By Jennifer Dorsett
Field Editor
Beef prices may be going up but cattle ranchers’ profits are not.
That’s the take-home message from ranchers to consumers about the impact the COVID-19 pandemic has had on their operations.
And although every sector of the cattle industry is feeling the pain, a report recently released by the National Cattlemen’s Beef Association (NCBA) said without relief payments, cow-calf producers stand to lose $3.7 billion in 2020, equivalent to $111.91 per head for each mature breeding animal.
Additional long-term damages of $4.45 billion, or another $135.24 per mature breeding animal, could impact the cow-calf sector in the future if damages are not offset by relief payments.
Hyman Boozer
Nacogdoches County
Hyman Boozer began raising cattle as a side pursuit and went into ranching full-time after retirement. He and his son run a crossbred Charolais/Brangus cow-calf operation, a Brangus cow-calf herd and occasionally raise stockers.
The recent jump in boxed beef cutouts while cattle prices are declining concerns Boozer.
Although the cattle market always has its ups and downs in pricing, Boozer said it seems like the concentration of the packer industry throughout the years has made pricing more volatile.
“It’s just down to a few packers now, and that’s not always a good thing. This year, we have a situation where the calf market overall has been down, but demand and retail prices have gone up,” he said. “There’s a big difference, and I’m not exactly sure how that’s all working out. Packers need to justify how the boxed beef is bringing such big prices when what we’re seeing at the sale barn doesn’t reflect that.”
The recent low prices haven’t yet reached his Nacogdoches ranch, though. Boozer’s calves are typically sold in September or early October, so for now, he is observing and hopes the market corrects itself by the fall.
“We’ve been fortunate to have rain and early grass, so we aren’t having to feed right now. We’re just raising our calves and hoping for the best, but a lot can change between now and September,” he said.
Agricultural organizations, including the American Farm Bureau Federation, and state and federal lawmakers have asked for an investigation into the price volatility and disparities.
“It’s an interesting battle that we face every day. We’re not like most folks. We aren’t guaranteed a certain amount of money for our work when we sell calves,” he said. “We use quality bulls, and we protect and try to care for our animals so that we can produce a good product, and all we want is a fair price for that effort. Ranchers in Texas are really concerned, because we want people to realize the cattle industry is where they’re getting that good cut of beef for their dinner plate.”
Austen White
Wilbarger County
Austen White’s family has been farming and ranching in Wilbarger County since the early 1900s. The fifth-generation rancher continues the family legacy, raising cattle and proven young sires for the R.A. Brown Ranch.
A few years ago, the Whites began participating in verification programs, including certification through the Global Animal Partnership (G.A.P.), an animal welfare program, as a way to add more value to their beef cattle.
“We bought into these programs around six years ago and saw this niche market open up,” he said. “Year in and year out, we’ve done really well marketing our cattle. Sustainability cannot happen without profitability, and more profit is the end game for everybody, really. We’re just trying to keep our margins healthy by trying some different things.”
It has been business as usual around the ranch, but White and his family are holding some yearling calves a bit longer this year while keeping a close eye on the cattle market.
“We like to sell a few loads [of cattle] and keep a few loads at the yard,” he said. “With the markets the way they are, you can’t hedge your bets. You don’t really want to give your calves away, so you’re basically going in and hoping for the best.”
He noted good genetics and quality beef will help his operation hopefully weather the COVID-19 storm.
“We’re not doing the same kind of ranching we were doing 40 years ago,” he said. “We really believe in good genetics. Texas produces a lot of beef, and people realize that and depend on us for quality, and we won’t let them down. It’s easy to be mad at the packers, but it’s best to worry about your operation and how to keep it profitable.”
James O’Brien
Bee County
James O’Brien is a sixth-generation rancher in Bee County. While his family has run a large cow-calf operation in the Coastal Bend for more than 100 years, O’Brien realized he needed to diversify to add another generation to the ranch.
To bring in additional revenue, O’Brien raises and trains horses, as well as operates a direct-to-consumer grassfed beef operation. His perspective on the pandemic and its effects on agricultural markets comes from the differences in their conventional cow-calf herd and the direct-marketing herd.
O’Brien recently took some cattle to the sale barn. After the sale, he compared his prices to last year’s prices.
In May 2019, live cattle sold at the local auction for around $1.51 per pound. Now, they’re selling for around $1.30 per pound, which nets him about $105 less per head.
O’Brien, like many ranchers, faces a tough decision between holding calves in hopes of better prices or selling them now and taking the hit.
“You have steers sitting in the feed lot hitting 1,500-1,600 pounds, and they need to go somewhere, so they take the $1.00 or 90 cents they’re offered, and we do the same thing at the sale barn because we don’t really want to keep feeding them, and we need the room for the new babies. But it’s a hard decision to make,” he said. “It’s tough to hear those stories about the boxed beef cutouts, and then go to town and lose money on your cow-calf operation.”
But his grassfed beef operation is doing well.
“We’re just fortunate we’ve been focused on diversification the past few years,” he said.
The market for his direct-to-consumer beef has grown steadily since he first started it three years ago. Since the pandemic, demand for his local beef has increased even more.
“Where we were selling out at about every 25 days and processing once a month, now we’re selling out every two weeks,” he said. “The prices at the grocery store have gone up, and they’re limiting what you can buy, so people are looking for other sources to ensure they have meat for their families.”
It’s an interesting comparison to what’s happening in the conventional cattle market.
“On the cow-calf side, we’re losing $100 a head, but on the direct-marketing side, if they’d let me process 10 head a month right now, I’d do it because sales are so good,” O’Brien said. “We’re processing three a month now, and we’re just lucky we already had the ball rolling. We’re ramping up our volume as much as we can and trying to build inventory.”
Moving forward, O’Brien expects more ranchers will better understand beef marketing, genetics and the cattle market in general. He believes there will be more emphasis on technology and more interest in unconventional or niche markets than prior to the pandemic.
“There are a lot of people who started looking at direct-to-market operations after prices tanked and packer margins ballooned,” he said. “I’ve heard even some custom guys that normally focus on wildlife are starting to process beef. The smaller, local processors are getting slammed with all the livestock shows getting cancelled and so many people thinking they might switch to direct-marketing. That’s going to have an effect on packers, as well.”
The disparity between live cattle markets and packer margins may spur some changes in the way markets operate.
“It’s like two different markets is the best way to explain it. When I think of cattle, I think of beef but it’s really two different markets,” he said. “It’s going to end up being a heck of a case study in a year or two when we can look back on all this data and see why it went down the way it did.”