Do you remember the Chicken Little story? Chicken Little was walking through the woods when an acorn fell on her head. She immediately concluded the sky was falling and the world would soon come to an end. She ran around screaming, “The sky is falling! The sky is falling!”
Cattle prices have fallen over the last three to four weeks. This has caused a few Chicken Littles to run around screaming, “The sky is falling! The sky is falling! Cattle prices are gonna drop like a rock just like they did in 2016.” The record-high calf prices we had in 2015 were quickly cut in half in 2016 as a result of rapid herd expansion.
Calm down… we’re not there yet. Cattle numbers are no higher today than they were 30 days ago. Herd expansion is just creeping along – much, much slower than it did in the 2014/2015 time period. The time will eventually come, however, when herd expansion takes off – causing cattle prices to fall. The sky is not falling… not yet anyway.
So what happened? If the number of cattle (supply) has not increased in the last 30 days, then what caused the recent decline in cattle prices? The recent decline was caused by a decrease in demand for beef! It’s all about supply and demand. Retail beef prices have reached a new all-time high. Prices are high enough to create some consumer resistance. This is a little concerning to me.
We all like high cattle prices – but the last thing we need is for cattle prices to go so high that beef becomes a luxury item. Unfortunately, it looks like we are moving in that direction. If beef becomes a luxury item, we will only need to produce a fraction of the beef we currently produce – and we will only need a fraction of the cow-calf producers we currently have. No one wins!
Survival of family farms and ranches, as well as the entire beef industry, will require beef producers to produce great-tasting beef at an affordable cost to the consumer. The current beef production paradigm is based on expensive fossil fuel-based inputs. The cost of those inputs has doubled in the last 20 years! That’s right… DOUBLED! Beef production needs to get back to being primarily based on free solar energy!