Death comes to us all. Life's but a walking shadow | I agree with McDonald. The amount of labor, care, time and attention cattle require is far more than crop farming especially in the northern tier where the weather is inclement for much of the year. You can have a low labor system in the southwest but you generally trade productivity for that low cost. Given the long term drought situation there it has reached the point where they literally can no longer raise cattle.
There were good economic studies that showed that depending on herd size there was a real loss (mostly due to unpaid labor but also land costs) was equal to or more than the selling price of calves. The livestock industry could get away with this when corn $2/bu and beans $5/bushel but when corn & beans are $5 & $12 the discrepancy becomes intolerable. Part of the problem is that every farm in every different region has a different mix of resources, tillable land vs. grazing so that it makes it very hard to estimate the relative returns. On top of that there is significant in access to markets. For example here our corn basis is almost always positive or nearly so while the meat packers often discount us by as much as 40 to 50%. It makes it almost impossible to have livestock farm here while you can make over $100/A here raising corn even though this region is well adapted to grazing and hay production,
I figured out several years ago that the calf price needed to be over $2/lb here to break even, just to break even, and that was some years ago. And then there is the whole problem of capital to buy cows and get started. Not many have access to good cows but tractors, planters and combines are available everywhere. It's not just that you have reduced your herd by 5 million cows in 5-6 years (20% or 5 million/26 million) but you have lost all the land & facilities to say nothing of the 100,000 producers (720,000 down to less than 600,000). The packers have liquidated a full 20% of their capacity. Killed the golden goose, so to say and now are busy eating the seed corn. |
Comparative analysis cattle vs corn
