Field Notes Blog > Factors that Influence the Beef Industry
Factors that Influence the Beef Industry
April 16, 2018
Featured Guest Writer: Matt Meals, AgChoice ag business consultant
I am very blessed to have the opportunity to be a beef producer and work with several beef operators in a consulting role. The beef industry, like many other agricultural sectors, experiences economic cycles that, if graphed over time, would resemble roller coaster blueprints. We all know that imbalances of supply and demand in our free market system cause these vicissitudes. Influences including weather, domestic/international markets, industry growth and public policy, are beyond our control. The things we can control include management of our individual beef operations.
We can add the dairy industry to the list of uncontrollable factors. Every dairy producer is also a beef producer. Dairy is an area all beef producers need to watch, especially this year. The dairy industry represents 22.7% of the United States’ beef supply chain as of 2016. That includes culls and finished dairy steers and heifers. That is a significant portion of the industry, and we can expect to see this percentage grow in the coming years.
So why be concerned this year? Dairy is experiencing record low prices, and the beef chain is an alternative for dairy producers. Beef exports are strong, but our elected officials have made renegotiating trade agreements a priority. Weather, specifically drought, is affecting major cattle regions of the country. Feedlots nationwide are full, and the American cattle herd continues to expand.
All of these factors can drastically influence the beef market over the next 12 to 18 months. We all need to watch closely the market conditions affecting our industry to protect our operations from fluctuations. This should include a good marketing and risk management plan. Several tools and resources are available to assist us with implementing these plans, or fine-tuning them if already in place.
As producers, we cannot fully control all the things affecting our operations’ balance sheet or the circular nature of the market. However, we can control how we position our operations to handle the fluctuations when they happen.