Editor’s Note: This article is part of the Drovers 2024 State of the Beef Industry report, which includes an exclusive survey of cattle producers and their thoughts on numerous topics of importance to the future of their operations. To download the full report, click here.
Based on the 2024 State of the Beef Industry survey results, most respondents are simultaneously serious, thoughtful and optimistic about the business.
While parts of the U.S. still grapple with dry conditions, the overall situation has dramatically improved versus this time last year, especially in the middle part of the country. The reprieve from drought coupled with record prices has provided producers an opportunity to focus on other parts of the business.
Supplies are increasingly tight, but much of the market’s strength is attributed to resilient beef demand. Last year’s per capita beef spending totaled $461 — a new record by $14.
Consumers have had every opportunity to trade down when it comes to their protein options, but they continue to choose beef, even at higher prices.
Those consumer dollars are flowing back into the production sector. As a result, fed cattle prices have established another set of new highs in 2024. While overall beef production has waned (due to lower cow slaughter), fed beef production has been running ahead of year-ago levels. That is, higher prices on bigger volume.
Just how high can prices go? That remains to be seen, but the battle for margin between the feedyard and the packer, and ultimately the retail and food service sectors, will be especially important to watch. In the interim, the cow-calf producer holds the cards and will continue to benefit from solid prices allowing the sector to string together multiple years of unprecedented profits. In fact, in the past five years, 49% of respondents report profitability.
Looking to the Future
Producers are thinking to the future with plans to add a family member. In the 2024 Drovers State of the Beef Industry survey, 59% indicate they plan to add a family member to the operation in the next five years. That number was 54% in 2023.
The question that often follows next when adding a family member is herd size. Even though it doesn’t appear the industry will see rapid rebuilding, 51% of producers say they will grow herd size in the next five years. Of the remaining respondents, 38% plan to maintain herd size, 7% will reduce herd numbers and 4% aren’t sure.
While U.S. beef cow inventories stabilize in 2024, Lance Zimmerman, senior vice president, senior animal protein analyst for RaboResearch Food & Agribusiness, says the industry could experience a longer transition period as unprecedented risk mutes profit signals that normally kick-start herd rebuilding efforts.
USDA reported a Jan. 1 beef cow inventory of 28.2 million head, and Rabobank is forecasting a relatively stable cow herd over the next three years between 27.9 and 28.3 million. Cow-calf producers remain relatively quiet about the prospects of restocking pastures. That stands in contrast to the continuous dialogue regarding the production and price risks casting doubts on the segment.
Therefore, numbers will remain tight in the coming years, and they will be further exacerbated if/when producers decide to hold back heifers to rebuild the cowherd. At that point, the industry is likely to see the peak in prices.
For now, there are indications many operations are viable, which is likely why 64% of producers say they are optimistic about the future. In the 2023 survey, that number was similar at 65%.
Breakdown of Survey Respondents
Given this is the second consecutive Drover’s State of the Beef Industry survey, of special interest is the comparison of this year’s results versus last year. That begins with the demographics. Some of the similarities are striking.
For example, 2023’s survey resulted in 40% of respondents managing operations in which three-quarters or more of the business income is derived from cattle; that number was nearly identical this year (36%). Similarly, the 2023 survey indicated 82% of respondents preconditioned their calves before selling, and this year’s number came in at 79%.
Therefore, many of the key year-over-year comparisons are especially meaningful and begin to tell some sort of story in terms of trend (versus one-offs) about what’s really going on in the industry.
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