The U.S. beef industry has gone through significant changes over the past two years and that change continues. The critical factor is production efficiency. This is true across all U.S. agriculture.
I have mentioned before in this column the direct impact is that it takes a smaller production base to produce the same product. One does not have to dig into the data too deep to see just that whether it be the quantity of beef produced per calf or brood cow, pork per breeding sow, corn per acre, or soybeans per acre.
The U.S. has the lowest cattle inventory since 1951, a statistic that provides good discussion. However, the more important statistic is the difference in the quantity of beef produced per cow with the brood herd in 1951 compared to today. In 1951, that figure was 217 lb. This year, it will be about 700 lb. Those pounds of beef are not only significantly higher, but also notably higher quality and both impact prices.
Another impact of this production efficiency in the beef industry is that it limits herd building in the face of record-high prices. The industry has a young, productive cow herd that is giving ranchers more financial, breathing room than they have ever had in the past.
It would take very little herd growth to change that situation. And, in addition, consumer beef demand is strong. Furthermore, it appears that it will remain that way.The current situation has paved the way to reduce or eliminate debt and to focus on herd genetics to generate greater value per pound of beef produced.
Again, the U.S. beef industry is changing which in turn, necessitates taking into account those changes as we assess the industry going forward.
