Land use, drought impact herd expansion
Updated: Thursday, January 24, 2013 11:11 AM
More land planted to higher values crops moves grazing to drier areas
By CAROL RYAN DUMAS
Growing demand for beef, signaled by record-high prices for cattle and beef, supports rebuilding a beef herd that has shrunk by 2.76 million head since 2007, experts say.
But drought, the conversion of pasture lands to higher value crops and producer demographics complicate herd expansion.
Derrell Peel, Oklahoma State University extension livestock marketing specialist, broke down the dynamics of rebuilding the herd in his recent three-part series for the extension's weekly Cow/Calf newsletter.
"In the short run, the drought is, of course, the major factor affecting herd liquidation. Until forage conditions improve, the question of rebuilding the herd is a moot one," Peel said.
The 2011 drought took out 1.07 million beef cows in Texas and Oklahoma, and the 2012 drought is expected to reduce that number by another 400,000 to 500,000 head across several states. Most of that loss can be recovered, but it will take several years in some regions, he said.
The impact of changes in land use through conversion to higher value crops is more complex.
Changes in cattle inventories since 2007 indicate the beef cow herd is decreasing more rapidly in arable regions where competition with crops is greater, he said.
Since 2007, the decrease in the Midwest and surrounding regions averaged 14.2 percent. By contrast, the decrease in the Great Plains and Rocky Mountain region averaged 2.6 percent. Pre-drought, the decrease in the Southern Plains averaged 3.1 percent, he said.
As a result of changing land use, an increasing share of the total beef cow herd will be located in drier regions of the country. And with today's higher value of forage, there's incentive to better manage production and considerable potential for the adoption of new forages and forage systems to increase cattle production and/or extend grazing seasons, he said.
Cattlemen also have concerns about development and recreational use of forage lands, which in some areas is significant. But the majority of about 1.381 billion acres of rangeland, pasture and hay land (72 percent of U.S. land) is used for livestock production, mostly cattle. That compares to 16 percent used for cropland and 5.7 percent developed, he said.
"Land diversion away from agriculture is not a trivial matter but does not represent a huge barrier to potential rebuilding of the cow herd, at least not on a national basis," he said.
In addition to competition for land use and drought, an aging producer population and the increasing challenges of beginning producers to obtain financing will factor into the issue, he said.
Producers age 55 and over represent 64 percent of the land used for cattle, and in many cases there are no family heirs interested or able to take over the operations. At the other end of the spectrum are young producers trying to get started, facing record-high asset values and capital requirements greater than ever, he said.
Leasing and other business arrangements might be more feasible and necessary to rebuild the herd than asset purchases. And older producers forced to liquidate due to the drought might be more interested in leasing land, he said.
Between the old and young, many producers are simply trying to survive the drought, but it's important that they have a plan to preserve enough equity to rebuild herds later, he said.
"Unprecedented cattle and beef prices confirm that market demand ... offers opportunities and will support rebuilding of the beef cow herd, although to what level is as yet uncertain," he said.