Editor's note: The following story is the final installment of a three-part series on the rising cost of beef.
At the Graham Livestock Commission's weekly sale each Monday, cattle are ushered through gates into “the ring” to be sold. The room, filled with grandstand seating, is centered around a semicircular pen gated on each side. Cattle enter the room with one owner and exit from the opposite side with another. Typically, it all happens in a matter of seconds.
An auctioneer with a white cowboy hat and glasses sits with other auction administrators perched in the center of the room. His hat, like nearly every surface in the building, is coated with a fine layer of dust. His steady cadence drives each sale as onlookers watch and bid from the stands.
Local cattleman Alex Dooley waits in the corner of the bleachers. He's eager for the cows he brought to the market to be sold so he can collect his check.
“I'm afraid the buyers will run out of money,” he quietly joked later as he sat in the sale-barn's administration office. As he made that statement, he was still waiting for his cows to be sold.
In Young County, Monday business seems to boom.
But to solely examine how busy the sales are each week in the Graham sales barn and make an assessment of the overall market is also to negate the complexity of the current situation.
Prices for beef are higher than Dooley has ever seen in his 60 years of experience, yet his business is not really growing, he said. Dooley, like many cattle producers, had to reduce his herd significantly in 2011 because of record-setting drought conditions.
“I've got nearly nothing now,” he said.
While the price of beef has essentially doubled nationally, most herds have been reduced by half. And building herds back up is expensive and risky, according to many who understand the current industry.
For now, Dooley said he is just trying to maintain what he has. In an example of a recent deal he was a part of, he bought some old cows, got one calf from them and then sold them off, turning a small profit.
“You don't always make money,” he said.
Dooley plans to rebuild his herd once prices go down.
“They'll go down. I don't know when, but they'll go down,” Dooley said. “Got to have some rain.”
The current price of beef is due to a “perfect storm” of drought-reduced supply coupled with an unprecedented upswing in foreign demand, explained Young County cattle producer and United States Meat Export Federation's Executive Committee member Larry Pratt.
Even with Russian sanctions put into place Thursday banning the import of American and European Union beef products, the foreign beef market is booming. The Russian market was already limited for U.S. beef, explained Pratt, as Russia had curtailed U.S. beef imports behind disingenuous claims that the meat had feed additive residue issues that “sound science” had proven to be unnecessary, Pratt said. It's a move he sees as a way for Russia to build a domestic herd.
The foreign economy is booming due to other countries' willingness to accept certain meats that Americans won't eat, Pratt said.
“Let's just say we've taken a number one steer, weighing 1,100-something pounds; 1,200 pounds when you slaughter him,” he said. “Not only does that produce meat, now we have a market, because of foreign markets for the tongue, and the liver, and the spleen, and the heart and everything that is in that calf that Americans won't eat.”
The matter is complicated even further by the fact that cattle that supplemented the U.S. beef market from Mexico were affected by drought, and beef from Canada found other markets, Pratt said.
“You have to have sympathy for the American housewife because she is competing against people who are more than willing to pay that price in the foreign market,” Pratt said.
Foreign demand would grow even more if U.S. beef could penetrate markets in Russia and China, he added.
Standing in the vast expanse of one of his many pastures near Eliasville, Pratt explained the complex situation this market creates for ranchers.
“If we had prices like this with a full complement of cattle that we could run, we would really be making a good living off the land now. Our herds have been kind of cut in half, and the thing that has mitigated that some is the fact that we're getting more for our calves on a reduced basis of cowherd numbers than we had when we had a full complement of cattle,” he said. “So, it's kind of balancing itself out.”
Read the entire story in the weekend edition of the Graham Leader.