From the Capital Press
The US beef industry has begun to add up the coronavirus pandemic damages, which so far have soared past $13 billion.
The impacts on the cattle industry vary widely due to its distinct sectors, said Derrell Peel, extension livestock marketing specialist at Oklahoma State University. But the stark decline in cash and futures prices shows all have been hit hard — from the cow-calf and stocker/background producers to feedlots.
National Cattlemen’s Beef Association commissioned Peel and a team of other livestock economists to do the numbers to help USDA determine the most effective way to assist the industry.
They found losses to the cattle industry will reach a staggering $13.6 billion — $9.2 billion in total revenue losses in 2020 and $4.4 billion in the value of breeding animals if the revenue losses are not compensated.
The cow-calf segment will have the largest losses at $3.7 billion due to the decline in calf prices and damages of almost $112 per cow. But it could also incur another $4.4 billion in losses in the value of breeding cows and bulls to the tune of about $135 per animal.
Lower calf prices reduce the value of the mother cow (with the bull implicitly included in that value), which goes on the producer’s asset sheet, pulling down her worth. If the producer sells the cow, it’s not worth as much to anyone else either, Peel said.
If she loses money this year — due to lower calf prices — her lifetime earning is reduced. If that loss isn’t compensated this year, she never gets that value back, he said.
If the losses in calf prices are not compensated, the total loss to the cow-calf sector would more than double to about $8 billion.
Losses in the stocker/background sector, where weaned cattle add weight outside feedlots, are estimated at almost $160 a head for a total of $2.5 billion.
Losses to feedlots, where cattle are finished for slaughter, are estimated at nearly $206 a head for a total of about $3 billion.
“Everybody who was in the cattle business when this thing hit was impacted, and that’s what we tried to measure,†Peel said.
The economists focused on giving USDA an idea of the losses in the whole industry and breaking down the impact on the different sectors to assist in how USDA might allocate funding, he said.
“I’m under no illusions that everybody’s going to be happy,†he said.
It’s the nature of the cattle business with its vertical sectors to see one person benefit at another’s expense at some point, but it usually evens out, he said.
“The loss happened to the industry, and we tried to divide it up into different sectors," he said.
The economists did not consider any risk-management factors because they didn’t know who might have done what, he said.
Now watch if something is done in Canada and there is recognition of the damage it will end up like BSE, the feedlots and Packing plants will get assistance and the Cow Calf sector will get lip service and a kick in the nads.
The US beef industry has begun to add up the coronavirus pandemic damages, which so far have soared past $13 billion.
The impacts on the cattle industry vary widely due to its distinct sectors, said Derrell Peel, extension livestock marketing specialist at Oklahoma State University. But the stark decline in cash and futures prices shows all have been hit hard — from the cow-calf and stocker/background producers to feedlots.
National Cattlemen’s Beef Association commissioned Peel and a team of other livestock economists to do the numbers to help USDA determine the most effective way to assist the industry.
They found losses to the cattle industry will reach a staggering $13.6 billion — $9.2 billion in total revenue losses in 2020 and $4.4 billion in the value of breeding animals if the revenue losses are not compensated.
The cow-calf segment will have the largest losses at $3.7 billion due to the decline in calf prices and damages of almost $112 per cow. But it could also incur another $4.4 billion in losses in the value of breeding cows and bulls to the tune of about $135 per animal.
Lower calf prices reduce the value of the mother cow (with the bull implicitly included in that value), which goes on the producer’s asset sheet, pulling down her worth. If the producer sells the cow, it’s not worth as much to anyone else either, Peel said.
If she loses money this year — due to lower calf prices — her lifetime earning is reduced. If that loss isn’t compensated this year, she never gets that value back, he said.
If the losses in calf prices are not compensated, the total loss to the cow-calf sector would more than double to about $8 billion.
Losses in the stocker/background sector, where weaned cattle add weight outside feedlots, are estimated at almost $160 a head for a total of $2.5 billion.
Losses to feedlots, where cattle are finished for slaughter, are estimated at nearly $206 a head for a total of about $3 billion.
“Everybody who was in the cattle business when this thing hit was impacted, and that’s what we tried to measure,†Peel said.
The economists focused on giving USDA an idea of the losses in the whole industry and breaking down the impact on the different sectors to assist in how USDA might allocate funding, he said.
“I’m under no illusions that everybody’s going to be happy,†he said.
It’s the nature of the cattle business with its vertical sectors to see one person benefit at another’s expense at some point, but it usually evens out, he said.
“The loss happened to the industry, and we tried to divide it up into different sectors," he said.
The economists did not consider any risk-management factors because they didn’t know who might have done what, he said.
Now watch if something is done in Canada and there is recognition of the damage it will end up like BSE, the feedlots and Packing plants will get assistance and the Cow Calf sector will get lip service and a kick in the nads.
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