include Canada, Mexico and, once again, Japan.
The Japanese Ministry of Agriculture, Forestry and Fisheries is slowly relaxing restrictions on importing U.S. beef after mad cow disease was found in a single animal in Washington state more than a decade ago. Northwest producer groups including the Oregon Beef Council are investing in a marketing plan specifically to Japanese groceries — dubbed the Pacific Northwest Initiative — to further re-establish their presence.
During a recent meeting of the Umatilla County Cattlemen’s Association in Pendleton, national speakers recognized in the industry spoke about cow-calf prices that could increase dramatically. But the double-edged sword could be more feedlots and packing plants stand to close unless the herd starts to recover.
For now, if producers have the resources and feed to invest in their operations, they will reap the rewards of the market, Rowan said.
“These are boom times for the local guys,” he said. “They’re enjoying very high prices from a cow-calf perspective, and I think we’ll see that for the next couple of years.”