From the Ground Up: High demand allows ranchers to remain profitable, grow herds

Seasonal demand, processing changes affecting the bottom line
Published: Jan. 21, 2022 at 11:47 AM CST
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BRYAN, Texas (KBTX) - Predicting the future is hard. In agriculture, tens or even hundreds of thousands of dollars with of decisions need to be made in which you won’t know will be successful for years. For ranchers, they’re hoping those decisions they made in 2019 are finally starting to pay off, today.

“It takes a long time from that calf being born to becoming a steak. That’s gonna take a good 18 months. from the time that calf is born to being on your plate,” says David Anderson, an economist with Texas A&M Agrilife.

“We had the drought a decade ago, and following the drought, we had sold so many cows, the number of beef cows in Texas dropped by over 20%. Over a million beef cows fewer following the drought. That tight supply led to record high calf prices in ‘14 and ‘15, yet we were for the most part unable to take advantage because we didn’t have the cows!”

A global pandemic, for example, is another major disruption. Fortunately, with timely rains and a warm start to winter, ranchers have been able to keep up with higher demand.

“Prices go up, that’s okay! We’ve make up for some lost ground. Once we had high prices, everyone expanded their herds, prices go back down, so we’re gonna make up for lost ground,” Anderson says.

Making up ground means more money in the ranchers pocket.

“Longer term, higher prices allow ranchers to expand their herd and increase beef production, and the whole cycle starts again.”

A 2-3 year process that, for now, means some more pricy cuts of our favorite beef at the grocery store.

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