News

CME: Shrinking US Beef Cow Herd of Concern

03 August 2012

US - The shrinking US beef cow herd and resulting reductions in the annual calf crop are an item of concern to most industry analysts and participants, write Steve Meyer and Len Steiner.

Fewer cows simply mean fewer people involved in the industry and that means fewer thinkers, fewer ideas, less political clout and a host of other bad things. But it doesn’t drive a commensurate reduction in beef output. They haven’t even had a huge negative impact on cattle slaughter. Those statements seem to be at odds, so what is going on?

First, as can be seen in the following chart, US cattle slaughter has stayed in a range of 32.7 to 33.9 million head for the past 6 years. At its current year-to-date change of –4.3 per cent, it will break out of that range to the bottom side this year. If the YTD rate continues through December, annual slaughter will be just over 32.1 million, the lowest level since 2005 and the lowest non-BSE-influenced level since 1992.

The chart below shows that the continually shrinking US calf crop has quite logically resulted in lower and lower steer and heifer slaughter levels. Should 2012 year-to-date steer and heifer slaughter decline of 4.6 per cent persist this year’s total will be just 25.06 million head, the fewest since 1980. This year’s decline, in number of head, could be the largest ever except for that of 2004 when the full impact of the BSE-driven ban on Canadian feeder cattle imports was felt.

But note in the first chart that, while total cattle slaughter has averaged about 1.8 million less from 2005 to 2011 than it did from 1995 to 2002 (before BSE in Canada impacted the numbers beginning in May 2003), annual beef production is still near the same level. The driver, of course, is more beef per animal, a function of both higher slaughter weights and higher carcass yields. There are a number of contributing factors for both increases.

First, the cattle are simply genetically better. The advent of more cattle being measured for growth rate, leanness, etc. and more sophisticated tools for converting these data into useable knowledge has allowed commercial cattle operations to make significant progress. It wasn’t long ago that about the only people who knew what an EPD (expected progeny difference — a measure of the impact that a parent animal will have on its offspring) was had PhD behind their names. Now every professional cowman not only knows what it means but uses it regularly in making breeding stock selections.

Second, feeding programs are better. Research advances, more and more accurate measurement of feed ingredients and many other factors have allowed cattle to reach larger weights while maintain higher-lean growth. Has lean beef helped consumer demand? Probably. Has it helped production and processing efficiencies and thus kept beef competitive with low-cost chicken and equally improved pork? We think there is no doubt about that one.

Finally, the amount of carcass beef per pound of live weight — carcass yield — has improved, especially in the past few years. The following chart shows carcass yields computed using data from the mandatory price reporting system since January 2002. As with most livestock factors, there is considerable seasonality for carcass yield but the uptrend since late 2007 is clear. Better cattle, better feed, more timely marketing and feed additives such as Zilmax and Optiflexx have all contributed to this increase.