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Agriculture on the High Plains
Cattle feeders riding out volatile market forces
Don Close: For 08, on behalf of cattle feeders has been an extremely difficult year. The problems have been, both we started the year with a high cost of inventory of the cattle that were in there to start the year, then to only make matters worse, we had the unprecedented run-up in input and feed grain prices throughout the summer, and then to close out the year, with the pressure on the overall economy and slowdown in consumer purchases.
Haslett: High grain prices are great news for the farmers of the high plains. Of course, cattle feeders have struggled with those prices. After a mid-year spike, grain prices came down toward the end of 08. However, that's right about the time the national economy went into a free-fall. One bright spot for feeders: consumer demand for the final product remains high. Americans still love their beef, even if some are choosing hamburger over tenderloin.
Close: As far as the consumption of beef, I think overall, it's still quite good. But as we have seen the slowdown in the overall economy here for the late third and fourth quarter, it has caused a shift in the beef items that consumers are buying that has caused some disruption in the overall value of the beef market.
Haslett: At the Kirkland Feedyard in Vega, Texas, a truck unloads corn, which is then mixed with roughage and other ingredients before going through the flaker and coming out as the finished ration.
Robby Kirkland operates the feedyard along with his father, Perry. Kirkland says their facility typically receives about five of six truckloads of corn a day. He also says that the high prices for feed and for the cattle themselves have come down from their early-08 numbers. As a result, he's seeing more of his customers looking to buy his feeding services instead of selling the livestock outright.
Robby Kirkland: Well, course 08 has been a pretty tough year. Corn prices and cattle prices as well. As the corn has cheapened up it's struck more interest in folks as far as looking to feed. We're seeing more retained ownership, customers coming back into the industry. With the feeder price, or the calf prices falling as much as they did, more guys are coming back into feeding those calves rather than selling them.
Haslett: Close says that the retained-ownership model is a throwback to how business was done in the not-too-distant past.
Close: That was, conventionally, the way it was. The feedyard was virtually a motel. And the cattle were owned by the rancher. And as conditions changed over the years, those cattle sold at lighter weights.
Haslett: Finally, what about the credit crunch? Close says that feeders here do still have access to credit. For one thing, those same high grain prices have brought money into the region, which helped the overall health of the economy and local institutions. Close also says that many investors have reacted to the crisis by keeping their money here on the High Plains.
Close: As the macroeconomic conditions and Wall Street conditions eroded, there were a lot of people who had money in various funds and outside investments that have become concerned and just pulled money out and brought it home. So as far as cash availability at the local bank, it's been pretty- quite good.
Haslett: The bottom line: Like many commodity producers in our region, the cattle feeders of the High Plains have their concerns. But they also feel they have the resources to make it through a very uncertain 2009. This is Mark Haslett, HPPR News. © Copyright 2012, hppr
(2008-12-30)
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AMARILLO, TEXAS
(hppr) -
Mark Haslett: With the global financial system stumbling into 2009, many here on the High Plains are feeling the effects. However, unlike some urban centers where the economy relies heavily on the troubled financial and real estate sectors, the regional economy of the High Plains is a commodity-based economy. Grain production and meat production play central roles, and within the meat production sector, the cattle feeding industry is prominent. Don Close, Market Director for the Texas Cattle Feeders Association, says that most feeders will not miss 2008.
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Don Close: For 08, on behalf of cattle feeders has been an extremely difficult year. The problems have been, both we started the year with a high cost of inventory of the cattle that were in there to start the year, then to only make matters worse, we had the unprecedented run-up in input and feed grain prices throughout the summer, and then to close out the year, with the pressure on the overall economy and slowdown in consumer purchases.
Haslett: High grain prices are great news for the farmers of the high plains. Of course, cattle feeders have struggled with those prices. After a mid-year spike, grain prices came down toward the end of 08. However, that's right about the time the national economy went into a free-fall. One bright spot for feeders: consumer demand for the final product remains high. Americans still love their beef, even if some are choosing hamburger over tenderloin.
Close: As far as the consumption of beef, I think overall, it's still quite good. But as we have seen the slowdown in the overall economy here for the late third and fourth quarter, it has caused a shift in the beef items that consumers are buying that has caused some disruption in the overall value of the beef market.
Haslett: At the Kirkland Feedyard in Vega, Texas, a truck unloads corn, which is then mixed with roughage and other ingredients before going through the flaker and coming out as the finished ration.
Robby Kirkland operates the feedyard along with his father, Perry. Kirkland says their facility typically receives about five of six truckloads of corn a day. He also says that the high prices for feed and for the cattle themselves have come down from their early-08 numbers. As a result, he's seeing more of his customers looking to buy his feeding services instead of selling the livestock outright.
Robby Kirkland: Well, course 08 has been a pretty tough year. Corn prices and cattle prices as well. As the corn has cheapened up it's struck more interest in folks as far as looking to feed. We're seeing more retained ownership, customers coming back into the industry. With the feeder price, or the calf prices falling as much as they did, more guys are coming back into feeding those calves rather than selling them.
Haslett: Close says that the retained-ownership model is a throwback to how business was done in the not-too-distant past.
Close: That was, conventionally, the way it was. The feedyard was virtually a motel. And the cattle were owned by the rancher. And as conditions changed over the years, those cattle sold at lighter weights.
Haslett: Finally, what about the credit crunch? Close says that feeders here do still have access to credit. For one thing, those same high grain prices have brought money into the region, which helped the overall health of the economy and local institutions. Close also says that many investors have reacted to the crisis by keeping their money here on the High Plains.
Close: As the macroeconomic conditions and Wall Street conditions eroded, there were a lot of people who had money in various funds and outside investments that have become concerned and just pulled money out and brought it home. So as far as cash availability at the local bank, it's been pretty- quite good.
Haslett: The bottom line: Like many commodity producers in our region, the cattle feeders of the High Plains have their concerns. But they also feel they have the resources to make it through a very uncertain 2009. This is Mark Haslett, HPPR News. © Copyright 2012, hppr
