Beef Market Impacting Northeast in Different Ways

5/18/2013 7:00 AM
By Chris Torres Regional Editor

A combination of dry weather and high feed costs have resulted in less cattle going to slaughter, especially in the Midwest and West.

But impacts are also being felt here in the East, albeit in different ways.

John Comerford, associate professor of animal science at Penn State, said that to some degree, the availability of fed cattle in the region has been reduced as a result of the weather and high feed prices. “And so sometimes the plants reduce the amount of time they spend operating, perhaps cut a shift here and there,” Comerford said.

Unlike larger plants out West though, Comerford said Cargill Taylor in Wyalusing, Pa., and JBS Swift in Souderton, Pa., aren’t so dependent on large beef feedlots since they also do a lot of cow kills, which has reduced the impact of having less fed cattle on the market.

Tom McCombie, regional buyer for the JBS Swift plant in Souderton, the largest such plant east of Chicago, said cattle numbers at the plant have been reduced. But he’s also seeing more of a long-term trend in the market, with more smaller producers, especially dairy producers, going out of business and larger farms getting bigger.

“A lot of small farmer feeders, they’ve died off or retired. Cow numbers are about the same I guess. We’ve lost a lot of small farms, but the big farms have gotten bigger,” McCombie said, adding one farm he works with in New York state has grown to 10,000 head.

The consolidation of the industry he believes has resulted in more uniform animals with cattle coming onto the market at the same time, something he thinks has brought more money to producers.

“Because big farmers cull cows all of the time. Cows are inside year-round. So they are culling every week,” he said.

Mike Baker, beef cattle Extension specialist with Cornell Cooperative Extension, said he believes the number of cattle going to Cargill Taylor has also gone down.

“In terms of prices, we’re definitely seeing the increase in prices at our feeder calf sales. It’s just the feed prices that are hurting,” Baker said.

For producers that were able to grow their own hay, Baker said those producers are in good shape and have been able to take advantage of the high price of beef. He said it cost about $100 to produce a ton of hay compared to $150 a ton to buy it in.

Glenn Eberly, who works for the Keystone Beef Marketing Network, said cattle producers are struggling with limited markets for their beef, especially in Pennsylvania.

“There really is kind of an expansion of people trying to expand their program and take it to the finished processors. The limitation as I see it is lack of custom slaughter plants,” Eberly said.

Along with that, Eberly said large processors, in particular Cargill Taylor, have established working arrangements with some natural beef cooperatives to slaughter animals, which he said has also cut into their capacity.

With the uncertainty in commodity prices, Eberly said many producers he’s talked to are taking a wait-and-see approach before making an investment to bring feeder cattle onto the farm.

“Right now is the time of year, I used to call it the grass fever time. As we sit here and speak, a number of small groups of feeder cattle would be available, but people aren’t looking for them,” he said. “Some of the feedlots are just tired of losing money. You can’t blame them.”

Frank Stoltzfus of Masonic Village in Elizabethtown, Pa., said the farm has been doing some custom feeding in order to keep its barns full.

“We are staying full. We’re trying to keep the feedlot as full as we can. We’re also ramping up our cow herd a little bit. We’re looking to take advantage of the lower cattle numbers, and hopefully that equates to higher prices,” Stoltzfus said, adding the farm kept 48 of its heifer calves from last year in order to grow the herd.

He realizes that expanding is potentially rolling the dice if another drought impacts the corn market, which would keep prices high.

“The thing that’s going to be the unknown is what corn prices are going to do. I think that’s the unknown. I think the cow prices are going to be good on the fed end,” he said.

Even so, Comerford said producers around here have more options in terms of feed.

“There is different sources of feed here. From human food waste products, Hershey’s chocolate, chips, snack foods, all of this can be used,” he said. “I see the beef market, the beef industry, as very good in the Northeast. Because we have not dealt with the drought situation those folks have dealt with. Our producers have the ability to take advantage of the situation when there are selloffs across other parts of the country.”

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