Jonathan Knutson, Published April 13 2014
Eyes on expansion: ND, Minn. producers look to increase beef cow numbers
The cow, maternal instincts on overdrive, licks the calf fervently. Her son, ungainly but determined, tries to struggle to his feet in the straw-covered pen.
Kevin Elliott, watching from just outside the pen, smiles at the sight.
“I really like this time of year, seeing them take that first gasp of life,” he says.
What’s happening at the Elliott ranch near Clifford, N.D., is happening at ranches across America this spring: A new batch of calves is coming into the world, and ranchers are working diligently to keep their animals safe and healthy.
But the Elliott ranch differs from many ranches nationwide: It’s adding beef cows at a time when U.S. beef cow numbers have fallen to their lowest levels since 1962.
The most recent annual decline nationally – from 29.3 million on Jan. 1, 2013, to 29 million on Jan. 1, 2014 – comes despite record-high beef prices and lower corn prices that, at least in theory, should encourage ranchers to increase their herds.
The mindset is that high beef prices and lower feed costs will cause producers to hold back heifers for slaughter, with those young females producing many calves of their own to sell over time.
Beef prices are expected to remain high for the next few years, further increasing incentive to expand herds.
North Dakota ranchers are putting theory into practice. The number of beef cows in the state rose from 922,000 in early January 2013 to 943,000 in early January 2014.
To be sure, as Jason Zahn, a Towner, N.D., rancher and president of the state Stockmen’s Association, notes, it’s only a 2 percent increase, a relatively modest rise.
Even so, it contrasts noticeably with the national decline and state-level declines in beef cattle numbers in South Dakota, Minnesota and Montana.
What’s different about North Dakota?
Better weather and more grass and hay. North Dakota avoided the worst of the drought that hammered grass and hay production in the three adjacent states.
But cattle producers and others say Montana, South Dakota and Minnesota, as well as the nation overall, are setting the stage for herd expansion.
“It comes down to record high prices and moisture conditions. When those two things line up, we’re going to expand. Right now, we think we’re in the process of doing that,” says Kevin Good, a senior analyst with CattleFax, a cattle market and research information service based in Englewood, Colo.
Some parts of the country remain dry, however, which will slow overall expansion of the beef herd, he says.
Demand, market share
Potential expansion of the U.S. beef herd has important consequences, both short- and long-term, for individual producers. It also will affect the cattle industry’s ability to produce beef at a price and quantity that consumers want.
USDA numbers show that beef prices in February, the most recent month for which data is available, continued to increase. The average price of fresh beef overall was $5.28 per pound, up from $4.91 per pound a year ago.
Cattle prices have risen sharply, too. One example: 500- to 600-pound steers sold at auction in North Dakota in the last week of March averaged $217.50 per hundredweight. Steers in that category averaged $160.31 per hundredweight in the same week of 2013.
Consumer demand for beef remains strong, despite the higher prices, industry officials say.
One thing to remember about herd expansion:
If cattle producers do hold back more heifers, U.S. beef supplies will continue to decline temporarily, putting more upward pressure on prices. That pressure won’t end until calves from held-back heifers are ready for slaughter.
Beef cattle basics
The biology of beef cattle prevents a quick build-up of U.S. beef supplies.
“It takes time,” says Tim Petry, livestock marketing specialist with the North Dakota State University Extension Service.
Say a rancher hangs on to a female calf born this spring. She will be bred next summer and have her first calf in two years. Another year will go by before that calf is slaughtered.
So, about three years pass from when a rancher holds back a new female calf until additional beef from its first offspring is available to consumers.
Historically, the long build-up has played a big role in what’s called the beef cattle cycle, or the roughly 10-year period in which the U.S. beef herd expands and contracts in response to changes in beef prices and profitability.
Roadblocks to expansion
Ranchers and industry officials in Minnesota, South Dakota and Montana say some producers in the three states already have expanded their herds. Other producers have had to cut back because of bad weather, however, more than offsetting expansion in some herds.
Now, though, ranchers and officials in the three states see encouraging signs of a broad expansion.
But there are roadblocks that likely will slow or limit herd expansion:
- Many area ranchers are in their late 50s and 60s, an age at which increasing their herds becomes less attractive. The appeal declines even more because most, or even all, of the additional cows would be heifers, which generally have more calving difficulties than older cows.
- High crop prices have caused some pasture and hay land to be converted to crop land.
- Current prices are so high that they encourage ranchers to sell cattle now, at an attractive profit, instead of holding back the animals for expansion.
That’s especially true for producers who struggled in recent years to make money because of drought or high feed prices or both.
Kevin Elliott is part of Tri E Simmentals of Clifford. The operation includes his parents, Mike and Patty; Kevin and his wife, Stacy, and their children, McKenzie, Keegan and Konner; and Kurt (Kevin’s brother) his wife, Cheryle, and their children, Chase, Dani and Levi.
The extended Elliott family runs a cow-calf operation and 3,000-head cattle feedlot. It also sell bulls and raises grain.
About 270 cows are calving this spring in the cow-calf operation. That’s about 70 more than a few years ago.
“We’re growing some,” Kevin Elliott says. “But expenses have risen, too. You’ve got to watch your expenses. If something doesn’t pay for itself, you can’t be doing it for very long.”
Many of the additional cows were bought by Chase Elliott, a junior at nearby Mayville (N.D.) State University.
“It’s the next generation adding on to the herd,” Kevin Elliott says.
Chase Elliot returns regularly to the ranch during calving season and wants to join the operation full-time after college graduation.
“I just enjoy the whole process” of the cattle operation, he says.
Like his uncle, he mentions the satisfaction of watching cattle take their first breath of life.