Last week, hundreds of people gathered in Wichita to talk cattle. The Kansas Livestock Association held its annual convention at the Hyatt Regency and Century II Performing Arts and Convention Center. KMUW’s Sean Sandefur attended and reports that while the nation’s cow populations are still low, business is better than ever.
The large convention hall inside Century II is filled with big tractors, big cowboy hats and the smell of BBQ beef brisket. If you’re in the cattle business, this is the place to learn the newest trends in bovine technology.
Doug Zeitlow owns Zeitlow Distributing in McPherson, Kansas. The company has sold livestock products for over 50 years. He shows off the new Tru-Test 5000, a colorful keypad about the size of a phonebook. It’s hooked up to large, gated platform. The technology allows ranchers to weigh their cattle and maintain a database, which can be brought up on a laptop, tablet or cell phone.
“It helps with breeding, basically culling the animals that are not performing,” Zeitlow says.
As a general rule, ranchers don’t like scrawny cows--this system helps them breed only the best of the best and get rid of the underweight or less healthy ones.
Across the aisle is Bud Wylie, a representative of Blade Energy Crops, a California-based company that sells sorghum seeds that are cultivated for cattle feed.
“The company started as a genomics company back in 1996 and we’ve brought some of those kind of technologies into selecting these forages,” he says.
Wylie explains that sorghum requires less water than corn and wheat, which is important, considering the droughts that have crippled parts of the country in recent years. But, despite that dry weather, there’s something tangible in the atmosphere here. Business is good—really good.
The Market for Livestock
In a large conference room at the Hyatt Regency Hotel, Randy Blach speaks to crowd of a couple hundred people.
"Obviously, it’s been a pretty fun run for most of you in the room,” Blach says to the crowd, in reference to soaring prices for cattle and beef.
Blach is CEO of CattleFax, a market analysis company that provides guidance to those in the beef industry. For much of the 1980s and 1990s, cow populations were very high, which brought down demand and profitability. Blach says when droughts hit in the late 1990s and 2000s, cow populations thinned out. Demand grew, but because of the harsh weather, ranchers were spending their money on supplemental feed. The market was tough, according to Blach.
“It takes two things to maintain a cow herd, you have to have profitability in order to have sustainability," he says. We didn't have profitability in the late 1980s and early 1990s. When we got profitability, we didn't have any green grass. So even though the industry wanted to expand, there was nowhere to carry that increased supply. Now we have both of those stars lined up.”
According to the US Bureau of Labor Statistics, the average price of a pound of lean beef has gone up nearly a dollar since January, and prices are nearly double what they were 10 years ago.
That puts a smile on the face of Gary Cotterill, a third generation cattle rancher from Fredonia, Kansas. He says while this year has been profitable, he’s not going to get too comfortable. He expects the price of cattle to come back to reality.
“I think we’ll see probably a decrease of 10 to 20 percent the next 2-3 years," Cotterill says. "So we need to pay attention to our cost of doing business and become more efficient with our operations.”
Randy Blach agrees. As part of his analysis, his company looks at long-term weather forecasts, which he says indicate rainfall will be steady in the coming years, allowing cattle populations to begin to grow after almost two decades of decline. He says consumers should expect small price increases in 2015, but in 2016 and beyond, he predicts prices will come down from the clouds.
“The lion’s share of the pricing increases has already been experienced in these markets," Blach says. "Not to say the markets won't stay strong in 2015, but the bulk of the price move has been seen.”
These cattle prices affect Kansas’ economy in a big way. According to the Kansas Livestock Association, Kansas ranks third in the nation with roughly 5.8 million head of cattle on ranches and in feedlots. That translates to an industry nearing $8 billion a year. And when ranchers are making money, so too are the numerous industries that support them, like the vendors vying for attention at the trade show in Wichita.