We get a lot of questions about where we see the industry and its future… Talk about jumping right into the frying pan. Numbers drive business which drives the world. Here are some industry numbers that we look at to try and determine how we set a long term strategy for our operation. We have always been very long term focused, as nothing is short term in the cattle business except purebred breeders. 😉
The cattle industry is at a constant state of transition driven by both internal and external forces. In order to be a part of it in the future we have to understand where we have come from and where we are today. Who the influencers and controllers really are, may not at all be what we have been lead to believe.
As Angus breeders we are part of the largest most financially successful breed organization in the world with around 70 million dollars in the bank and the owner of the most successful branded meat product in Certified Angus Beef. Let’s first look at the demographics that make up the Angus breed and its breeders. According to the American Angus Annual report, there are nearly 25,000 members of the AAA in 46 states. 63% or 15,750 members have from 1-10 cows, 13%, 3250 members have 11-19 cows, 14%, 3500 members have 20-50 cows, 6% or 1500 members have 51-99 cows and 5% of the membership would make up the rest of the 1250 members at over 100 cows. Where do we start with the full time ranches? In our area it takes 200-300 cows for a family to make a living. That means today about 24,500 members have an equal say to those of us who make a living ranching with Angus. Of the 500 largest fulltime ranches only about 100 of those are 100% ranching operations with no other entities or outside income influencers. That is.4% of Angus breeders.
In 2016 there were 334,607 head of angus cattle registered in the AAA. 53% were AI sired and 52,108 angus bulls sold in 2016. If 95% of the AAA membership is a part time rancher what is their impact on the total breed picture? Like any hobby, there is a different emphasis placed on production and inputs then someone who makes a living with their cattle. Now that we understand how membership breaks down, let’s look at how some of the data breaks out.
The AAA has 20 million plus performance records on file, with 8.3 million WW, 111,862 Carcass records, and only 18,554 feed intake records total. While the carcass records were up a record 26% for a total of 5000 records from 56 herds, which is 89.3 head/herd, out of 25,000 members in 2016. Sire evaluation programs for carcass merit were first established in Angus cattle in 1974. That means in the 43 years there were 2600 carcass evaluations per year. That is an extremely interesting number when you consider the extensive push for carcass/terminal cattle over the last 10 years! So who is really pushing the extreme end product cattle? Why is there not a semen catalog today with a balanced trait bull in their entire lineup if only 56 herds are taking cattle to the point of carcass data collection? Of the 56 herds part of them would be commercial cow herds with registered bulls submitting data.
There are 600,000 head of cattle processed each day on the average in the U.S. AAA members sold 52,108 bulls last year and if each bull bred 25 cows on the average that is 1,302,700 calves annually. When we kill 600,000 head per day you are looking at 2.17 days of beef in the U.S. If the average bull lasts 4 years then we are looking at a total of 8.86, days or 5,202,800 head of beef production that purebred Angus bulls affect annually. According to USDA, ERS, the U.S. produces 23.7 Billion pounds of beef annually, 22% of the total beef picture in the US is what the purebred Angus breeder impacts. USDA said that US cattlemen retained 32% for replacements and figuring a 10% loss, leaving the total Purebred Angus breed impact in the entire Beef annual picture is 3,850,072 head or 16% of the total beef end product. Realizing that Angus genetics effect a larger population over the last 40 plus years it is still a very slow process as the numbers further say that 90% of all calves marketed in the US today are through a local sale facility. Further explains why so little carcass data is collected by producer. In 43 years that number would be significantly larger if there were a true consistent premium paid in the fed cattle sector. Historically there is too high of risk to retain cattle to End product and then you are looking at a lot more hands in the pot to split profits with.
What do the numbers look like for the entire beef sector and the history of production? In 1975 we were at the largest cattle inventory year with 132 million head, and around 1.163 million operations. Since then we have been in a decline for cow calf inventory and producers. Today USDA says we have 92 million head, in 913,246 total operations with an average of 40 head of cow, down 40 million head and 250,000 producers. The reduced inventory represents 43% of today’s total cattle numbers. This culling of producers alone explains an improvement in quality of beef. When we look at collective group of purebred angus producers, with an average life span of 5-7 years, how much genetic improvement can actually be done in that time frame? Why are all of these numbers Important?
Now let’s look at where beef sets in the total Ag picture. Cattle represent the largest cash receipts in the Ag sector at 78.2 billion dollars or 21%. Corn is second at 47.2 billion dollars or 12.5%. yet when u ask a farmer where he makes his money most will tell u corn… So who makes the money in the beef sector? It’s the largest pot of money to be had in Ag? These are important questions that need to be answered in order to understand were beef production is headed and who will be producing it for a world population that is supposed to double by 2050, and an aging agriculture producer in the US.
Life science companies have already taken over the crop sector and control the genetic and financial picture there, as well as the other protein sources. Now they are after #1 the Beef cash pot. How does big pharma get the genetic material in which to control the Beef sector, like they have done in all other ag segments? They get you the beef producer to send them your cattle DNA and you pay them! They have marketed it to you as it is going to be your herds value in the future…… Who controls the genetic material of your herd once they have it? Zoetis and Pfizer lead the pack in the Angus breed. While you paid them to get it… Now who controls the genetics in beef production in the future? Here is a picture to the future.
If we look at the US dairy cattle industry and the changes there, in 1970 there were 648000 dairy operations, and today 47 years later there are 64,089 operations, down 90.1% While average milk production per farm rose 12 fold. Genetic material is Corporate controlled and determined through DNA for breeding and once bulls are born they are Evaluated again and the best one moves forward. Complete single trait selection with every generation getting weaker for all other traits. Swine operations are the same story, 1970 there were 600,000 swine operations with 80 head average. Today there are 63,000 operations with an average size of 980 head. So I hope by now you are seeing the trend and with the Beef industry being the largest cash prize and today 4 companies receive most of the cash that the industry has to offer.
When you look again at the demographics of Angus breeders and 95% of them will fall out under this new model as it follows all other protein sources of Integration. In as few as 10 years the Angus breed could go from 25,000 members to 2500 and the average herd size from 40 head to 400. It will happen! Where will you be in this new integration model, and who will be your boss?