Cattle Numbers, Feed Sources
Among Challenges For Feeders

By David Bowser

WINSTON, N.M. — Dr. Kenneth Eng sees a number of problems facing the cattle industry as it prepares to enter the 21st century. The biggest problem for some in the industry, however, will be lasting long enough to get there.

The consulting nutritionist, who ranches in New Mexico, California and Texas, says cattle numbers are something the industry needs to come to grips with today and will still be coming to grips with in the next century.

"Cattle numbers for the feedlot operator are a major, immediate and longterm challenge," he says. "We've got 107 million total cattle, which is four percent fewer than last year. Two percent fewer beef cows."

A lot of people forecast that within a few years there will be even fewer total cattle, he says.

The number of cattle on feed, however, is up 12 percent.

"How did we get that many fewer cattle and that many more on feed?" he asks. "We got it because we're borrowing from our heifers. We have the highest percentage of heifers on feed that we've ever had, historically, and we've had this all year."

The industry has increased feedyard capacity between 10 and 20 percent with basically 10 percent fewer cattle to fill them.

"Feedlots operators run, they hope, a full hotel if they're going to be profitable," he says. "A tremendous challenge to most of these feedlots is going to be how do they get their pens full of cattle and keep them full when there are fewer and fewer cattle to obtain."

Eng points out that while there are 803,000 ranchers in the country, the average cow herd size is 39 head.

"It's not a highly organized group," he says wryly. "That's probably good. They're probably the least organized and in better shape than all the rest of us organized people."

He admits there are a lot of part-time ranchers. Fifty percent of the ranchers in Texas are part-time ranchers.

"Some of them work for the county," he says. "Some of them are lawyers or doctors. Some of them are artists. But they like cattle, and it's nice to be in a business where people are doing something they like. We associate with an animal that people do like. Did you ever hear of anybody in the chicken business who'd admit he liked a chicken? If he did, you'd probably really wonder about him."

Most people, by contrast, love cattle.

"I think that's great, but it means that we have a lot of smaller operators," he says. "We'll probably have more of them all the time. I personally think that they may actually begin to increase, percentage-wise, because the guy who’s really under pressure is the guy who does nothing but raise cattle and has a 400 or 500-head cow herd. He's got more problems than the rest."

At the feeding level, there are 2075 feedyards in the nation with greater than 1000 head capacity. They account for about 85 percent of the cattle fed in the country.

"We've got 2000 cattle feeders out there with 800,000 ranchers to get their cattle from," Eng points out. "That sounds good until you put in that 39 head per customer. That's a real challenge."

What is really depressing, however, is that all this narrows down to three major packers.

"We've got to have better control of our marketing if we're going to compete or survive long term," he says. "We're certainly to a large extent at fault because we've ceded our product to the packer and retailer, and they do not have our best interest at heart.

"I'm sure there's not ever a discussion in the IBP boardroom about what they can do for the cattle feeder out there. I'll bet it never comes up in Albertsons. They like to have us around because we've got something they need, but they've got their own business to worry about."

The question for the feedlot operator is how to compete and keep the feedyard full, Eng says.

"Fortunately, we have the most flexible animal in all the animal kingdom," he says. "It gives us a lot more opportunities, because you can feed them a lot of different things and come to the same end point."

A new entry into this equation has nothing to do with cattle, but it has to do with the cattle business. That's the farming business.

"We have what we call the Freedom to Farm Act, which everybody is in now," he says. "Even if you weren't in a farm program, you are in the Freedom to Farm Program."

The farm program means farmers don't have any restrictions on what they plant.

"If the farmer this year who planted corn sells his corn in the Midwest for $1.60 a bushel, he's going to look for something else to plant," Eng points out. "The wheat farmer who sold his wheat in the Northwest for less than $2 a bushel is going to plant something else."

Prices for grain are at historic lows, Eng says.

"They're going to look for something else to plant," he says. "I don't know what it's going to be. They can plant anything they damn well please, which is good, but then we as feeders have got to be willing to feed it. If you're one of those feeders who says, ‘I'm going to feed corn regardless, and I like to feed yearling cattle and I want them to be blacks and black-baldies,’ you'd better really, really, really do it well, because there are a lot of other people who can do that. You're no longer unique."

Eng says that if a feeder is going to survive in a tough business, the more unique he is, the better off he will be.

Feeders are going to have to change feedstuffs because availability is going to change a lot, but it means they're probably going to work with smaller and smaller animals.

"That's one of the reasons I think we'll go back to the rancher more and more, either partnering with him or buying the cattle earlier and earlier," Eng says. "We're going to go back to cattle programs."

Eng says he is not saying that feeding yearlings is simple, but it is not unique.

"There are a lot of people who do a great job with a yearling that hate a calf," he says. "They'd better learn to love them, because otherwise they're going to have a hard time maintaining feedlot occupancy. Remember that a 300 or 400-pound calf is going to spend twice the time in a feedyard as a yearling will. Feeders have some things to look forward to."

But to survive in the cattle business today, no matter what segment a person may be in, he will have to be good at what he does, and he's going to have to be able to get along with other segments of the industry and with society.

"We're going to have to get along with a lot more people than we currently are," Eng says. "There's probably more antagonism, more lack of civility, more hostility in this business than I've ever seen in my life, and that's a long time."

He notes that northern feeders are all mad at Canada because they're dumping beef in the U.S. The Canadians are mad at the U.S. because the U.S. is going to make them label it Canadian beef. People in the Midwest are mad at the Mexicans because they're sending feeder cattle into the U.S. The Mexicans are mad at the U.S. because they say the U.S. is dumping finished beef south of the border. People are mad at the Southeast because they think they're feeding chicken litter.

"Everybody is mad at the Midwest farmer now that there's going to be cheap grain, because they think they're going to feed everything for 175 to 250 days whether it needs it or not, because they've got to feed all that corn up," Eng says.

The Midwest guy is mad at the western rancher because he thinks the westerner gets a free ride with the public lands.

"I'll tell you something about that," Eng counters. "I had a 40,000 acre lease in the forest that we had a 243-head permit on. If you think that would have been fun even if they gave it to you, you're wrong. By the time the lions and bears and everything else got their share and you found the cattle, that was not a cheap operation."

Nobody has it particularly easy now, Eng admits.

"There are ranchers who think the feeders and packers are in bed together and they're trying to break this market back far enough they can finally get the price of calves and yearlings down," Eng says. "Everybody's mad at somebody."

As for the next century, Eng says he's like a lot of cattlemen right now. He's not so much worried about what to do in the 21st century as he worries whether he'll be around on October 21.