Bigger cattle herds will slow beef-price stampede
Cattlemen in the United States have begun rebuilding their herds, and that's good news for the consumer. Five years of declining herds reduced beef supplies and led to a record increase in retail prices last year.
The price of beef in the supermarket is not expected to go down as a result of larger herds. But there will be a "moderation" this year in the rate beef prices are rising, an expert observer says, and "no dramatic increases over the next four or five years."
The number of cattle in the US will rise in 1980 compared with 1979, marking the first increase since 1975, a number of agricultural analysts say. As a result, they say, total beef supplies on store shelves will begin to rise around the end of this year, cooling off retail prices, which rose 24 percent in 1979.
"the cattle industry is profitable for the first time since 1973; that is why we're seeing expansion," explains economist Thomas Beall of Cattle-Fax, a market analysis service for ranchers.
Mr. Beall expects average retail beef prices to rise about 10 percent this year, roughly in parity with inflation.
Cattle industry experts also view the embargo on feed grain sales to the Soviet Union announced Jan. 4 by President Carter as possibly having a beneficial effect on beef production in the US.
"I feel grain prices will move lower with that much supply hanging like a cloud over the [domestic] market. Cheaper grain will allow us to feed animals to greater weights, and increase beef production," predicts Robert Price, an analyst with the Texas Cattle Feeders Association.
The US Department of Agriculture maintains that grain prices will not fall this year as a result of curbing corn and wheat sales to the Soviet Union. However, if grain prices do fall, economists at the USDA agree both beef and poultry supplies could increase this year.
Poultry farmers could respond relatively quickly to cheaper feed grain because prices on poultry meats are high right now, making producers eager and financially capable of expanding their flocks, USDA economist Robert Remmele says.
Hog production might increase slightly, but not significantly because pork prices have been low for the past six months, and hog farmers would be "very reluctant" to expand their operations, Mr. Remmele speculates.
Dr. Edward Uvacek, a livestock market specialist at Texas A&M University, feels that grain prices will fall enough to reduce by 5 cents the cost of the amount of feed needed to increase the weight of a cow one pound. Currently, it costs an average of 50 cents in feed grain to increase the weight of a cow one pound.
Ironically, it was the domestic grain market that helped precipitate current high beef prices. Russian grain purchases in 1973 were so large that they pushed grain prices up in the US, helping to squeeze profit margins and contributing to a sharp downturn in the cattle industry, according to Mr. Beall.
The industry began selling off cattle in the mid-1970s as the business became less profitable. As the herds diminished, beef supplies plunged and prices skyrocketed.
The higher prices have encouraged cattlemen to begin building their herds once again.
Total US beef supplies peaked in 1976 at 25.7 billion pounds. The figure fell to 21.1 billion pounds in 1979. The size of the cattle herd went from 131. 8 million head in 1975 to 110.9 million in 1979.
The report of the annual USDA survey of the number of cattle in the nation will be published at the end of this month; it is widely expected to show an increase over 1979.