Ranchers will have to wait for recovery

Gregg Doud

By MATEUSZ PERKOWSKI

Capital Press

The U.S. economy may be emerging from recession, but the chief economist for the National Cattlemen's Beef Association expects at least another six to nine months of economic turmoil in the livestock industry.

Beef and pork producers are burning through their equity, and many are probably headed for bankruptcy, economist Gregg Doud said at the Oregon Cattlemen's Association recent convention in Bend, Ore.

"We are about out of gas," said Doud.

Cattlemen have been hit hard by consumer aversion to restaurants during the recession, since about half the beef in the U.S. is eaten away from the home, he said.

At home, pork has been a strong competitor since the glut of hogs has resulted in lower prices, Doud said.

"You never talk about beef prices in a vacuum," he said. "We are absolutely toast until we get those hogs cleaned up."

However, there is a light at the end of the tunnel, he said. Pork, beef and poultry production have fallen 2, 3 and 4 percent, respectively, compared to last year.

As that translates to lower per-capita meat supplies, prices for livestock are expected to rebound once consumers start spending again, Doud said.

"It is enormously bullish when the economy turns around," he said.

"That's what we're hanging our hat on."

Doud said U.S. livestock producers should resist the pull of isolationism during the downturn, since the industry is so dependent on trade.

For example, foreign trade restrictions due to bovine spongiform encephalopathy have cost the beef industry up to $14 billion in exports, he said.

Imports of Canadian cattle are also important, since they support domestic slaughter plants, Doud said.

The Canadian cattle herd has shrunk significantly in recent years, a trend that will injure U.S. infrastructure if allowed to continue, he said. "It is going to be devastating to you if this happens."

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