The US cattle industry is currently profitable but faces many challenges. It produces 25 billion pounds of beef annually from an 89 million head cattle inventory. While all segments of the industry are profitable now, structural changes and a looming generational shift threaten the future as the average rancher is nearly 60 years old. Attracting young people to the industry through education, high-value niche markets, and international cooperation can help address this and other challenges like increased regulations and input costs. Solutions require increased efforts across segments and countries to build understanding and sustainable industry growth.

1. Current State of the US Cattle
Industry and Future Challenges
Jesse Y Womack III
Global Cattle and Beef Industry
Consultant

2. Snapshot of US Cattle Industry
• Total Cattle Inventory is 89 million head
(Brazil’s is 190 million)
• 30 million total Beef Cows
• US produces 25 billion pounds of beef
annually, equivalent to 20% of global
production
• Exports are 10% of total production or 2.5
billion pounds equal to $5.1 billion

3. Current Values in Different Segments
• Cows, replacement heifer, and cow-calf pair
prices trending higher
• Steer calf prices predicted to average $2 per
pound for 400-500 pound steer in 2014
• Feeder steer prices at all time highs (spot
contract $1.65 per pound)
• Fed cattle prices remain close to record highs
(spot contract $1.32 per pound)

4. Cow-calf Segment
• Currently seeing some of the largest profit
margins ever on a per head basis
• Calf prices projected to remain high for the
near to medium term future
• Range conditions across most producing
regions have improved
• Hay and feed costs have decreased

5. Stocker and Feeder Segments
• Stocker and feeder steer values at all time
highs
• Feed costs have decreased
• Positive feed yard close outs for the first time
in over one year
• Feed yards managing to stay fairly current
• High packer demand for fed cattle

6. Packer Segment
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High beef cut out values
Lower corn and feed costs
Exports remain strong
Offal and hide values helping margins
Increased consumer interest in offal and
alternative cuts (largely from urban and ethnic
populations)

7. However… Challenges
• Weak domestic economic growth affects
consumer beef demand
• Higher beef prices inflicting demand
destruction
• Stalling developing economies
• Pasture conditions still not great
• Political uncertainty (farm bill, trade deals,
immigration reform etc.)

8. Challenges continued
• Greater public scrutiny on production methods
(animal welfare, hormone and anti-biotic use)
• Higher input costs (diesel, labor, fertilizers)
• Increased environmental regulations
• Drastically increased capital costs (bred cows,
replacement heifers)
• Feed Yard and Packer over-capacity
• Lack of skilled labor, availability of unskilled labor,
competition from other higher paying industries
(cattle and new oil producing areas often overlap)

9. Conclusions
• Most, if not all segments of the US cattle and
beef industry are enjoying profitability right now.
• However, many major challenges face the
industry now and in the future
• We will see major structural changes in the
current US cattle/beef industry within the next 10
years
• One additional major challenge is the looming
generational shift in many US cattle operations

10. Generational Shift Challenges
• Average age of US farmers/ranchers approaching
60 (in some states the average is already over 60)
• For every farmer/rancher under 25 there are 5
people over 75
• The number of farmers/ranchers over 65 has
grown by 25% since 2002
• Increased capital costs, estate tax burdens,
increased input costs, higher land values are all
exacerbating this trend

11. Not All Bad News
• Increasing interest in food production, where
food comes from, and how it is produced in
younger populations
• Higher value and niche markets emerging
• Many new technologies being developed in
agriculture and food production
• Being recognized as an industry for entrepreneurs
and innovators (similar to the oil and gas
industry) in order to attract younger talent

12. Possible Solutions
• Cattle and beef organizations need to increase
programs and efforts to attract young people
• Different segments of the industry need to
increase cooperation and recognize that a healthy
industry is better for all
• Producers and cattle organizations from different
countries must increase exchanges and dialogue
as well
• Brazilian cattle producers can learn from our
mistakes

13. Producer Exchange Trips

14. Increasing Understanding and Building
Relationships

15. Education Programs

16. Obrigado!
• Questions?