Johnson column: Fewer cows mean higher prices
By Brad Johnson
For the Salisbury Post
SALISBURY — As you browse the grocery store aisles, especially perusing the meat counter, you may come to the conclusion that prices have increased.
There’s a simple explanation involving Mother Nature and the Southwestern United States. Over the past year or so, the Southwestern United States, Texas, especially, has experienced one of the most severe droughts on record. So, how does that affect the price of meat in North Carolina? The drought has significantly impacted the amount of grazing land for cattle and sheep. If producers can’t feed them, they’re selling them.
I recently read an article stating that 30 percent of the beef cattle in Texas are now gone, either sold to another state or added to the food chain in the past year. This has resulted in a significant decrease in the number of cattle, sheep and goats nationally.
Texas, by far, has the largest inventory of beef cattle, sheep and goats in the U.S. The national beef cattle herd has decreased by 2 percent from 2011 to 2012, as it has decreased from more than 92.5 million (according to USDA information) to less than 91 million. Texas leads the nation with a total beef cattle herd of 13.3 million in 2011, which has decreased to 11.9 million in 2012.
The drought has also affected Oklahoma, as that states’ beef cattle numbers have decreased from 5.1 million (in 2011) to 4.5 million (2012). The No. 2 state nationally for total numbers of beef cattle is Nebraska with 6.45 million head.
In addition, Texas leads the U.S. in numbers of sheep and meat goats, which have also decreased significantly (2 percent nationally for sheep and 4 percent nationally for goats). The total U.S. flock of sheep is estimated at 5.5 million, with Texas accounting for 850,000 in 2011. Texas’ flock has decreased to 650,000 in 2012. California is the No. 2 state nationally for sheep with 600,000 head in 2011, but has decreased to 570,000 head in 2012.
Of the national flock of 2.5 million goats, Texas accounted for 950,000 in 2011, but that number has decreased to 850,000 for 2012. If you’ve noticed that the price of cashmere has increased, the number of Angora goats in Texas has decreased from 110,000 in 2011 to 85,000 in 2012 (the national flock is only 172,000).
Using the economics theory of supply and demand, as supply decreases and demand stays the same or increases, the price increases accordingly to help drive producers to increase the supply. Unfortunately, the gestation period of cattle is 285 days, plus it takes roughly 15-18 months for the resulting calf to reach appropriate size (1,300 pounds) for harvest. In other words, it takes a couple years for the calf conceived this winter to reach the grocery store as retail cuts of beef, and ultimately, your dinner table. Consequently, it takes several years to increase the national herd size to meet the demand. In the meantime, producers are receiving record prices for cattle and sheep, which is increasing the cost of production throughout the food supply chain.
For example, according to information from the North Carolina Department of Agriculture and Consumer Services Division of Marketing, 500-600 pound feeder steers are currently selling for $135.44 per hundredweight, while last year at this time, they were selling for $111.42 per hundredweight (which was a record price at the time). Lambs (prime and choice, 110 pounds) sold for $215 at the State Graded Meat Goat and Sheep Sale at Monroe a few days ago, while Selection 1 goat kids (60-80 pounds) sold for $122.50-$175. Many producers will tell you that they’ve never seen sale prices for their stock this high.
Unfortunately, the inputs of feed, fertilizer and fuel are also extremely high, in many cases minimizing the gains from the record sale prices.
Brad Johnson is an extension agent in agriculture-dairy and livestock at Rowan County Cooperative Extension. Call 704-216-8970.