Kiowa County agent offers insight to volatile cattle market in Kansas
Cattle producers all over the country work diligent hours to provide beef for consumers everywhere. Lately, though, the cattle market has become a hard place for producers to make money.
“The beef market has taken quite a hit since the beginning of the year with prices dropping 10-20% across different sectors,” said Wade Reh, Kiowa County Extension Agent.
This is for multiple reasons, according to Reh. Before the pandemic, there was a good supply of cattle, but there were some signs of volatility in the market. When things with the pandemic got more serious, packing plants started to change the way they operated to be in compliance with recommendations to keep the spread to a minimum. This has slowed the rate of slaughter at these packing plants, making the system even more backed up. Another effect of the pandemic is the huge reduction of demand in the food service industry. Restaurants and school cafeterias don’t need as much beef. On the flip side, the increase in retail demand has shocked packers. This has caused a redirect from one supply chain (restaurants, cafeterias) to another (retail). If things continue to escalate and packing plants have to shut down, these issues would only get bigger.
“Hopefully a lot of the drop in prices is due to shock (fear) to the industry and there will be some recovery as the initial shock subsides,” said Reh.
Reh said surviving the dismal economic outlook for the cattle industry will depend on the producer. He suggested farmers and ranchers keep running their operation with big picture goals in mind, and try to be flexible during this hard time.
“Can they hold cattle until prices recover some? Can they cheapen rations or other inputs? Do they need to move cattle to clear input costs?” said Reh. “Would refinancing debt make sense at this time?”
These are all questions that are being asked to help producers make it through this. There will be relief for most producers through the USDA Coronavirus Food Assistance Program (CFAP). CFAP was announced by the United States Department of Agriculture on April 17.
“President Trump directed USDA to craft this $19 billion immediate relief program to provide critical support to our farmers and ranchers, maintain the integrity of our food supply chain, and ensure every American continues to receive and have access to the food they need,” according to the USDA website.
Even though the markets are unstable, farmers and ranchers in Kansas will continue to find ways to make a living raising and selling beef.