State of the Beef Industry

Navigate Market Volatility with Risk Management Strategies

Wed, 22 Oct 2025 18:57:53 GMT

According to Farm Journal’s 2025 State of the Beef survey, risk management tools are being implemented by nearly half of producers. With 43% using Pasture, Rangeland, Forage Insurance (PRF) and 40% using Livestock Risk Protection (LRP) insurance.

Contract-based methods — such as futures, options and forward contracts — remain far less common. The survey shows producers are more likely to use risk tools that are simpler and more accessible, such as insurance, income diversification and off-farm income, instead of the more complex market-based tools.

Dave Weaber, Terrain senior animal protein analyst, says: “Risk management is crucial for producers, including developing comprehensive business plans, understanding cost structures, and using tools like LRP, futures and options.”

He says risk management for beef producers is far more than just a financial strategy — it’s a holistic approach to business sustainability.
Risk management is about protecting equity while maintaining operational flexibility. Weaber challenges producers to think beyond traditional commodity approaches, focusing on strategic decision-making that preserves long-term profitability.

“Set aside $40 to $70 a head for risk management,” he says. “I don’t care how you do it, if you use LRP futures, options [or a] combination of it — whatever it is.”

Weaber challenges producers to rethink their approach, asking the critical question: “How do I get less long? Every cattle producer is long in the market. How does he get less long and leave opportunity for the upside?”

He summarizes risk management isn’t about eliminating all risk but strategically navigating market uncertainties.

He encourages producers to:

Remain adaptable
Continuously educate themselves
Invest in measurement and management tools
Prepare for potential market shifts

By adopting a comprehensive, forward-thinking approach to risk management, beef producers can build more resilient, profitable operations that can navigate market challenges while maintaining financial health.

The State of the Beef Industry Report includes input from nearly 500 beef producers. The annual report provides information to help producers when making decisions. You can download the full report here.

For more insights to the report, as well as producer and economist perspectives, watch the State of the Beef Industry Webinar exclusive on FarmJournal.tv . The panel includes Ken Odde along with Matt Perrier, an Angus seedstock producer from Kansas, and Lance Zimmerman, RaboResearch senior beef industry analyst. You won’t want to miss their thoughts on the beef industry today and in the future.

Your Next Read: 15 Insights on the State of the Beef Industry

80% of Calves Sell Through Livestock Auction Markets

Fri, 17 Oct 2025 15:34:09 GMT

Livestock auction markets remain the option of choice for beef producers.

Nearly 80% of the 2025 Farm Journal State of the Beef Industry survey respondents say they use a livestock auction market as a marketing tool today. Just more than 50% use off farm or private treaty sales and 46% sell at least some beef direct to the consumer.

“Livestock Auction Markets offer quick, easy access with decision-making that doesn’t have to be made until a day or two before you go to sale,” says Ken Odde a commercial cattleman from South Dakota. “In the industry we’ve had a trend towards more video auction sales, but that’s largely a function of herd size. About 80% of the calves that sell in the U.S. sell through livestock auction markets.”

An example of the weaning, health and genetic data displayed on screens while Odde Ranch calves are in the sale ring. The Odde family also develops handouts for potential buyers.

(Odde Ranch)

Odde stresses the importance of transparent, data-driven cattle marketing to add value to cattle. This includes providing buyers with animal weaning and health information along with genetic information.

“Ranchers need to get more active in marketing their calves,” he says.

Odde shares weaning, health and genetic data with his local auction market prior to sale day to share on screens while the calves are in the sale ring. He also develops handouts for potential buyers.

Odde uses the International Genetic Solutions (IGS) Feeder Profit Calculator (FPC) , to generate and provide detailed genetic and management information to buyers.

An example of the International Genetic Solutions (IGS) Feeder Profit Calculator report.

(Courtesy of Odde Ranch)

The FPC is a free, third-party evaluation tool available to help commercial producers, marketers and buyers know and share the profit potential of feeder calves.

According to Odde, these added steps promoting your calves on sale day can add more money to your pocket.

“Feeders are getting more comfortable paying for additional information that reduces their risk,” adds Troy Rowan, University of Tennessee assistant professor.

The Livestock Marketing Association represents more than 80% of all regular-selling livestock markets in the U.S. as well as a growing number of Canadian livestock auctions. Members are a diverse range of professionals in livestock marketing, including livestock auction markets, online and video auctions, livestock dealers, order buyers and sales management.

The State of the Beef Industry Report includes input from nearly 500 beef producers. The annual report provides information to help producers when making decisions. You can download the full report here.

For more insights to the report as well as producer and economist perspectives, watch the State of the Beef Industry Webinar exclusive on FarmJournal.tv . The panel includes Odde along with Matt Perrier, an Angus seedstock producer from Kansas, and Lance Zimmerman, RaboResearch senior beef industry analyst. You won’t want to miss their thoughts on the beef industry today and in the future.

Your Next Read: 15 Insights on the State of the Beef Industry

The Surge of Technology Adoption and Data-Driven Decision-Making

Fri, 10 Oct 2025 11:05:03 GMT

Producers are increasingly embracing new technologies, with adoption of drones, AI systems and genomic tools. The industry is moving toward more data-driven decision-making and precision agriculture practices.

South Dakota cattleman Ken Odde says: “The industry’s future will be defined by technological integration, data-driven decision-making and the ability to adapt to changing economic landscapes.”

He says technology is the most transformative force in the beef industry. He points out emerging technologies like 701X tracking tags will be game changers, allowing ranchers to monitor bull health, movement and breeding activity remotely. These innovations address critical challenges like labor shortages and provide unprecedented insights into herd management.

“We don’t have enough labor, and these technologies fit perfectly into that challenge,” Odde adds.

He predicts artificial intelligence and machine learning will dramatically reshape the industry within the next three to five years.

“This industry has never been a very high-tech kind of industry, but I really think that’s about to shift,” Odde says. “If I can save one bull because of this technological oversight, it easily pays for itself.”

According to the 2025 Farm Journal State of the Beef Industry survey , 66% use at least one tech tool on-farm.

Respondents indicated technology is a challenge to achieving their goals in the next few years.

They also mentioned these challenges related to technology:

Limited access to the latest agricultural technologies can hinder competitiveness
Finding the right technology solutions that align with business goals can be a daunting task
High cost of technology for a small operation

Troy Rowan, University of Tennessee assistant professor, summarizes: “I’m excited about the technologies that we’ve been innovating on over the past decade finally becoming affordable enough for deployment across the industry. Things like genomics have typically been reserved for seedstock breeders, but prices have dropped to a point where there is clear return on investment for commercial operations. Genomics is starting to break through in the commercial heifer replacement arena, but I’m most excited to see how genomics being deployed in feeder calves can add value and increase our industry’s efficiency. Other technologies like virtual fencing, drones and wearable sensors are also approaching price points where wider deployment will come fast.”

The State of the Beef Industry Report includes input from nearly 500 beef producers. The annual report provides information to help producers when making decisions. Click here to download the full report.

For more insights to the report as well as producer and economist perspectives, watch the State of the Beef Industry Webinar exclusive on FarmJournal.tv . The panel includes Ken Odde, a South Dakota cattle producer, along with Matt Perrier, Angus seedstock producer from Kansas, and Lance Zimmerman, RaboResearch senior beef industry analyst. You won’t want to miss their thoughts on the beef industry today and in the future.

Your Next Read: Producer Purchasing Decisions: What Matters Today

Ranching Parched Land: Strategies for Drought Resilience

Wed, 01 Oct 2025 10:32:35 GMT

Drought has reshaped the cattle industry in recent years, but according to the Drovers State of the Beef Industry survey, an increasing proportion of producers are opting to take some type of action to mitigate their risks. While the impact of drought persists for several years, likewise an increasing number of producers who report they reduced their herd size indicate they plan to begin restocking next year.

(Farm Journal)

Despite the high percentage of producers answering they have been impacted by drought, very few operators considered leaving the cattle business because of dry years.

(Farm Journal)

For producers who took action to help mitigate the effects of drought, the most common choices were reducing herd numbers, selling equipment and selling land. One of the other ways producers have mitigated drought effects is through written grazing management plans (GMP) .

Weathering Droughts

LeValley Ranch is a fourth generation cow-calf operation located in western Colorado between Gunnison and Grand Junction — an area where irrigation is dependent on snowpack. Current conditions have reached extreme drought.

Environmental Stewardship Award Program 2024 Region VI Winner LeValley Ranch, Hotchkiss, Colorado

(Baxter Communications Inc. for NCBA/ESAP)

Robbie LeValley, who runs the ranch with her husband and sons, says this is the fourth drought they have weathered since 2000.

“Early on in April and May, when we weren’t getting the late snow and we knew what the reservoirs were measuring at, we made the hard decision to not hay the larger fields and just hay a few of the smaller fields — concentrating on keeping the majority of the fields wet,” LeValley says. “We could keep the grass and the alfalfa alive, but certainly not enough to produce a hay crop as well as graze.”

In normal years, LeValleys take one cutting to concentrate on grazing. They only provide hay from the middle of March to May, this year they had to purchase two-thirds of the hay they typically put up to get them through the winter.

Their grazing timeline changed as well.

“We have a very measured grazing rotation plan in several public land allotments and private leases, which are dependent upon water availability,” LeValley says. “Those ponds have dropped significantly, so we are moving cattle quicker through the rotation — about three to four weeks earlier than normal.”

There will be portions, allotments and whole leases left ungrazed because there is no water there. The cattle drink from natural ponds created by runoff and rain.

Environmental Stewardship Award Program 2024 Region VI Winner LeValley Ranch, Hotchkiss, Colorado

(Baxter Communications Inc. for NCBA/ESAP)

Virtual Fencing Aids During Drought

The LeValleys use virtual fencing in their grazing plan and have expanded areas this year to allow cattle to pick and choose to meet their nutrition needs.

In addition to making grazing adjustments, the family has also culled some of their older females.

LeValley says the grazing plan has been invaluable in being prepared for times of drought.

“The grazing rotation is definitely our insurance policy, and that’s why we’ve had grazing rotation plans in place since 1995,” LeValley says. “We modify it significantly when we have these drought times. But having that additional root mass, even in these drought times, allows for the feed to be relatively good and provides that nutrition the animals need. Having roots to respond when there is moisture is critical for the long-term sustainability moving forward when Mother Nature does decide to provide additional rain.”

Mark and Robbie LeValley

(Baxter Communications Inc. for NCBA/ESAP)

Recognized for Stewardship Efforts

The LeValley family was recognized by the National Cattlemen’s Beef Association (NCBA) as a regional winner of the 2024 Environmental Stewardship Award Program (ESAP).

“The LeValley’s willingness to discuss differing ideas, problem solve complex issues and explore new ideas to improve management have led to positive and lasting rangeland conservation,” says Ken Holsinger, ecologist with the Bureau of Land Management-Uncompahgre Field Office. “The LeValley Ranch is deserving of this award for their proven commitment to the stewardship and conservation of their public land permits and for their cooperative efforts in working with agency partners and other landowners.”

For five generations, the LeValley family has been stewards of the land and they achieve their goals through an overall philosophy of land health and management that concentrates on allowing time to rest, grazing moderately and creating pastures where they are utilized in a different rotation in consecutive years.

“Healthy rangelands are important for the productivity of our ranch, and we wouldn’t be in business if we didn’t care for the land.” explains Mark LeValley. “If you manage the land right everything flourishes, and it is going to be here for the next generation.”

The State of the Beef Industry Report includes input from nearly 500 beef producers. The annual report provides information to help producers when making decisions. Click here to download the full report.

For more insights to the report as well as producer and economist perspectives, watch the State of the Beef Industry Webinar exclusive on FarmJournal.tv . The panel includes Ken Odde, a South Dakota cattle producer, along with Matt Perrier, Angus seedstock producer from Kansas, and Lance Zimmerman, RaboResearch senior beef industry analyst. You won’t want to miss their thoughts on the beef industry today and in the future.

Your Next Read: 15 Insights on the State of the Beef Industry

15 Insights on the State of the Beef Industry

Fri, 19 Sep 2025 19:10:43 GMT

Farm Journal’s recent producer survey results, coupled with expert analysis, point to several dynamics shaping the beef industry in 2025 and beyond. Here’s what four industry insiders have to say about what is driving today’s profitability, how increased market prices are impacting the future and what’s next for beef producers:

Ken Odde, South Dakota commercial cow-calf producer
Matt Perrier, Kansas Angus seedstock producer
Lance Zimmerman, RaboResearch Food & Agribusiness senior beef industry analyst
Scott Varilek, Kooima Kooima Varilek Trading Inc.

Zimmerman on demand: “Demand is as high today as it has been since 1983. The highs in demand were in the late ‘70s. We’re within layup range of getting there, and I never thought that would have been possible 10 years ago.”
Zimmerman on beef quality: “We’re producing 5 lb. of Prime beef today to 1 lb. Select. Go back to 2005, and we were producing 1.2 to 1.3 lb. of Prime and Choice beef for every 1 lb. Select. The consumer loves the quality of beef they’re getting from U.S. beef producers today.”
Zimmerman on the complexity of herd expansion: “ Those operations that are big enough to take that financial risk ... they’re going to want to make sure they can rebuild strategically. The beef industry has always been built by risk takers, but I think as producer demographics have gotten older, as you get older, you tend to take more calculated risk.”
Zimmerman on cow numbers: “I think this is going to be a slower rebuild because of the amount of volatility we’ve seen in the cattle markets over the last 10 years, in addition to how the pricing patterns reacted to the last rebuild.”
Odde on calf prices: “Two years ago, we were selling calves off the ranch for maybe $1,600 to $1,800 a head. Those same calves today are worth $2,200 to $2,400 a head.”
Odde on the beef industry’s impact: “This beef industry today — especially the cow-calf sector — is pumping a lot of dollars into rural America, and this is not something we have seen for a long, long time.”
Odde on young people returning to agriculture: “Making money in these operations is what’s really key to attracting young people back to the operations.
Perrier on bull demand: “As we see fewer cows, we don’t necessarily see less demand for bulls.”
Perrier on how genomics and DNA testing have revolutionized cattle breeding: “For around $50 a head, we are able to take a DNA sample that can tell us an immense amount about that animal’s genetics, both on the commercial and seedstock end of things, allowing for more precise selection and reduced risk.”
Perrier on genetic investment: “It’s more important than ever to make sure you’re investing those profits in things like genetics that can pay back.”
Perrier on consumer demand: “That consumer dollar that comes into the beef industry trickles down all the way through, and that’s where the new source of wealth is in our ranches.”
Perrier on industry outlook: “It’s time as producers to recognize the fact we have a product that people want to buy. We have profitability in the industry, and we need to treat it as a business.”
Varilek on cattle traders’ mindset: “Cattle traders are nervous. We all know the end is going to come eventually, so we kind of fall into that trap.”
Varilek on herd rebuilding: “We’ve had moisture from Texas all the way to North Dakota this year, so we had some grass. We didn’t have the drought issues to worry about. There is some heifer retention that’s happening. I think it’s been a little bit slower, but it is there. Couple that with the cow slaughter being well behind year-ago levels — talking 37% week over week —there’s a lot less cows going to slaughter all year long. We’re trying to keep them. This market has sustained good prices for a long time. We know we’re tight on supplies. We’re trying to rebuild safely.”
Varilek’s three signs for a turning market: “You’ve got the basis, is one. We’re losing some of that. We’re still positive. The bull spreads have not really performed as of late. They have all summer — they’ve been great. But maybe lacking here. And then just the market itself. So, those are the three signs.”

Rebuilding the U.S. Cow Herd: A Calculated Climb

Thu, 18 Sep 2025 14:29:44 GMT

Lance Zimmerman is a senior beef industry analyst with RaboResearch Food & Agribusiness and helped provide research and insights for Drover’s State of the Beef Industry report.

Cow liquidation is in the rearview. Heifer retention is underway. The U.S. cattle cycle is officially shifting into rebuild mode, but this recovery will not be a stampede. It’s shaping up as a slow, strategic climb.

Beef processing bottlenecks, persistent drought, soaring feed costs, labor shortages and post-pandemic friction kept cow-calf margins relatively tight from 2016 to 2022. Some of those pressures have eased, but with herd numbers set to grow, others could easily resurface. As producers hold back more heifer calves this fall, herd replenishment remains a cautious and calculated exercise.

Rabobank expects the Jan. 1, 2026, beef cow inventory to be 28 million head, up 200,000 head from the prior year. A second increase of less than 500,000 head is likely over the following year. In short, do not expect dramatic shifts early in this rebuilding effort. From 2024 to 2026, the nation’s beef cow herd will hold relatively steady (see Figure 1).

Figure 1: U.S. beef cow inventory on January 1

(USDA, Rabobank 2026-2030 forecast)

More meaningful herd growth is forecast from Jan. 1, 2027, into the early 2030s. But even then, the peak inventory projection is likely to be 500,000 to 1 million head below the 2019 highs, and that is not necessarily a bad thing.

Thanks to long-term efficiency gains across the U.S. beef sector, a rebuild topping 30.5 million cows might be more than enough to hit new record high in total production. Per capita beef supplies could reach levels not seen in more than two decades. Still, adding upward of 2.5 million cows during this next phase will be complicated.

According to the latest Farm Journal State of the Beef Industry survey , just 47% of producers are considering expanding their cow herd within the next five years, a four-point drop from last year’s already modest number.

Factors Affecting Herd Building

The hesitation is rooted in hard realities. Rising input costs, from fencing and equipment to replacement heifers, are straining budgets. And it is not just the higher price tags. Volatility is adding pressure. Fluctuating expenses are muddying financial planning, tightening cash flow, and making profit targets feel increasingly out of reach.

Access to pastureland is still a sore spot. Prices keep climbing, while land-use restrictions and expanding suburbs are blocking opportunities for cattle producers.

Federal government shifts are not helping morale either. Regulatory red tape and compliance demands already pull significant time and resources. Adding the moving target of trade policy and a maze of new rules, and producers find themselves burning hours to stay current. The burden is exhausting.

Behind much of the fatigue in cattle production lies a familiar challenge: aging producers and a shrinking labor pool. Finding help is tough and getting tougher.

Older ranchers worry about health, longevity and who will take the reins next. Meanwhile, the next generation faces a different battle: securing capital, gaining know-how and finding tenacity that defined those who came before. The grit is there — so are the obstacles.

Given these constraints, can the beef cow inventory forecast outlined earlier really take shape in the coming years? Improving drought conditions and profitability help. Survey responses suggest it will take even more than that.

USDA’s latest Census of Agriculture reveals a clear trend: big cow-calf operations are getting bigger. Since 2012, producers with 200 head or more added 2.2 million cows, a 20% jump. Meanwhile, operations less than 200 head lost 2 million, an 11% drop. The shift was established by 2017 and accelerated into 2022.

Rabobank sees the 2027 census amplifying the trend: big operations getting even bigger. They have the capital cushion to absorb risk and make bold moves without jeopardizing the ranch. That is critical when bred cow and heifer prices push past $4,000 per head in the next few years and calf prices soften as supply grows later in the cattle cycle.

Producer age matters even more in this rebuilding effort. According to the 2022 Census of Agriculture, beef cattle operators now average 58.3 years old, the oldest among all U.S. livestock and poultry producer groups.

Younger ranchers might be more willing to bet bigger during this rebuild. For many families, it’s a natural handoff, an exit lane for older operators to transition decision-making to the next generation. Also, herd expansion could unlock new revenue and pull sons and daughters back into the ranch.

Cow-calf producers stand apart in the beef supply chain as fixed-cost operators in a largely margin-driven sector, but that distinction is blurring.

As herd size grows larger and ranch leadership skews younger, margin thinking will gain ground. Larger producers focus on profit per cow or per acre. Younger ranchers lean into data and strategy.

With volatile market prices and uncertainty surrounding the cattle business, margin-minded cow-calf operators are not just likely to evolve during this cow herd rebuild. They are essential to the U.S. restocking effort.

The State of the Beef Industry Report includes input from nearly 500 beef producers. The annual report provides information to help producers when making decisions. Click here to download the full report.

For more insights to the report as well as producer and economist perspectives, watch the State of the Beef Industry Webinar exclusive on FarmJournal.tv . The panel includes Ken Odde, a South Dakota cattle producer, along with Matt Perrier, Angus seedstock producer from Kansas, and Lance Zimmerman, RaboResearch senior beef industry analyst. You won’t want to miss their thoughts on the beef industry today and in the future.

Your Next Read: Consumer Craze for Protein Drives Beef Demand

— Lance Zimmerman serves as RaboResearch Food & Agribusiness’ senior beef industry analyst. Discovering and implementing decision-friendly business solutions for agricultural and food companies has been the focus of his career. Growing up on a western Kansas farming operation that includes a commercial cow-calf herd has fueled his passion for the industry.

Consumer Craze for Protein Drives Beef Demand

Wed, 17 Sep 2025 15:10:17 GMT

The industry has made substantial progress in beef quality, with strong consumer demand supporting premium pricing. Quality grade improvements and consistency have been major success stories.

U.S. Bureau of Labor Statistics shows the average retail price of ground beef rose to a record $6.32 per pound in August 2025.

This is up from $6.25 in July and $5.74 in August 2024. Prices for certain beef cuts might ease with the end of peak grilling season, but ground beef prices remain historically high.

Don Close, Terrain senior animal protein analyst, says: “What we have seen so far is consumers have been incredibly loyal to protein collectively, but they have been especially loyal to beef. Beef is actually continuing to gain market there — even at the current prices — at the expense of the other protein.”

Close says when he correlates the monthly all fresh beef price to hourly wages, he found they are in lock step.

“Yes, beef prices have escalated, but beef prices have not risen any faster than the improvement in overall hourly wage,” he explains. “So, from the consumer’s perspective, their share of their paycheck committed to beef is essentially the same as it’s been on a comparative basis for years.”

Other contributing factors to beef demand include consumers’ craze for protein and the impact of GLP-1 diets on protein consumption.

According to Dave Weaber, Terrain senior animal protein analyst, beef spending has dramatically increased since COVID-19 —outpacing pork and poultry combined. Weaber says consumers are now spending about $84 more per capita annually on beef compared to the 2005-2015 period.

He attributes this growth to several factors:

Improved beef quality: The industry has seen a substantial increase in Prime and Choice beef, with nearly 85% of heifers and 75% of steers now grading in these top categories.
Changing consumer preferences: Younger generations are spending more on high-quality beef, both in restaurants and at home, driven by increased cooking skills and appreciation for beef’s flavor and quality.
Health perception: Beef is now viewed more positively as a health product, with increased transparency and better communication from the industry.

Close says the role of strong demand can’t be ignored and is likely to continue.

“I think it’s certainly through 2026 and, really more realistically, somewhere deep into 2027,” he summarizes.

The State of the Beef Industry Report includes input from nearly 500 beef producers. The annual report provides information to help producers when making decisions. Click here to download the full report.

For more insights to the report as well as producer and economist perspectives, watch the State of the Beef Industry Webinar exclusive on FarmJournal.tv . The panel includes Odde along with Matt Perrier, Angus seedstock producer from Kansas, and Lance Zimmerman, RaboResearch senior beef industry analyst. You won’t want to miss their thoughts on the beef industry today and in the future.

Your next read: 6 Challenges Facing the Beef Industry Today

6 Challenges Facing the Beef Industry Today

Tue, 16 Sep 2025 17:58:26 GMT

While optimistic, commercial cow-calf producer Ken Odde says he is aware of potential industry threats that can impact growth of the nation’s cow herd as well as beef supply and consumer demand. However, he says the industry’s adaptability will help mitigate these challenges.

Some of the key concerns, summarized by the 2025 Farm Journal State of the Beef Industry survey and industry leaders include:

Animal Health.
“The industry has existential threats that could grind our current hot streak to a halt,” says Troy Rowan, University of Tennessee assistant professor. “ New World screwworm or other emerging animal diseases could put the industry on its head overnight.”
Land.
Rowan says in many parts of the country, agricultural land loss is shifting productive ranching areas out of production.
“This will challenge producers to continue to be profitable with smaller land footprints,” he summarizes.
Aging and Succession Planning.
A critical challenge facing the industry is the aging producer population. Many older producers are choosing to reduce cow-calf operations, opting instead for stocker cattle or leasing land for alternative uses. This generational shift poses a significant threat to herd expansion and long-term industry sustainability.
Trade and Tariffs.
Dave Weaber, Terrain senior animal protein analyst, says trade dynamics add complexity to an already challenging beef market environment. He points out the 50% tariff on Brazilian beef has significant market implications as related to lean trim.
Labor and Immigration.
Immigration reform is becoming a critical issue for the industry, with labor shortages and workforce challenges affecting production capabilities.

“Immigration reform is an important step in helping to fill jobs and establish a sustainable workforce for the industry,” says Jarrod Gillig, Cargill senior vice president, managing director for beef.
Feeders and Packers Capacity.
The current market presents significant challenges for packers, Gillig admits. As of early August, packer margins are estimated at negative $300 per head. Packers are relying on diversified portfolios to help buffer against beef market volatility.

But the question is: How long is that sustainable?

“With supply fundamentals remaining on the current path of further tightening cattle numbers for at least the next three years, the industry’s negative margin situation is not likely to change given the over-capacity situation,” says John Nalivka, Sterling Marketing Inc. president. “Consequently, capacity will be reduced. I believe this will occur through permanent plant closures.”

Packers are not the only sector with over-capacity, he adds. Feedlots are facing the same dilemma as feeder numbers continue to tighten.

The State of the Beef Industry Report includes input from nearly 500 beef producers. The annual report provides information to help producers when making decisions. Click here to download the full report.

For more insights to the report as well as producer and economist perspectives, watch the State of the Beef Industry Webinar exclusive on FarmJournal.tv . The panel includes Odde along with Matt Perrier, Angus seedstock producer from Kansas, and Lance Zimmerman, RaboResearch senior beef industry analyst. You won’t want to miss their thoughts on the beef industry today and in the future.

Your Next Read: 47% of Beef Producers Plan to Increase Herd Numbers

47% of Beef Producers Plan to Increase Herd Numbers

Mon, 15 Sep 2025 17:37:16 GMT

Takeaways from the 2025 State of Beef Industry survey reflect the industry is currently thriving financially but facing long-term structural challenges around herd rebuilding, succession planning and maintaining competitiveness through innovation and efficiency improvements.

Despite the challenges, optimism is rising: 47% plan herd growth, and two-thirds report profitability. Survey results summarize producers believe long-term success will depend on adaptability and innovation.

In its third year, Farm Journal’s State of the Beef Industry 2025 Survey, provides a comprehensive overview of the current status and outlook of the beef industry. The report surveyed 469 beef producers from across the U.S., focusing on those with cow herds that exceed 50 pairs or more than 500 on feed.

The year-over-year comparisons are starting to tell a story about what’s going on in the industry and the shifts producers are experiencing. Here are some key takeaways:

Two-thirds of producers have added new revenue streams like selling direct to consumer, developing a recipient herd, custom calving or hunting, which helps offset the risk of volatile markets.
Comparing the 2023 and 2024 surveys, the number of respondents who precondition calves before marketing has been consistent — 83% in 2025, 79% in 2024 and 82% in 2023.
Of the survey participants, 84% selected genetics and performance information as a consideration when buying bulls. Other top factors included disposition (79%) and phenotype or appearance (79%). Source came in at 56% and value 54%.

The State of the Beef Industry Report provides information to help producers when making decisions. Click here to download the full report.

Your Next Read: Are We Seeing Signs of Herd Rebuilding?

Are We Seeing Signs of Herd Rebuilding?

Fri, 12 Sep 2025 19:49:16 GMT

The U.S. beef cow inventory has reached its lowest point since 1962, marking what appears to be the bottom of the current cattle cycle. Tight supply is driving the strong pricing environment beef producers are enjoying today.

“For cow-calf producers right now, things are as good as they’ve probably ever been,” says Troy Rowan, University of Tennessee assistant professor. “Even though things are really good, producers are conscientious and vigilant about potential challenges,” Rowan summarizes.

Agreeing with Rowan, South Dakota cattleman Ken Odde adds while profits are currently strong, inflation quickly erodes economic gains. He stresses the importance of risk management and diversification.

Early Signs of Herd Rebuilding?

This is the million-dollar question: Are there encouraging signs of expansion?

“The beef industry is not currently in herd expansion mode, with producers hesitant to retain heifers due to high costs and economic uncertainties,” says Dave Weaber, Terrain senior animal protein analyst.

In Drovers State of Industry Report to be released the week of Sept. 15, we breakdown the July USDA cattle inventory and cattle on feed reports. While the USDA reports showed the smallest U.S. herd in history and continuing tightening numbers on feed, analysts predict producers have not experienced the highest cattle prices, yet.

“Our national herd size has the industry at an interesting point,” Rowan says. “Prices are at all-time highs, inputs are reasonable and more cow-calf enterprises are profitable than ever. When the industrywide rebuild will happen remains up in the air, but producers are keeping in mind that the high-flying industry right now is not going to stick around forever. They’re starting to adopt new technologies, leveling up their crossbreeding programs and expand opportunities for non-cattle related income on their ranches.”

Weaber adds producers need to be intentional about herd expansion, understanding the financial implications of adding new cattle.

Beef-on-Dairy Fills the Beef Supply Gap

“The current dynamics of supply is going to be a challenge,” says Jarrod Gillig, Cargill senior vice president, managing director for beef.

Gillig summarizes the cattle industry is experiencing a critical period of transition. He doesn’t expect the cow herd to return to previous peak levels of 32 million head. Instead, he predicts the gap in supply will be filled by beef-on-dairy calves.

Nick Hardcastle, Cargill senior director of meat grading and technical specialist, explains how the beef-on-dairy calves are an upgrade to the traditional Holstein steer and the positive impact they are making on beef supply.

“Beef-on-dairy is more desirable because it helped overcome several Holstein difficulties,” he says. “Improvements include red meat yield — more meat to a consumer — as well as improved acceptance in branded programs.”

Hardcastle says the beef-on-dairy cattle are filling the supply gap by filling pens in the Plains states where feeders are needed, and they are widely accepted by feeders and packers.

Defining Future Beef Producer Success

Odde says the beef industry is not just surviving but positioning itself for significant transformation.

“Producers who remain flexible, technologically savvy and strategic in their approach will be best positioned to thrive in this changing environment,” he says.

Weaber agrees saying successful producers will be those who can adapt, manage costs effectively and align themselves with evolving market trends.

“Don’t let cost get away from you,” Weaber warns, emphasizing that “being a low-cost, high-productivity producer means you get to make money seven, eight or nine years of the cycle.”

He stresses the importance of understanding financial implications, particularly during market transitions.

“If we’re not working on the business, we can’t work in the business,” Weaber adds, summarizing his philosophy regarding producers’ need to adopt more strategic, data-driven approaches.

The State of the Beef Industry Report includes input from nearly 500 beef producers. The annual report provides information to help producers when making decisions. Click here to download the full report.

Your Next Read: 47% of Beef Producers Plan to Increase Herd Numbers

The Future of the Beef Industry: New Survey Data Shows Producers Are Optimistic

Fri, 04 Oct 2024 19:47:55 GMT

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.

Drovers State of the Beef Industry

(Farm Journal)

Your Next Read: Idaho Rancher’s Enthralling 35-Mile Fall Trek Through BLM Land

How Historical Cattle Cycles Are Shaping Inventory and Production Today

Fri, 27 Sep 2024 18:31:25 GMT

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 .

By Lance Zimmerman, senior vice president, senior animal protein analyst for RaboResearch Food & Agribusiness

Past cattle cycles provide an outline for the tendencies that typically shape inventory and production over years and decades. While U.S. beef cow inventories stabilize in 2024, 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.

The last herd rebuild started in 2014, but remember the short-term milestones that preceded it. The percentage of heifers in the fed cattle slaughter mix peaked in 2010, the beef cow cull rate spiked in 2011 and beef replacement heifer inventories didn’t post a year-over-year increase until Jan. 1, 2012.

More recently the heifer slaughter mix peaked in 2023, and the cull rate reached multiple-decade highs in 2022. Now, the focus is on heifer retention, and that remains a sticking point for this rebuild.

Macroeconomics outline declining supplies and steady demand, or increasing demand and steady supplies, lead to higher prices.

Supply Versus Demand

For nearly three decades, the U.S. beef industry has been in a declining supply and increasing demand market. Absolute prices and volatility have increased significantly over that time, but per-head profit margins have not followed the same uptrend.

Commodity producers largely operate on thin margins, and competition within and across the beef and cattle producing segments has kept margins low, while volatility in returns has increased. That is why U.S. producers are expressing more caution during this rebuild.

The beef consumer’s role in supporting each U.S. cowherd rebuild has been discussed many times. Tighter supplies motivate higher meat case and menu prices, allowing producers to receive a higher percentage of beef spending. The July average USDA all-fresh beef retail price pushed to new highs at $8.15 per pound. Even with relatively steady beef demand, Rabobank expects annual average retail beef prices to approach $9.50 per pound around 2027.

That means 500-lb. steer calf prices could advance to annual averages near $400 per cwt as early as 2026, and replacement female prices follow the calf market. It is possible $4,000 bred heifers are in the producer’s future. CattleFax estimates current prices around $2,800 per head. That is creating pause for a segment dominated by part-time operators facing production risks and less of an appetite to take on more.

El Niño didn’t offer the weather benefits needed to recover pastures in major cow-calf producing regions in 2023 and early 2024, and a return to La Niña in late 2024 will cast doubt on forage availability.

A decade ago, interest rates were 3% to 4%. Today, those loans have an 8% to 9% rate. Aging producers are looking to transition out of the business, but younger producers are struggling to fill the void.

These pressures will likely amplify the rate of consolidation within the cow-calf segment and silence opportunities for smaller operations to expand profitably going forward.

Your Next Read — Industry Shifts: What Cattle Producers See Coming In the Next 5 Years

Industry Shifts: What Cattle Producers See Coming In the Next 5 Years

Thu, 26 Sep 2024 20:44:52 GMT

Drovers State of the Beef Industry 2024 Report

(Farm Journal)

Viability is Top of Mind

Despite the challenges, producers are thinking to the future with plans to add a family member and grow their herd size. In fact, 54% of producers in this year’s survey indicate they plan to add a family member to the operation (versus 51% in 2023).

Even though it doesn’t appear the business will see rapid rebuilding , there are indications many of these operations are viable and plan on remaining that way in the future. That’s certainly a sign of brewing optimism among the respondents.

Your Next Read: Are Cattle Producers Rebuilding Their Herds Now?

Are Cattle Producers Rebuilding Their Herds Now?

Wed, 25 Sep 2024 16:09:29 GMT

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 .

America’s beef cattle inventory continues to tighten, pushing market prices to record levels. Under normal conditions, that would lead to anticipation about building herds again. If this were a typical cattle cycle, the elements for expansion — ample forage and record-high cattle prices — would be in place. However, the current cattle cycle is not typical other than the recent liquidation when drought forced significant culling and resulted in the smallest U.S. cattle herd inventory in 70 years.

The pace of expansion or herd rebuilding in the current cattle cycle will be much slower than past cycles, and the extent of herd building will also be reduced. That has been the case for previous beef inventory expansions since 1975’s peak of 132 million head as subsequent cycles have all peaked below the previous cyclical peak. For instance, the 1982 peak was 115 million head, 1996 at 104 million, 2007 at 97 million and 2019 at 95 million. What has changed?

Production-wise, efficiency has increased and the industry produces significantly more beef with fewer cattle, which impacts prices. When expansion begins, smaller increases in inventory pull prices lower. But there are other crucial factors that influence individual ranchers’ plans to continue in the cattle business.

Volatility Will Increase

The age of farmers and ranchers is critical as decisions are made going forward. Closely tied to age is the financial stress of the market over the previous four years. This plays a greater role for part-time cattle producers. The drought coupled with low prices and accelerating costs of production are key to the decision. I often hear ranchers comment: “Why would I or my spouse continue working in town to support cows that are draining our bank account?”

For many of those part-time cattle producers, the cows went to the sale yard. Will they be replaced? Only time will tell, but many will not return to the business. The other major consideration of this cycle is the price of replacement cows or heifers.

Ranchers are rightfully wary of a market that could become increasingly volatile. It’s a major risk to invest in cows or breed heifers with high maintenance costs that won’t deliver a marketable product for two-plus years.

The decision to own cattle or expand an existing herd will be influenced by high interest rates and rising production costs, further slowing the speed of any herd rebuilding.

Rebuilding The Cowherd Remains On Hold

One of the biggest factors on everyone’s mind revolves around if and when cow-calf producers might begin rebuilding the cowherd. Much of that decision to date has been contingent on the weather. However, despite improving forage availability and conditions (and higher prices), producers remain tepid about running more cows.

Drovers State of the Beef Industry 2024 Report

(Farm Journal)

The 2024 Drovers State of the Beef Industry survey asked, “What are your plans to restock your cowherd (as a result of the drought)?”

In both 2023 and 2024, 21% of respondents indicated “next year.” The process remains on hold. However, some of that reluctance might prove to be permanent. One key difference in this year’s survey has more producers indicating they have “no plans to restock” (23% versus 14% in 2024 and 2023, respectively).

There’s not much appetite to aggressively rebuild the cowherd. Producers are cautious when it comes to running more cows.

Drovers State of the Beef Industry 2024 Report

(Farm Journal)

Your Next Read: A Glimpse Into the Cattle Inventory Black Hole

A Glimpse Into the Cattle Inventory Black Hole

Tue, 24 Sep 2024 14:12:15 GMT

Drovers State of the Beef Industry 2024 Report

(Source: USDA; CattleFax Estimates)

Cows and Heifers

Beef cow inventories are estimated to be 400,000 below a year ago. Beef cow slaughter has been down sharply but not enough to overcome the record-low bred heifer inventory as of Jan. 1, 2024, most of which have now calved and would be counted as cows.

Beef replacement heifer inventories are likely steady to slightly higher but remain historically tight, estimated up a narrow 50,000 head from last year. Spring 2023-born heifers were likely retained and bred at a stabilization pace, with numbers roughly even with year-ago. A few more heifers might have been retained from the fall 2023 calf crop, although this is a smaller percentage of the nation’s herd. The expectation is for a mild expansion pace of heifer retention this fall.

Dairy Cows

Dairy cow inventories are also likely steady to slightly smaller, estimated 50,000 head lower due to a shortage of replacements coming into the year, despite a steep decline in dairy cow slaughter. The dairy replacement heifer shortage, largely due to the beef-on-dairy revolution, will remain a headwind to stabilization and growth of the herd in the near term.

Calves and Feeders

The July report also contained the first estimate of the current year’s calf crop. CattleFax expects the 2024 calf crop to be 700,000 fewer head, a record low, reflecting a smaller breeding herd coming into the year. The smaller calf crop will continue to translate into tighter feeder cattle and fed cattle supplies down the road.

With total on-feed numbers up 100,000 head from year-ago, the feeder cattle and calf supply remaining outside of feedyards would be down 850,000 head or 2.5% from last year, also record small. The July 1 outside supply figure would include the new spring-born calf crop as well as the remaining 2023-born feeder cattle and calves.

Bottom Line

Despite the absence of the July Cattle Inventory report, CattleFax estimates, based on numerous other data sets, cattle inventories will continue to tighten, but with mixed signs of stabilization. Expansion and retention patterns will be closely monitored this fall with confirmation in January 2025’s inventory report.

Reprinted with permission from CattleFax.

Your Next Read: Good News: Consumers Continue To Choose Beef

Cattle Market Hits All-Time Highs: How Long Will the Bull Run Last?

Fri, 22 Sep 2023 13:30:52 GMT

Both live and feeder cattle futures hit all time highs this week as a function of historically tight supplies, reports Michelle Rook on AgDay. Yet, the question remains—how long could these strong prices last?

The last bull market, nearly ten years ago in 2014 and 2015, proved to be rather short—also a result of drought that induced widespread culling in the U.S. cattle herd. However, in this cattle cycle, the cuts prove to be even deeper, Rook notes.

Many industry and market experts agree there is an upside to 2024, as the smallest cattle inventory is yet to come.

Brad Kooima with Kooima Kooima Verilek explains: “To me, our tightest numbers have the chance to be at the end of the fourth quarter to be in the first quarter of next year. I’ll bet a steak dinner that we see the market above 200 (per cwt.) at some point in the first quarter.”

The key shift will be when cattle producers start keeping heifers instead of selling them at these high prices, which hasn’t happened yet, Rook adds.

“We’re not seeing any significant heifer retention at this point,” says Todd Wilkinson, South Dakota cattle producer and president of the National Cattlemen’s Beef Association. “The drought continues to be a problem in major cattle production areas. And, instead of us being what was a maybe a one-hit-wonder back in 2014 and 2015, I think we’re looking at four or five (years) or maybe even longer.”

Cattle producers surveyed in the Drovers State of the Beef Industry shared a sentiment of optimism for the industry. Additionally, 54% of operations shared they plan to add a family member in the next five years.

Les Shaw, a cattle producer near White Owl, S.D., notes: “Hopefully, the numbers show that we’re going to stay in a three-year cycle and we can encourage some of these young people to get their footing.”

Profitability is needed for the future of the industry because the average age of the cattle producer continues to rise, Rook adds.

Meanwhile, record cattle prices have caused beef packer margins to move into the red, according to a recent Sterling Beef Profit Tracker . Cattle feeding margins gained about $10 per head last week, closing at an estimated $343 per head. Packers saw a $51 per head decline, resulting in a loss of $10.68 per head.

Last week, cash cattle prices averaged $184.41 per cwt., up around $1.20 per head, which is 22% higher than last year’s $143.64 per cwt. cash price.

Cattle Prices Soar: Is The Cattle Industry's Optimism Justified?

Thu, 21 Sep 2023 12:17:30 GMT

Could the optimism in the cattle industry be fueled by profitability?

With the U.S. cattle inventory at a 62-year low, cattle prices have reached record highs. Yet, it’s important to consider whether these high prices are equating to profitability.

For producers in the cow-calf business, Clinton Griffiths, host of AgDay, says these high prices have likely enabled some black ink to appear on the balance sheet.

Eric Jennings with the South Dakota Cattlemen’s Association adds: “It’s fun to go to the sales ring with some calves or sell them direct and get that kind of money. It’s been a long time coming, but they’re certainly enjoying it.”

The Livestock Marketing Information Center forecasts cow-calf producers will be profitable (on average) in 2023 with returns projected in excess of $300 per head, says Nevil Speer, an independent industry consultant, in the Drovers State of the Beef Industry Report . Additionally, since 2010, returns have been negative four out of 14 years with an average annual return of approximately $87 per head.

However, some of the benefit of the high prices was cushioned by inflation, Jennings notes. With everything more expensive, building back the equity lost in the last few years will not be realized as fast as hoped.

With winter approaching, dry conditions can still be seen across many growing areas and livestock production states — likely affecting corn and hay crop production totals.

“Certainly, when you look at Missouri in particular, we’re down in hay production in 2023 ,” says Scott Brown, markets and policy professor and interim director of the Rural and Farm Finance Policy Analysis Center at the University of Missouri. “Other states have recovered — some of the states that had more of a drought issue in 2022 than this year — but we’ve kind of been front and center of the dry weather that’s hurt pastures and hay and ponds.”

High input costs, such as feed and fuel, and higher interest rates will likely incentivize continued selling of cows and/or the reluctance to retain heifers, Speer notes.

For backgrounders and feedlot operators, profits also remain, but the margins are narrower with higher replacement costs.

“I will tell you, I’ve been trying to put a breakeven together and in terms of buying a fair number of calves for fall delivery, it’s pretty difficult right now, given the level of the input costs,” notes Todd Wilkinson, South Dakota cattle producer and president of the National Cattlemen’s Beef Association.

Though, lower corn prices are a big plus for feedlot closeouts, Wilkinson adds.

According to a recent Sterling Beef Profit Tracker , cattle feeding margins gained about $10 per head for the week ending Sept. 16, closing at an estimated $343 per head. Additionally, cattle prices averaged $184.41 per cwt., up about $1.20 from the previous week. That price is 22% higher than last year’s $143.64 per cwt. cash price.

Optimism Amidst Adversity: Resilience and Hope Remain in the U.S. Cattle Industry

Wed, 20 Sep 2023 13:26:16 GMT

Implications of the widespread, historic drought and massive herd liquidation will likely continue to be uncovered over the next several months in U.S. cattle production.

Reaching 62-year lows in the U.S. cattle inventory, Michelle Rook reports on AgDay that cattle producers faced tough decisions, yet remain optimisic about the future of the industry.

For Union Center, South Dakota cattle producer, Reed Cammack, the drought meant surrendering years of genetics built by the family.

“We ourselves, last year, were forced to sell over 100 mother cows because of the drought,” he says.

Herd liquidation has led to the projected 2023 U.S. calf crop to be 2.5 million head smaller than the recent peak in 2018, notes Derrell Peel, professor and extension specialist for livestock marketing at Oklahoma State University, in a recent article .

Meanwhile, low numbers in the cattle cycle have pushed cattle prices into all-time highs, Rook reports, and these prices could stay around for a while as rebuilding will take time.

The August Ag Economist’s Monthly Monitor survey asked economists when they think cattle herd expansion will start to take place. The majority believe cattle contraction will continue for at least another year. Additionally, a smaller percentage think it could happen in the second quarter of 2024.

Echoing the sentiment, Cammack says, “How fast we’re going to rebuild? I don’t know—it’s yet to be seen. I think we’ll see good cattle prices for the next several years, as the herd rebuilding continues to create demand for high quality bred females.”

Despite the challenges, the recent Drovers State of the Beef Industry survey shows cattle producers remain resilient, with two-thirds of respondents calling themselves “optimistic” about the industry and its future.

Additionally, the survey found:

- 38% plan to grow their herd in the next five years

- 49% say their operations will at least stay the same in the next five years

- 54% of operations plan to add a family member in the next five years

- 10% say they considered exiting the business

- 66% say that exiting the business was never a consideration

The hope is this market will provide an opportunity for the next generation, Rook adds.

“That’s probably the most exciting thing for me,” says Todd Wilkinson, president of the National Cattlemen’s Beef Association, “is that the young producer can think ‘do I want to go into the cattle industry,’ ‘is there a future for me,’ and suddenly there is. We’re in a position where the cow-calf guy has leverage, and they have the ability to know that this thing looks pretty good for a number of years.”

What The 2022 National Beef Quality Audit Says About The Cattle Industry

Wed, 13 Sep 2023 21:29:38 GMT

Editor’s Note: This article is the fourth in a series that comprise Drovers 2023 State of the Beef Industry. The full report will appear as a 16-page special section in the September 2023 issue. Additional articles from the series will be published in this space in the following days.

Three decades ago, the primary objective of America’s cattle and beef producers was to remain competitive with other proteins, especially the poultry industry. That desire spurred the landmark 1991 National Beef Quality Audit (NBQA), which produced some grim realities along with a road map for success.

The results of the first NBQA were too dramatic to ignore, former NCBA vice president of research and industry information Darrell Wilkes said at the time. He called the report the “proverbial 2’x4' between the eyes” telling the industry to implement changes. In short, carcasses were too fat, steaks too tough and blemishes too frequent.

Fast forward to the 2022 NBQA, which delivers many encouraging messages about beef’s improvement over the years while identifying issues that need further attention. The audit suggests the industry is producing a high-quality product that consumers want more efficiently and the industry’s primary focus across the supply chain remains food safety.

But as consumer demands have evolved, considerations outside of physical attributes have been added, such as sustainability, animal welfare and the connection between producers and consumers. By doing so, the results have been more beneficial to all parties involved.

Quality and Efficiency

“The NBQA is an important tool for the industry to identify where improvements are being made and where there are opportunities to capture more value,” says Josh White, senior director of producer education and sustainability for the National Cattlemen’s Beef Association. “The good news is, overall, the beef industry is providing a quality product to consumers that they enjoy.”

Quality, in fact, has reached levels higher than most thought possible. In the early 1990s, the percentage of carcasses grading Choice and Prime combined was slightly over 50%. In the 2022 audit, that combined percentage was 76% Choice and Prime combined. For several weeks over the past year, USDA market reports suggest that the percentage of Choice and Prime has exceeded 80%.

More than 25,000 carcasses were evaluated at packing and processing facilities to gather data for the NBQA. When comparing NBQAs from 2016 and 2022, the largest improvement was overall increased efficiency across the beef supply chain. And, it was noted, market segments no longer consider food safety as a purchasing criterion, but an expectation.

Some Key Findings Include:

When comparing 2016 and 2022 NBQAs, the largest improvement was overall increased efficiency across the beef supply chain.
Market sectors indicated their companies strive to increase their sustainability and work with the entire beef supply chain to do so.
The entire industry felt the effects of the COVID-19 pandemic, nonetheless, beef proved to be a choice of consumers, and the industry persevered to provide products.
Due to pandemic pressures, more cattle over 30 months of age were harvested.
The beef industry’s image improved within fed cattle market sectors.
Foreign materials continue to present a problem, but the industry is making strides to decrease incidence.
There was an increase in usage of electronic identification (EID).
There was an increase in the frequency of Prime and Choice quality grades, while Select decreased drastically.
The industry is improving quality, but it is accompanied by an increase in carcass weight and fat thickness, as well as large increases in percentages of Yield Grade 4 and 5 carcasses.
Nearly 93% of transportation service providers interviewed were familiar with the Beef Quality Assurance Transportation (BQAT) program and 91% are BQAT certified.
Nearly 92% of cattle received a mobility score of 1, with the animal walking easily and normally. That’s a decrease from 97% in 2016 and is attributed to larger cattle and longer transport times.

Areas for Focused Improvement:

While increasing numbers of producers are using technology for recordkeeping and data collection, others among the beef supply chain are concerned animal disease could impact the industry, and current traceability efforts do not provide a robust enough system to combat this potential threat.
Carcasses were discounted for liver abscesses, causing product loss and decreased profitability.
Preventative health strategies must be improved to ensure future effectiveness of antimicrobials.
Heat stress and other environmental factors caused increased bruising, dark cutters and heart issues as well as decreased mobility.
Increased bruising frequency should be addressed through facility and trailer design as well cattle handler training.

Eating Quality and Consistency:

Numbers of Yield Grade 4 and 5 cattle increased, and improved genetics could maintain the ideal of Yield Grade 3 or better, while maintaining marbling necessary to achieve desired quality grades.
Use advancements in genetic selection technologies to breed for carcasses with increased eating satisfaction, uniformity and desirable end-product specifications.

Beef-on-Dairy: A Revolution in American Beef Production?

Tue, 12 Sep 2023 19:11:45 GMT

Editor’s Note: This article is the fifth in a series that comprise Drovers 2023 State of the Beef Industry. The full report will appear as a 16-page special section in the September 2023 issue. Additional articles from the series will be published in this space in the following days.

Beef-on-dairy is arguably the most significant advancement for the U.S. beef industry in a generation, and no current review of the State of the Beef Industry would be complete without examining its impact.

Further, the recent growth of beef-on-dairy has been significant enough that it could alter the cyclical impact the beef industry is experiencing from drought-forced herd reductions. For instance, Patrick Linnell says CattleFax estimates the industry will produce 2.92 million beef-on-dairy calves this year and 3.22 million in 2024 (see chart). Some industry observers believe those estimates are conservative.

Regardless of the exact number, Dale Woerner, animal and food science professor at Texas Tech University, told Drovers, “The number will continue to grow as the beef cowherd shrinks.”

That’s due, primarily, to the growing acceptance of beef-on-dairy calves by both cattle feeders and beef packers, and the realities of empty pens and shackle space the industry faces over the next few years.

Targeted Breeding

“Right now, everybody needs cattle,” says Jared Wareham, North America NuEra business development manager at Genus ABS. “The beef-on-dairy crosses, especially the good ones, are in high demand.”

When the beef-on-dairy segment first began to develop a few years ago there was little attention given to the genetics of the beef semen used because it was assumed the result would produce a more valuable calf. That was true, but Wareham says that shotgun approach has given way to much more targeted breeding.

“We saw good crossbreds and bad ones, and nobody wants bad ones,” Wareham says of the early efforts to implement beef-on-dairy. “But the focus on creating the good ones continues to rise, and now we have enough feedlot performance and carcass data to make more of the good ones.”

But the rise in beef-on-dairy is also influenced by the modern dairy production system. Today’s dairy industry, with a relatively stable cowherd of 9.3 million to 9.4 million highly efficient cows, operates under an intense genetic selection system to identify the most productive dairy heifers. The development of sexed semen has become a common tool used to further those efforts and sexed semen allows dairy producers to produce optimal replacement heifers from their best dairy cows with the genetically inferior cows available for breeding to beef sires.

In other words, sexed semen helps reduce the number of dairy cows needed to produce dairy heifers, thus allowing more dairy cows available for breeding to beef sires. That advancement has led to a dramatic decrease in the use of dairy semen and a corresponding increase in the use of beef semen. In fact, the use of beef semen has nearly tripled since 2017.

Advancing Sustainability

At the outset, cattle feeders knew a beef-on-dairy cross would grow faster, be more tolerant of extreme weather conditions and produce a beefier carcass than traditional dairy calves, but that’s a low bar for today’s beef industry, and many feedlots and packers are adjusting their sights much higher.

“At first everybody saw beef-on-dairy as a way to create a dual-stream production system for milk and beef,” Wareham says. “In the beginning, breeding those dairy cows was just a stab in the dark. We used Angus genetics, but now we’re seeing a number of composite sires designed specifically for beef-on-dairy be quite successful.”

Packers and retailers also have a favorable view of the beef-on-dairy segment. For instance, a research project by Woerner and colleagues found strip loin steaks from beef-on-dairy cattle have improved color and shelf-life performance, as well as improved steak shape compared with traditional, straightbred dairy cattle. On average, the research found beef-on-dairy cattle produce carcasses with greater red meat yield than conventional Holstein steers, and high-yielding beef-on-dairy cattle can yield as high or higher than conventional beef cattle.

Woerner and his colleagues at Texas Tech have also collaborated with Cargill for over three years on the Dairy Beef Accelerator, a program to better understand the opportunities of beef-on-dairy. That research has documented several benefits for producers, packers, consumers and the environment. Some highlights:

Compared to purebred dairy calves, beef-on-dairy calves can provide higher-quality beef products without impacting current milk production efficiencies.
Beef-on-dairy calves show greater feed efficiency, which lowers the environmental footprint from their production.
Increased feed efficiency significantly reduces greenhouse gas (GHG) emissions.
The practice benefits meat quality. Beef-on-dairy delivers increased volumes of higher-grading beef carcasses, providing feedyard operators more access to value-based marketing opportunities.

“The beef and dairy industries can to work together to produce even more efficient beef animals,” Woerner says. “Crossbreeding dairy cows to complementary beef sires can advance sustainability by reducing the environmental impact and improving profitability.”

Short Supply and Structural Shifts In Focus: 2023 State Of The Beef Industry

Tue, 12 Sep 2023 13:00:00 GMT

Editor’s Note: This article is the sixth in a series that comprise Drovers 2023 State of the Beef Industry. The full report will appear as a 16-page special section in the September 2023 issue.

The state of the U.S. beef industry in 2023 is strong. Drought-induced herd liquidation impacted the supply side, but an even greater impact occurred on the demand side.

U.S. consumers have shown a willingness to pay higher prices for beef which is key to market sustainability. As beef producers have improved their product over the past two decades, consumers have come to expect quality, consistency and safety, the three attributes supporting strong beef demand.

Structural Change

With the U.S. in an inflationary economic environment, consumer budgets might tighten. Even so, the beef industry is in a much better position today and that has not always been the case. While I believe beef demand has yet to be fully tested at these higher prices, the evidence supports the factors mentioned above that brought us to this point have had a greater impact than in the past.

While demand is strong, we must recognize supply and structural issues that will have a significant impact going forward. For instance, contrary to popular belief, the industry does not lack harvest capacity. Capacity use is a key economic factor that impacts margins and will be a factor driving distinct structural change through decisions made within individual firms (packers).

Utilization of slaughter capacity in fed beef plants averaged 81% across the industry in 2014/15. As cattle numbers increased, that figure rose to 88% from 2016 to 2022. Through July 2023, utilization averaged 85%, and with continued reduced fed cattle numbers in 2024, the figure will drop to 80% against current capacity. Cow plants averaged 92% utilization from 2016 to 2022 as herds were built and then liquidated due to drought. Through July 2023, that figure has fallen to 81% and could fall to 65% in 2024. There will be adjustments, with decisions directed toward managing and aligning slaughter capacity with value-added, case-ready products.

The production of case-ready products by packers has become the rule rather than the exception, and for good reason: margins and customer demand, both in retail and food service. Cattle producers must maintain their focus toward producing and marketing cattle — not selling, but marketing cattle — that meet the demand for beef in U.S. and global markets. This will be achieved through genetic improvement. The goal is for cattle producers to realize their share of the value chain through producing the right cattle for the right market, and 2023 is the starting point.

Cattle Market Signals: High Costs, Projected Profits and Beef Demand

Fri, 08 Sep 2023 13:17:30 GMT

Editor’s Note: This article is the third in a series that comprise Drovers 2023 State of the Beef Industry. The full report will appear as a 16-page special section in the September 2023 issue. Additional articles from the series will be published in this space in the following days.

Weather has been the dominating story for the beef industry in recent years. That’s resulted in sharp inventory declines for all classes of cattle as 2023 began. The item that gets the most attention (appropriately so) being the Jan. 1 beef cow inventory. Beef producers began the year holding just 28.9 million beef cows, the lowest starting inventory since 1962.

Moreover, given slaughter rates through the first half of the year, it’s likely cow producers will take another cut out of those numbers going into 2024. Beef cow slaughter through June represents ~6% of the Jan. 1 starting inventory; that’s just a half-percent below last year’s pace.

Reluctance to rebuild the cowherd is due to any number of factors. Most notably, forages (hay and pasture) are in short supply. For instance, this year’s hay inventory carryover into the current crop year (starting May 1) stands at just 14.5 million tons (and only 2.5% above the previous low established in 2013).

Higher Costs Ahead

Meanwhile, drought continues. It’ll likely require several years of recovery before producers feel confident enough to begin restocking. Simultaneously, high input costs and higher interest rates contribute to incentive to keep selling cows and/or reluctance to retain heifers.

Markets Strengthen

On the flip side of higher expenses are better markets. LMIC forecasts cow-calf producers will be profitable (on average) in 2023 with returns projected in excess of $300 per head. Since 2010, returns have been negative only four out of 14 years with an average annual return of ~$87 per head.

Strength in the feeder market should continue to be underpinned by supply challenges in the calf supply. USDA pegged the Jan. 1 feeder cattle supply outside of feedyards at 25.27 million head. That’s the lowest since 2015 and roughly in line with 2014. Despite rising feeding costs (corn, fuel, interest, labor), tightening supply and a favorable string of feedyard closeouts will continue to bolster the feeder market for the foreseeable future.

Beef Demand

From a consumer standpoint, beef demand continues to be solid. Last year’s beef production saw a record (28.22 billion pounds.)

And yet, even in the midst of bigger supply and an economy burdened by ongoing inflation, consumers purchased beef at record retail prices averaging nearly $7.60 per pound. The year-over-year comparisons are especially favorable. Beef consumers are purchasing more product and paying higher prices, all an indication of strengthening demand.

Dairy Contributions

Last, the dairy sector is increasingly an important contributor to, and participant of, the beef industry. Beef cross calves are progressively becoming an essential component of beef production, and dairy producers are cognizant of subsequent opportunities on the beef side. While the dairy business continues to consolidate, dairy cow numbers remain surprisingly resilient. The 2023 starting inventory was 9.40 million cows, right in line with the 10-year average (9.35 million head). As such, the dairy herd represents a sizable, reliable and consistent supply of feeder cattle going forward; that’s vastly different from dairy-sourced calves that were previously thought to simply be a discounted, after-thought in the marketplace.

Survey Reveals Key Insights: What Are Cattle Producers Focusing On Now?

Thu, 07 Sep 2023 03:42:15 GMT

Editor’s Note: This article is the second in a series that comprise Drovers 2023 State of the Beef Industry. The full report will appear as a 16-page special section in the September 2023 issue. Additional articles from the series will be published in this space in the following days.

The discussion below highlights just several items because of their potential influence on the industry over the long run. They’re addressed in no particular order; each one is independently important. But perhaps more significantly, these items ultimately overlap to influence producer decision-making going forward.

Survey Results

It’s important to note at the outset, the survey results are largely representative of producers fully committed to the business. For example, roughly half of the respondents in the survey generate 75% or more of their income selling weaned calves. Moreover, 40% of respondents indicate cattle to be the primary/sole income source for the operation. At first blush, that might seem low and even contradictory with the previous statement; however, that number well exceeds the national average.

USDA’s National Animal Health Monitoring System Beef 2017 survey provides an extensive and comprehensive overview of management practices within the cow/calf sector. Most significant here, the survey categorizes income for respective operations (primary versus secondary). While bigger operations are more likely to designate cattle as a primary source of income, only 15.8% of all operations in the U.S. categorize it as such.

Additionally, the responses regarding preconditioning practices further underscore respondents’ commitment to the business. More than 80% indicated they precondition the calf crop prior to marketing. Based on a subjective view of the industry, that number far exceeds industry norms. In other words, survey respondents are actively seeking all opportunities to leverage both their genetic investment and management skills to maximize revenue for the operation.

Weather

No discussion about farming and ranching can occur without some mention of weather. During the past 10 years, cow/calf producers have endured two major rounds of drought and subsequent selloff of the cowherd. The outcome being the smallest beef cow inventory going into 2023 since the early-1960s.

What happens next? Just one-third of operations that downsized in recent years due to drought intend to restock this year. In other words, survey respondents are carefully evaluating their options and seemingly aren’t in any rush to restock anytime soon. Rebuilding the cowherd will take time, implying this cycle will likely be of longer duration versus the previous inventory lows in 2014. That assessment was confirmed by USDA’s July 1 cattle inventory report; producers are neither keeping back cows nor retaining additional heifers to grow the cowherd.

That’s not surprising. Producers need time to replenish pastures, ponds and hay inventories. To that end, the percentage of range and pasture rated as poor or very poor is on pace with the five-year average. That reality can be viewed both ways: it’s no worse versus previous years, but it’s no better either.

Profitability/Success

Survey results reveal a bullish outlook on the business. First, nearly two-thirds of respondents indicate they’re optimistic about the future. And second, despite market challenges in recent years (especially through COVID-19), less than 10% indicate their business operated at a loss during the previous five years. And given 2023’s market strength to date, it’s likely if the survey were taken today, such optimism likely would be even higher.

The combination of respondents’ optimism and profitability leads to a third aspect of significance: plans to expand the operation. In terms of growth, 54% indicate plans to add an additional person to the operation while 38% expect to expand their herd in the next five years. In other words, as alluded to above, growth and expansion are in the cards; it’s just likely to be drawn out.

Herd Expansion and Family Integration

Perhaps the most indicative question of long-term commitment and optimism about the business revolves around plans to add a family member. Regardless of profitability, roughly half of all respondents indicate they plan to add an additional family member in next five years.

Complexity

Ultimately, the beef industry’s success will be underpinned by how well it navigates the respective priorities of consumers and the inevitable shifts in the marketplace over time. The survey asked about four different aspects related to consumer pressure and expectations for change in the future: environmental impact, animal welfare, sustainable practices and desire of high-quality beef, respectively. In every instance, a majority of producers either agreed or strongly agreed each of those items will be increasingly important in the years to come.

The survey report summarizes it succinctly: “Operators foresee acceleration of challenges they face today, mostly related to consumer attitudes and activist efforts that are largely outside their control. Most beef producers expect increased pressure to be sustainable, care for the environment and elevate animal welfare while producing higher quality carcasses.”

That’s especially true as millennials (many of whom consider themselves to be Flexitarians) obtain wealth and increasingly become the most influential consumer cohort for the beef industry, and the importance of being responsive to their concerns is best illustrated by 2023’s Power of Meat study.

For example, when asked if, “Meat/Poultry Brands are Committed to Planet Health and Sustainable Production” nearly one-third (32%) of younger millennials (24 to 29 years of age) respond in the negative fashion — nearly twice the rate (17%) of Boomers (56 to 75 years old). The same pattern exists (32% and 16%, respectively) when asked if, “Animal Welfare for Livestock Raised in the U.S. is Good [Sufficient/Satisfactory.]” Younger consumers tend to have higher rates of negative views of animal agriculture versus their older cohorts.

The marketplace will become more complex in the years to come. Accordingly, in response to those pressures, producers will need to be increasingly cognizant of the importance of eating quality coupled with planet health and animal welfare.

Conclusion

Going back to the beginning, as noted previously, survey respondents are actively seeking opportunities to leverage their skills and capabilities to maximize revenue for their operations. Furthermore, they also envision even more complexity coming to the marketplace. And given their current state of mind regarding the business (growth and optimism), it’s fair to say Drover’s respondents are highly likely to eagerly anticipate that complexity as yet another venue of opportunity.

Data Reveals Passion: Optimism and Resilience Amidst Drought

Tue, 05 Sep 2023 20:42:09 GMT

Editor’s Note: This article is the first in a series that comprise Drovers 2023 State of the Beef Industry. The full report will appear as a 16-page special section in the September 2023 issue. Additional articles from the series will be published in this space in the following days.

America’s beef producers are optimistic about the future, and the state of today’s beef industry is strong. Those are two highlights from Drovers State of the Industry producer survey conducted this spring and reported in detail in this special section.

Such producer sentiment was a little surprising due to the devastating and historic drought that gripped nearly all of cattle country last year. Yet, two-thirds of respondents call themselves optimistic about the future of the business, and 54% say they will add a family member to their operation within the next five years.

Those data points should be viewed as both the foundation of a strong industry and an indication of the resilience of Drovers readers. As part of our 150th anniversary celebration, Drovers sought to gauge producer attitudes, commitment and management practices. Responses tend to support or confirm findings from other industry projects.

For instance, the 2022 National Beef Quality Audit released earlier this year found three key points regarding producer/consumer symbiosis.

Food safety is an expectation, not a purchase criterion with consumers.
The largest improvement since the 2016 audit was in overall efficiency across the beef supply chain.
Companies are striving to increase their sustainability and are working with the entire beef supply chain to achieve improvement.

Overwhelmingly, 88% of Drovers survey respondents say they support the industry’s sustainability efforts, and most respondents agree or strongly agree current industry challenges will continue to grow in the future. They include: reducing environmental impact, 78%; animal welfare scrutiny, 77%; demand for higher quality carcasses, 73%.

While it is encouraging to see widespread acknowledgment of key issues that might have significant impact on the industry in the long term, possibly the most important revelation from the Drovers survey was producer commitment. It speaks volumes about ranchers and cowboys who, having experienced the second historic drought in a decade, remain committed to their business and their lifestyle.

Despite the myriad stresses caused by the extended drought, just one-tenth of our respondents considered exiting the business, while 66% of respondents said hanging up their spurs was never a consideration.

At Drovers, we share your passion for agriculture and the beef industry. Our 150th Anniversary State of the Industry report is designed to provide a benchmark of information to help you make successful decisions.

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