Regional cattle market is strong, but worries remain

Cattle ranchers in Washington and Idaho are benefiting from a strong cattle market due to smaller herd sizes and robust consumer demand for beef.

But the risk of high tariffs on exports coupled with a threat to deport thousands of undocumented migrant workers has raised concerns among many beef industry officials.

“Current cattle prices are strong — that’s good,” said Cameron Mulrony, executive vice president of the Idaho Cattle Association. “We’re trying to recover from past years when our input costs were exceeding our growth standpoint. It’s all about supply and demand.”

Cattle ranchers throughout the country began culling their herds a few years back when input costs such as feed and fuel skyrocketed, shrinking profits to a trickle. Ranchers took another hit when drought, high temperatures and summer wildfires wiped out pasturelands. Mulrony said Idaho lost more than a million acres of winter range last summer because of wildfires.

As a result cattle herds got smaller pushing beef prices in the grocery stores, supplemented by foreign imports, to new highs.

According to agriculture economists, herd sizes are the smallest they’ve been since 1961. Mulrony said there’s no evidence yet that the situation is turning around.

“People are trying to catch up but the numbers are not showing yet that we are headed into an increase,” Mulrony said.

Growing the number of cattle on the market won’t happen overnight because of the time it takes to gestate a calf and raise it to market size.

“It is a cycle,” Mulrony said. “If they keep heifers next year it will be two years before that rebuilds. Once that starts then that tells us people are retaining heifers to rebuild their herds. It will take 17 months to get into the processing chain.”

Shannon Neibergs, an agriculture economist at Washington State University, said although local herd sizes are smaller, ranchers in the Northwest were not hit as hard as those in the major cattle producing areas of the Midwest where persistent drought scorched grass fields and forced producers to severely cull their herds. Official herd numbers and cattle statistics will not be available, he added, until the National Agricultural Statistics Service reports later this month.

“Our inventory trends don’t run the market but those guys with the big numbers run the market and they have culled down,” Neibergs said. “In Oregon, Washington and Idaho we have not culled our cows and we’re waiting to see how it’s reported at the end of January.”

Casey Scott, a rancher near Clarkston, said strong calf prices are prompting ranchers to continue to sell their heifers and there are not a lot of replacements coming in.

“So that’s definitely a concern for herd size,” Scott said. “We typically see some prices are up so (ranchers) are selling everything they can.”

Many ranchers also are reaching retirement age and liquidating their stock, “so that’s a bit of a player, as well,” Scott said.

When it comes to international trade, cattlemen said it’s too soon to tell how possible tariffs would affect local ranchers.

“The thing that is probably not recognized right off the bat,” said Neibergs, is that the large meat packing plants in the U.S. typically sell low-quality cuts, hide and other refuse to international markets like China and Mexico.

“If the tariff war flares up on that,” he said, “then those low-value cuts that add value to the carcass will have a hard time finding a home.”

Until the tariffs are proposed, Mulrony said, it’s hard to say how they would affect the beef industry.

“Tariffs are placed on items based on a political need,” he said. “If there’s a tariff on importing beef coming in, it would affect differently” than tariffs imposed by other countries on U.S. products going out.

“Foreign demand is still high and that helps,” Mulrony added. “We have more cows than people in Idaho and we have to be able to get it out.”

One of the more critical concerns of industry officials is proposed immigration reform that could drastically reduce the number of migrant workers in the agriculture sector. A University of Idaho study released in February found that finding key workers in agriculture, construction and service industries is a major worry for Idaho businesses. That is especially current in the state’s dairy industry that accounts for about $10.7 billion in economic impact each year and 90% of workers are unauthorized.

“The foreign-born workforce is necessary in agriculture,” Mulrony said. “We don’t see it as much in cow-calf operations but more in the feeding and processing industries. We have to have the people to do the work and that’s the concern. If we start reducing the workforce we need to do the job then we start running into issues, as far as reduced supplies in the stores. It adds to that pricing structure.”

Mulrony said one of the priorities for the beef industry is to support the efforts of dairy and row crop producers who would be more directly affected by the loss of foreign-born workers.

Hedberg may be contacted at khedberg@lmtribune.com.