Beef farmers surviving in tough times
Published 5:00 am Tuesday, October 28, 2008
Despite having fallen in value alongside every other market inthe rough economic times of 2008, Mississippi’s beef market hasmaintained a manageable situation and, all things considered, is indecent shape heading into 2009, agro-economists said Monday.
Mississippi State University Extension Service Agro-economistJohn Michael Riley said while the market value for one of thestate’s leading economies has suffered, the cost of cattleoperations has decreased significantly, leaving embattled beeffarmers with a silver lining in these times of economicuncertainty.
Any news was good news for Lincoln County’s beef farmers, whowere in a quiet, somber mood as Riley spoke Monday night at the2008 Fall Beef Workshop at the Lincoln County Multi-PurposeFacility.
“Right now, if you put a microscope strictly on the numbers inthe cattle business, things are positive,” he said. “We havepositive reports on the number of head being fed, decreased feedcosts and decreases in beef production, which is restricting supplyand making the beef price go up.”
Riley said the drooping economy, while responsible for thedecrease in beef value in the first place, is also working in theindustry’s favor. Beef farmers have seen their input prices -production costs – decrease drastically over the last few months,he said, while cattle prices have fallen, but not quite asfast.
Comparing current market values, Riley noted the price of oil -vital for beef farmers’ transport and the leading factordetermining the price of fertilizer – has fallen 55 percent andgrain prices have fallen 40 percent, while the cattle prices aredown only 20 percent.
In short, while cattle aren’t worth as much as they once were,they are cheaper to feed and cheaper to move to market.
“We didn’t fall as hard as they did,” Riley said of the prices.”So when we bounce back, hopefully we can maintain a goodoutlook.”
MSU Extension Service Agro-economist Dr. John Anderson said theleading concern for beef farmers heading into 2009 is a furtherreduction in demand.
“Everyone in the county is focused on the decline of stockvalues, and the cattle market is responding to that,” he said.”People are reluctant to jump into the cattle market. The realquestion is how bad will the economic downturn be, and how longwill it last. Until we get some clarity, the market will remainshaky.”
In the meantime, Anderson advised beef farmers to engage in riskmanagement and always weigh their options. He said it is importantto preserve equity, pursue production efficiency and market theproduct as best as possible.
It’s also important for beef farmers not to lose hope, hesaid.
“We go through situations like this periodically in the cattlemarket,” Anderson said.
The MSU Extension Service Web site lists beef production as thesixth-leading agricultural commodity in the state with a 2007 valueof $197 million. At the beginning of 2008, more than half ofMississippi’s total of 990,000 head of cattle were beef cattle.
The market is even bigger in Lincoln County.
Lincoln County Extension Director Rebecca Bates said beef cattleproduction is the county’s second leading agricultural industry.The county is ranked seventh in the state in beef production, shesaid.
Lincoln County’s beef market has followed in the footsteps ofthe state and national markets – down, but not out.
“Right now, our beef industry is sustaining,” Bates said. “Someof our producers haven’t felt the dropping costs of fuel andfertilizer yet, but it should come pretty soon.”
Bates said a small number of the county’s beef farmers sold outof the business during the last two years when production costsbecame unmanageable, but such is not uncommon.
“We see a few go out, but then come back in,” she said. “It’snot uncommon – instead of buying supplemental feed they can’tafford, they just sell out and re-buy later. And those that havegone out – I believe they’ll be back.”