Wher Does Ky Get Its Beef
2 years ago, Henry County cattle farmer Clint Woods could pocket $ane,600 for each 800-pound dogie sold at auction.
This yr, "it looks like nosotros will get $800 to $900 per head," Forest said.
Beef, one of the most valuable subcontract crops from the bluegrass state, used to generate $1 billion in sales annually. Now Kentucky cattle farmers are barely breaking even or losing money for the ane 1000000 young cows, steer or calves sold each year to fatten in feedlots out westward.
While cattle farmers lose near half of their income, supermarket beef prices take barely budged, edging downward most 10 percentage, co-ordinate to CattleFax, a beefiness manufacture analyst firm.
The bottom line? Just considering the toll of a calf sold to a feedlot for fattening and slaughter has tumbled doesn't mean the consumer tin can observe a bargain filet at the supermarket. Beefiness cost an average $six per pound in 2015. That historic high slipped to only $5.74 in 2016, according to the U.S. Department of Agriculture.
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Like the oil industry, the food industry is highly segmented by middlemen and driven by huge corporate players and volatile trading markets. When crude oil drops beneath $l per barrel, pump prices never plummet. Instead, petroleum analysts are just as probable to talk nearly tight refinery chapters or currency fluctuations to explicate why gas prices remain loftier.
To explicate the worst beef market in decades, experts cite boundless factors. They include accusations that mega meat packers hold too much power, that high-frequency trading drives cattle markets downwards and that retailers are making bank. Low prices for corn and feed crops made it easy for greedy farmers to raise too much meat while others point to declines in beef consumption, particularly past millennials.
"We've never seen anything similar this before. It'due south as bad as information technology's ever been," Ed Greiman, a representative of the National Cattlemen'southward Beef Association, told 100 Kentucky cattlemen at a recent meeting about terrible market conditions in Winchester. "We know it'due south been a perfect tempest."
Meat glut
On average, Americans each ate 202 pounds of meat in 2014. At present, there is so much meat in the supply concatenation that the The statesD.A. predicts consumers volition consume more equally prices eventually autumn, upwardly to 217 pounds of meat, per person, this yr. That forecast means that every week, each consumer is expected to chew through two pounds of chicken and turkey, one pound of beefiness and 1 pound of pork.
Put another mode, beef's popularity has dropped steadily since its meridian at 95 pounds per capita in 1975. Final year, Americans ate an estimated 55 pounds of beef each.
As an undergraduate studying agricultural economics, young Munfordville cattle farmer Steven Green suspected the changing eating habits of his generation might be one of the factors driving cattle prices downwardly.
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Green surveyed about 300 consumers ages xviii to 25 for a inquiry project at Western Kentucky University. Of those surveyed, sixteen percent said yep when asked if "a negative video or article convinced yous to discontinue meat consumption." Another thirty percent responded yes when asked if whether they ever "had a bad feel with beef products."
These results square with some estimates that 1 in five millennials betoken they are practicing vegetarians. Amid older generations, vegetarians run scarcer, at about one for every 20 people.
"The urban millennial's perception of beef is hazy, at best," Green told beau researchers of the Kentucky Academy of Scientific discipline at the University of Louisville in November. "These are the young men and women that will exist the next consumers."
Cattle farmers losing clout
In the U.S., virtually craven and pigs are built-in and raised on concrete indoors, operations run by big corporations that control breeding, husbandry, slaughtering and wholesale markets. As a result, few chicken and hogs are raised by independent, family unit farms.
Cattle, however, remains largely the province of the small farmer, like the twoscore,000 cattlemen in Kentucky, the largest beefiness state east of the Mississippi. Those farmers remain captive to volatile article beef prices, since near of the 1.1 million beef cattle bred in the country are purchased for fattening on feedlots out west by corporate agri-companies and "come back to Kentucky as box beefiness," Henry County cattle farmer Bobby Foree said.
Two years ago, Foree sold 300 calves for equally high equally $1,927 per head when prices topped out at $two.29 a pound. Today, those aforementioned yearling steers get for $1.29 a pound.
If live cattle prices remain low as expected, consumers might look a supermarket meat war. If it comes, look for retailers like Wal-Mart and Kroger to battle effectually grilling season in the form of $5.99 ribeyes instead of the going charge per unit of between $8 to $ten per pound, said Louisville-based agriculture commodity analyst Matt Beeson.
For now, Foree said depression prices mean "farmers will not accept much profit at all."
To cope, Foree, a lawyer and vice president of the Kentucky Cattlemen's Clan, said he has "been practicing more than police force" to make up lost farm income.
At his farm on the outskirts of New Castle, Woods has taken jobs off the subcontract to make payments on the 95-acre spread. His wife works off the farm as well for a veterinarian. Both are delaying subcontract improvements like a new fence gate needed for the principal pasture while they expect the poor cattle market place to final a good while.
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The plunging beef prices forcing small cattle farmers like Woods and Foree to spend more time working off the farm stand for a disturbing trend called "the chickenization of beefiness," said Paul Wolfe, senior policy annotator at the National Sustainable Agriculture Coalition, the Washington, D.C., lobby representing 100 grassroots groups working for a healthier agriculture economic system.
When big players control markets, "farmers don't know if the toll they are getting is good," Wolfe said. When farmers fail from crippling market force per unit area, manufacture consolidation forces out family enterprises. That'due south what happened in poultry and pork. The shakeout'due south begun in Kentucky beefiness.
To appointment, low beef prices take driven some 25 percent of cattlemen in and around Danville, Ky., to seek farm refinancing and lower their monthly country payments, said Ag Credit chief loan officeholder Joe Goggin.
"This is the kind of market in which the existent farm managers survive," Goggin said. "Some farmers won't make information technology."
And then, who's making money?
Every bit farmers sell depression and consumers still pay high, some signal a finger at retailers.
"Grocery stores are making very good money," Beeson, the annotator, said.
Not true, said Valu-Market co-owner James Neumann.
"I haven't noticed whatever major pickup in margin," Neumann said. For proof, he provided sample data from a nationwide grocery co-op, which supplies $1 billion annually in wholesale grocery, meat and produce to independent supermarkets like his family-owned Louisville chain.
On Main Street in W Louisville, the family-endemic Superior Meats wholesales by and large to restaurants. When the market soared ii years ago, Superior Meats might accept paid $11 for a pound of strip loin in 2015. Now strip loin costs $9 a pound, he added.
"Nosotros haven't seen pricing quite come down as far equally the cattle prices," co-possessor Ben Robinson said. Big meat packers who buy from farmers and sell to retailers, he said, "basically command the market."
"In Kentucky, we send more than $1 billion of our resource, which is cattle, out west. Every time yous eat one of those burgers, you send money out of the state," he said.
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Well-nigh beef cattle are slaughtered in the U.S. by JBS, Tyson or Cargill, meat conglomerates that control almost seventy percent of the beef industry. JBS, for instance, slaughters 27,000 cattle every 24-hour interval, said Terry Ryan, feedlot manager for JBS 5 Rivers. Merely packer profit margins boilerplate between one and 5 percentage, slim figures compromised by reduced constitute efficiency, he said.
At its nine packing plants in the United States, for example, JBS' labor shortage is and then miserable that 10 percent of the workforce "don't come up to work on Monday."
"We can't become our cattle harvested. Nosotros tin can clean up the mess but you can't get the labor and I don't know when that problem is going to become away," Ryan said.
Industry experts as well say cattle trading on the Chicago Mercantile Exchange has been volatile beyond rational trends. The National Cattlemen's Beefiness Association asserts that automated, high-frequency trading by computers has skewed the marketplace south.
"We call that spoofing the market. It affects our livelihood," said Greiman, adding he just refinanced his own family-owned Iowa cattle farm and feedlot. "I can't lose any more than money."
Some analysts like Beeson say farmers tend to exist conspiracy theorists who blame the market. Others, similar former cattle futures trader Brian Luftman, now owner of a farm investment visitor in Lexington, agree with farmers that "plenty of speculation is probably what is happening to drive prices downwardly. These prices are brutal."
Fairer cattle trading practices are the promise of new federal rules finalized in the waning days of the Obama administration at U.s.D.A. Merely that reform of the federal Grain Inspection, Packers & Stockyards Administration, or GIPSA, has been put on hold for 60 days by President Donald Trump.
For a farmer who has received $i,000 per calf this year instead of $2,000 a few years ago, the new GIPSA rule that was to be final in February would enable him to file a federal complaint and wield other means to challenge anti-trust practices and unfair competition, Wolfe said.
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"All likewise often, processors and packers wield the power, and farmers comport the risk," former USDA secretary Tom Vilsack said upon releasing the rules in Dec.
"We've been waiting 5 years to get these rules out," Wolfe said. "The sooner it gets done, the better."
Whatever the cause, Kentucky agriculture commissioner Ryan Quarles said, "the disconnect between the packers and the retail toll is very loftier."
Of an estimated 76,000 family farms in Kentucky, cattle run on 40,000. For all, the biggest threat to survival "is the lack of consistent farm income," Quarles said in an interview final month. "You lot can't predict your cash flow from yr to year."
Farmers volition accept to wait longer for relief. Dissimilar chicken or pigs, cattle take a longer life cycle. Cattle herds grew half dozen percent last year with those numbers expected to expand at to the lowest degree as much in 2017.
For farmers, "Information technology may be early on 2018 earlier we hit the lesser," said Kenny Burdine, an agriculture economist at the University of Kentucky.
Jere Downs can be reached at (502) 582-4669, JDowns@Courier-Journal.com and Jere Downs on Facebook.
Source: https://www.courier-journal.com/story/life/food/farm-to-table/2017/02/03/beef-prices-dont-budge-while-kentucky-farmers-take-hit/96120414/
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