Will beef industry transition away from corn?

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Doc

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Pretty good article from Beef Magaine, in case you haven't seen it.

Will Beef Industry Transition Away From Corn?

Aug 19, 2011 11:23 AM, By Troy Marshall, BEEF Contributing Editor

Federal ethanol subsidies have turned corn into an energy market, leaving livestock in a weak competitive position. Does that mean that livestock feeding will transition away from corn?

         


The cattle industry is still learning to deal with the new reality of ethanol subsidies. As livestock producers, we can't compete with the subsidized ethanol industry for corn, and globally the declining value of the dollar makes us even less competitive for the crop with other countries. Many have pointed to the fact that energy demand for corn outpaced feed demand this year, but that really wasn’t a landmark event, as mandates dictated that ethanol demand would grow. We also knew that we couldn’t compete.

The truth is that corn is now an energy market, livestock is secondary. Price is determined by calculating export and ethanol demand, and then we absorb the remainder at whatever price level is determined. Ultimately cattle prices will rise to justify whatever price level is established or, to say it another way, the industry will shrink to whatever size necessary to raise prices to where we can compete with corn and other energy sources.

The industry has been debating just how much profit cow-calf producers must experience before herd expansion is triggered. While the drought alone impeded any chance for expansion, if you want to know whether the cattle industry will expand or contract, you just need to look at the price of corn. When the trend line for corn prices stabilizes or moves lower, the cowherd will expand.

Looking at the traditional 10-year cattle cycle, we should have begun to expand in 2005 or 2006. But just overlay the corn price graph onto the trend in cowherd numbers and you can see why we continue to shrink numbers.

Ultimately, we will have to answer how much profit is required to trigger expansion given the increased risk and cost associated with running a cow. But, the larger macro question is how big of a cowherd can be justified given the new dynamic of subsidized ethanol.

What we now know is that, with today’s dynamics, corn is going to be rationed or allocated between ethanol, exports and feed; the sector that will bear the brunt of the rationing will be the beef industry. In effect, even with record harvests, supplies are likely to be reduced for cattle.

Five to 10 years ago, when our industry made the statement that we were the lowest-cost producer of high-quality, corn-fed beef in the world, that looked like a long-term competitive advantage that positioned us for global dominance. After all, that was the beef product of choice among consumers. But, the new price structure means that market is considerably smaller than anyone imagined it would be.

I’ve heard others argue that the beef industry will merely transition out of corn. They may be correct, but that means an even smaller industry, because our industry does not enjoy a competitive advantage over the world relative to grass-fed beef production.
 

trevorgreycattleco

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I have not bought corn in a long time. reading this makes me feel even better about my decision to move to forage only. I personally believe there are enough folks here in America to eat all the cattle we produce and I honestly dont care what China needs. Unless we have a surplus to sell them. Transitioning out of corn doesnt necessarily have to be a bad thing. Many cattle may get relocated.

Are we standing at the edge of the cliff of the old way of farming? I dont know but I would bet yes.
 

Jenny

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we have fed milo to cattle for years; it is the crop that we rotate with from corn....in each field, corn one year, milo the next.
milo does what corn does; cattle like it; have to know how to use it but it is good feed.

so we sell corn, feed the milo to cattle.
 

Shorthorns4us

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that is a good idea on substituting another grain source for corn-- milo is interesting
So how do you properly feed milo?  Not familiar with feeding it at all.  What do you need to determine to substitute it for the corn in a finish diet?
thanks
EF
 

Jenny

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just google milo and add + feeding cattle; that should help you narrow down your results.

but it feeds just like corn, however, it has to be cracked or ground because the outer shell is too thick for the cattle to utilize; it takes just a bit more per lb. of gain;
it is pretty fine when it is ground but we have a total mix wagon so mix it with enough silage and ground hay to make a really nice feed.
 

nate53

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Ethanol seems to be the scape goat for every industry right now.

For rising food prices,
for gov. debt
for water shortages
for water pollution
for starving people around the world
for global warming
for farmers making some money :eek:

Get rid of the corn ethanol plants and bring back $1.80 corn and LDP's, all the above would still be here but one?  Where would the cattle market be then?
Keep the corn ethanol plants (don't build anymore), stop allowing so much speculation in the market,  which is also a big problem with Wall Street,  corn prices would become more predictable.
There is a weather premium in the market right now and over the next few months we will find out how much more will be added.  This will not be a record producing year for grains, not even close.  Throw in the massive drought in the south forage will be tight and will most likely add to the corn price.

Does their need to be expansion of the beef industry?  The cow numbers have been declining for decades and yet we still have more lbs. of beef than ever.  TrevorGrey will most likely get a little more business for his grass based program, Jenny is using milo, I'm sure the cattle industry will adapt and survive if or when needed.  The Hog industry has a lot less options than the cattle industry!  JMO  
 

TJ

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I've already totally transitioned away from corn.  I probably will help my nephew & niece with their show projects, but most likely those will be the only animals on any type of supplemental feed.  I'm even going to go so far as to attempt to get by with only feeding a very limited amount of hay this winter & use stockpiled grass instead.  Also, I am moving totally to fall calving, with no creep, as I want to be able to wean & grow the calves on green grass.  I'm hoping to become even more low cost than I am now, selling seed stock & finished grass fed beef.  Not going to worry about what most everybody else does.  What they do or don't do is going to be their own problem to worry about.  But, I will say that while I can be wrong, I do think that some very tough times may not be very far ahead in the not so distant future.     
 
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