Theodore Roosevelt, 1903

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Friday, May 24, 2013

The Cattle Industry - The News Is Mixed

Since people have written me asking about Cattle Ranching, but since I've been exposed to cattle ranching but by no means am I an expert on the subject, I did some research and talked to some friends who are pretty good ranchers.

Yes, they have had their ups and downs - but they have been able to survive in an industry ripe with over-regulation and heartache.

The news coming out of the cattle industry is truly a mixed bag.

In January of 2012, our nation's cowherd was 887,000 head smaller than a year earlier and totaled 39.1 million head. But while Americans continue to spend more for pork and broilers, beef’s share of percapita spending on all meat has increased slightly.
Here are some Cattle Industry facts that we should take note of.

A Family Affair?

Cattle and beef production represent the largest single segment of American agriculture. In
fact, the U.S. Department of Agriculture (USDA) says more farms are classified as beef cattle
operations than any other type of farm. 

Over 30% of all ag producers are classified as beef cattle operations.

In 2007, the USDA’s Census of Agriculture classified 687,540 farms as beef cattle operations.

There are more than 1 million beef producers in the United States who are responsible for more
than 94 million head of beef cattle. And yes, although cattle ranches are spread across the United State, nearly a third of cattle operations are located in the Plains states.

The U.S. beef industry is made up of more than 1 million businesses, farms and ranches.

In 2007, there were more than 1 million cattle ranchers and farmers in the United States.

The American Veal Association estimates there are 800-900 veal producers in the United States.

A surprise to me is the fact that most farms and ranches in the United States, including cattle ranches, are family owned and operated. Even the largest ranches tend to be family operations.

Fact is that more than 97% of beef cattle ranches and farms are classified as family owned.

As surprising as it might seem, when it comes to beef cattle production, most operations are smaller than you might think. For me, I've been under the impression that most of the beef industry in America is owned by big corporations - by people who live back East who didn't know a cow from a bull.

I was pretty surprised to find out that I was wrong.

According to USDA, the majority of beef cattle operations, almost 80% have less than 50 head of
cattle. What does this mean? Small operations are the majority.

Cattle Income

According to USDA’s Economic Research Service (ERS), the average annual gross income from livestock on ranches and farms in this country is $41,232.

The average gross cash income from a cattle operation in 2007 was $62,286, the this is considered the lowest income of any type of farm.

Less than one-third of cattle operators claim farming as their primary occupation and only 19% of them consider themselves retired.

However, even thought that's the case, research shows that over 60% say they work more than 1,000 hours a year on their farming operations.

According to USDA’s 2007 Census of Agriculture, 80% of the primary operators for beef cattle ranches and farms on their farm or ranch.

Demographics

First, what is meant by "demographics"?

Demographics is the term used to describe the statistical data of a population, especially those showing average age, income, education, etc.  

According to USDA’s 2007 Census of Agriculture, the average age of the American farmer is 57
years old. The average age for farmers has been above 50 since the 1974 Census of Agriculture
and has increased in each census since that time.

This means our beef producers are getting older. Younger people are not coming into the cattle industry as fast as they should be.

Cattle operations have long been considered family traditions, handed down from generation to
generation. In a survey conducted by the Iowa Beef Center, 60% of Iowa beef producers are
expected to pass their operation on to their children.

The 2007 Census of Agriculture also found that the average number of years a beef producer has
been on the farm or ranch is 22 years.

In fact, 75 percent of beef cattle ranchers and farmers have been on the farm 10 or more years.

According to ERS, nearly one in five cattle producers is a college graduate, one in four has
attended some college - and 89% are high school graduates.

That stat in itself is impressive since it goes against the national average for most other industries because the national graduation rate was only 75% as noted in data from 2009.

Impact on Society

Beef production impacts the U.S. economy in a bigger way than most know or understand.

Per capital spending on beef in 2009: $261.90 - beef is 47.8% of per capital spending on all meat.

According to USDA, producers of meat animals in 2008 were responsible for more than $66 Billion in added value to the U.S. economy, as measured by their contribution to the national output.

Total cash receipts: $62.9 billion (2012 Agricultural Statistics Annual)

Economic impact: $44 billion in farm gate receipts (USDA NASS)

2012 beef exports: $5.51 billion (up 2% from 2011), 1.13 million metric tons (USMEF)

Top export markets: Canada, Japan, Mexico, South Korea and Hong Kong

More Beef Industry Statistics

• 2012 Cattle inventory: 89,299,600 (USDA NASS)

The U.S. cattle herd has decreased 1,913,900 head from 2011 to 2012

• Number of herds: 742,000

◦ 29.3 million beef cows

◦ 34.3 million head calf crop (2012)

◦ 90 percent of cow herds have less than 100 cows (avg. 44 head)

• Cost of production: from 1990-2003, feedlot cost of gain was $261/head; in the past four years, feedlot cost of gain is $494/head

• 33.6 million head of cattle harvested under USDA inspection (2011);

• 43.4 billion pounds of beef harvested under USDA inspection.

• Average live weight 1,277 pounds.

• More than 50 percent of the total value of U.S. sales of cattle and calves comes from the top 5 states: (Jan. 1, 2012, USDA Cattle Inventory Report)

1. Texas
2. Nebraska
3. Missouri
4. Oklahoma
5. South Dakota

Strong Demand for Beef

American consumers’ love of great steaks and burgers, their confidence in the safety of U.S. beef and their renewed interest in the nutritional benefits of protein help create strong demand for beef.

• Consumer spending on beef was $76 billion in 2008 and has grown  $26.9 billion since 1999.

• Per capita spending for beef in retail and foodservice was about $249 in 2008 — up about $50 from 2001

• In 2008, per capita consumption of beef was 59.9 pounds, compared to 59.2 pounds for chicken.

Today’s Consumer

The demographic make-up of the domestic consumer continues to evolve.

The following trends have been identified: a growing and aging population; the emerging strength of the millennial generation, who are entering their prime household formation years; an increase in small households of one to two members and an increase in ethnic diversity.

Beef in Retail

Beef dominates the retail meat department in volume (pounds) of sales and total dollar amount.

Additionally, the value of beef sales continues to increase. The following statistics represent supermarkets with annual sales of $2 million or more. Data does not include club stores, butcher shops or independent grocery stores with annual sales of less than $2 million.

• Total fresh beef sales at retail were $15.5 Billion in 2008, a 2.2% sales growth from the previous year.

• Beef accounts for more than 52% of dollars spent on meat at retail. In comparison, chicken accounts for 22% of dollars spent on meat at retail.

• In 2008, 4.2 Billion pounds of fresh beef were sold at retail, a 2% volume growth from the previous year.

• In 2008, beef accounted for 39.3% of the pounds of meat purchased at retail.

• The average price per pound of beef in 2008 was $3.69.

• The volume and value of natural/organic beef product purchases have declined in recent months.

For the year ending March 29, 2009, natural/organic beef sales comprised 1.8% of the total beef volume (pounds) and 2.7% of the total beef sales (dollars) in retail.

This represents a 5.6% reduction in total pounds and a 5% reduction in total dollars from the previous year.

Beef in Foodservice

The foodservice sector includes both “restaurants” (limited and full service) and “beyond
restaurants,” such as lodging, business and industry (e.g., private, corporate and employee
dining facilities), colleges and schools.

Of the total dollar amount spent on food and beverages in 2008, approximately 50% went to retail outlets and 50% to foodservice establishments.

In 2008, Americans spent $540 Billion in the foodservice sector.

Importantly, beef remains the No. 1 protein served in restaurants.

• Overall, the foodservice sector purchased 8.18 billion pounds of beef in 2008.

This equated to $26.3 billion in wholesale purchases. Foodservice purchased 7.81 billion pounds of chicken in 2008.

• Ground beef represents the largest share of volume in foodservice at 63% while the steak category represents the largest share of dollars at 42%.

The following statistics measure beef volume in commercial restaurants, which account for about 66% of all consumer spending in foodservice.

• In 2008, 5.4 billion pounds of beef were purchased by commercial restaurant operators.

• Commercial restaurants include limited service restaurants (LSRs), such as McDonalds, Pizza Hut, Subway and Church’s, and full service restaurants (FSR).

FSRs are divided into midscale restaurants such as Denny’s, Golden Corral and Cracker Barrel; casual dining restaurants such as Olive Garden, Applebee’s and Red Lobster; and fine dining restaurants such as Morton’s and Del Frisco’s.

• LSRs accounted for more than 43% of all beef and 41 percent of all chicken served in commercial restaurants in 2008.

• In 2008, beef accounted for 39.3% of the pounds of meat purchased at retail.
• The average price per pound of beef in 2008 was $3.69.

• While non-organic beef has risen, the volume and value of natural/organic beef product purchases have declined in recent months.

For the year ending March 29, 2009, natural/organic beef sales comprised 1.8% of the total beef volume (pounds) and 2.7% of the total beef sales (dollars) in retail. This represents a 5.6% reduction in total pounds and a 5% reduction in total dollars from the previous year.

Beef in the Home

More than eight out of 10 individuals consume fresh beef regularly (an average of 1.7 times per week) in-home.

• Ground beef is the most popular beef item for consumers preparing meals in their home.

• In 2008, ground beef was present at 60% of all in-home beef servings.

• Steak is the second most popular in-home beef item.

Although families represent less than one-third of households, they represent more than half of fresh beef servings.

USDA's Foreign Ag Service released their latest forecast of world meat production in April (2013). They are predicting 2013 global beef production will be up 0.5% from 2012. Though our production is expected to be down 4%, the United States is the world's largest beef producer.

Cattlemen and women play an important role in the economic and social fabric of our country. We are an intricate part of American Agriculture. We feed the world.


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