Drought in America: US Cattle Herd at Lowest since 1951

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Texas Longhorns. Icons of the American beef industry.

I’ve seen numerous headlines over the past few weeks warning that the U.S. cattleherd is at historic lows.  Most blame drought for the decline, but looking behind the numbers a bit I realized that drought isn’t the full story, though certainly a huge part of it.

According to the University of Missouri, 2014 estimates for the U.S. cattle herd come in at 87.7 million head, down from 90.7 million in 2012, and continuing a downward trend that began in 2007.  Consider the following points:

  • In 1951 U.S. population was 154 million, less than half of today’s 317 million.
  • The decline in the cattle herd began in 2007, well before Texas was hard hit by drought.  The driver here was increased feed and energy costs, which greatly increased production costs for all links in the value chain, particularly for feedlots.
  • The process accelerated when Texas and other important cattle producing states were hit by a severe and prolonged drought starting in 2011.  Producers responded by feeding hay (which skyrocketed in price), moving herds to other non-drought states, and destocking.
  • The average beef cow herd in the United States is 40 head, which means many of these folks are diversified, small producers who may not have the capital or the energy (considering most are over 50) to get back into the game.
  • The cattle cycle runs 8 to 12 years, meaning even under ideal conditions it would take considerable time and effort to restock.
  • Conditions, however, are far from ideal, as drought persists in Texas and now California, an important beef producer in its own right, is experiencing record drought.

The bottom line is that beef is going to get more expensive, by as much as 4% in 2014.  In economic parlance, this means that supply should increase as producers respond to higher market prices.  However, as we have seen, agricultural economies can not respond like other industries (e.g. manufacturing) and ramp-up production at the flip of a switch.  There are too many variables at play, many indicating that beef prices may stay high, and the downard trajectory of the cattle herd may continue for many years to come, particularly if drought persists and as the aging demographics of the ranching community play out.

This portends big potential changes to the U.S. food supply in the years and decades to come.  A likely shift I foresee is younger farmers on smaller landscapes producing alternative non-ruminant protein sources, including poultry, fish, mushrooms, and even, perhaps insects.


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