Friday, 17 July 2009
Cattle-Fax estimates that commercial feedyard losses since November 2007 now top seven billion dollars on a cash-to-cash basis. These losses are because the cattle feeding industry is currently grossly overbuilt for the present-day size of the American cowherd. Between 2000 and 2009 the annual calf crop declined 3.1 million head while feeding capacity increased about 1.8 million head. The end result was a feedlot over-capacity of around five million head. This has resulted in feedyards playing a game of "last man standing" as they bid all of their equity into feeder cattle to try and maintain capacity. Their only hope is that someone else goes broke before they do. During the past 18 months, about 15 feedyards with a one-time capacity of nearly 300,000 head have been closed or ceased finishing cattle. Cattle-Fax predicts an additional 1.5 to 2.0 million head of one-time capacity could be idled during the next 12 to 24 months. Unfortunately, the American cowherd and calf crop continues to shrink. Until this shrinkage stops, feedyards and packing houses can expect little sustained profitability or an end to their attrition game.
Allan Nation has been the editor of The Stockman Grass Farmer since 1977.