Market Insights by Sosland Publishing

KANSAS CITY — Throughout 2024, US beef cattle producers worked to determine how herd rebuilding will affect the beef during the next few years.

Charlotte Talbott, animal agriculture sustainability analyst at RaboResearch, a part of Rabobank, recently detailed strategies and management decisions for stakeholders that may impact the industry across the country.

Many headwinds exist for cattle producers, including record-low inventory, volatile markets influenced by high prices, and many operations recovering from drought even though they received some relief during the last calendar year.

At the beginning of 2024, the US Department of Agriculture’s National Agricultural Statistics Service (NASS) reported that the national cattle inventory was 87.2 million, down 2% from 2023. Statistics from NASS detailed that this was the smallest cattle inventory in 73 years.

With such headwinds, Talbott explained that it’s important to reset and look over the past 10-year cycle and see what may be in store for the next 10 years.

“Historically, if you look at past rebuild cycles, we start going through expansion, and you generally see this kind of bump in productivity,” Talbott said. “I think it’s interesting because producers are looking at ways that they can maximize their efficiencies and be more productive as a whole.”

Talbott looked at many elements when assembling the analysis, including historical production and supply cattle cycle trends. After that, RaboResearch will use a few future demand drivers that will be relevant in the next 10 years, including external factors like weather, the regulatory environment and market conditions.

Talbott believes using all those different factors and building an outlook can help identify risks and opportunities for producers that can act to make their operations more resilient and ultimately more profitable.

“The cost of retaining a replacement heifer in the herd versus selling her for that profit is a big consideration,” Talbott said.

Another part of Talbott’s insights was that the management decisions for cattle herds continue to come into play, particularly with weather conditions and drought recovery in 2024. Still, there’s been a decline while looking at USDA pasture condition reports nationally.

Providing the proper timeline for cow-calf producers to figure out these choices on the growth of the herd remains central to the herd size going forward.

“I think the other management decisions are kind of around this timing period,” Talbott said. “You look at the drought, the forage base that’s existing, what are some of those different levers you can pull now versus when you have more animals perhaps on the operation.”

Managing grazing land

Drought continues to be a major factor in various parts of the United States where cattle graze, and it plays a role in overall production of herd build back.

Talbott noted that as producers consider adding more animals at the ranch level, there should be assurance that the forage resources are the best they can be throughout this next cycle.

“Investing in range lands and pastures and grazing lands has a really high potential for return on investment because it’s kind of the cheapest way to maintain cattle,” she said. “If you think about grazing cattle on land that you already have versus having to supplement feed in the winter or supplement feed during drought periods where you may not have as many forage resources you’d like to.”

In the report, Rabobank noted the US Roundtable for Sustainable Beef estimated that half of the 655 million grazing acres in the United States are managed under a written or unwritten grazing management plan, emphasizing the need to improve land productivity.

One example Talbott gave was rebuilding the forage resources in certain areas of the country while the inventory and stocking rates are lower, which can carry some lower risk. In the analysis, she also cited the need to improve pasture and rangeland resilience, which can give stakeholders a higher return on investment.

Some considerations in the report included trying to diversify pastures and forage bases that could not only build up soil health but also add more grazing options for cow-calf producers in the future.

Talbott suggested cattle producers develop a grazing management plan allowing time for regrowth on pastures that might need rest and recovery after a grazing cycle.

Another strategy Talbott addressed was enhancing herd genetics and monitoring the results to help rebuild the national herd and ensuring the efficiency and effectiveness of that process.

“Technologies have become more accessible, allowing producers to more easily invest in genetic improvements, reduce the risk involved with retained ownership, and rebuild the herd with a clearer focus on driving genetic potential,” the report stated.

Some other technologies that show potential for producers in the future are farm management software, which can help with the traceability of cow herding throughout the entire process of raising an animal. Harnessing the power of various data points can help a producer unlock more market opportunities in the future.

“I think that the potential of just having more data and being able to utilize that data and pass it to the correct party where value can be gained makes there a lot of untapped potential there for cow-calf segment especially,” Talbott said.

For example, using traceability technology, cow-calf producers might also provide information on superior cattle through the transfer of genetic data in to secure the best price for their cattle.

The role of sustainability

Talbott expects demand for sustainability drivers for the next 10 years to increase for parts of the cattle cycle, and the attention to the topics to be more prominent.

“Producers who consider what the landscape of sustainability delivers throughout the next rebuild can better position themselves for early market opportunities that align with individual production goals,” the recent RaboResearch report said about the cow herd rebuild. “Sustainability pressures signal increased demand for transparency throughout the beef value chain to facilitate environmental accounting and mitigation practices.”

Putting together many of these sustainability factors can also help people down the supply chain understand what goes into making all these decisions now and down the road.

“A retailer, for example, is selling a product, but doesn’t necessarily have control over how that product was grown or produced,” Talbott said of sustainability practices. “Those partnerships are key to making sure the incentive, the value and the demand driver is passing all the way to actually enact that.”

In recent years, the USDA’s Partnership for Climate Smart Commodities program provided different practices for cow producers, including fencing, pasture and range treatment solutions, and genetic testing.

Another program businesses tapped previously was the USDA Regional Conservation Partnership Program.

Talbott wants to determine how many of these incentives are passed throughout the supply chain, including to the cow-calf producers around the United States.

Much of the insight from Talbott addressed the balance between risk and reward for early adopters of sustainability.

“If there is a sustainability or environmental attribute related premium at the consumer level, does that actually pass consistently to the cow-calf producer?” Talbott noted. “I don’t think that’s quite clear today.”

With prices continuing to be high across categories of goods and services, Talbott said the value of climate-smart incentives might come from supply chain partnerships or different corporate incentive programs. Companies can then work with other companies to set the goals with their suppliers upstream to enact climate-smart practices.

As the new administration took over in January, the federal government’s position on cow-calf producers and their decisions going forward in the next few years could change the objectives.

“We do have an indication of expectations given President-elect Trump’s first term in office,” Talbott spoke on predictions before the president's inauguration. “In a broad sense we may expect lower regulatory costs and stalled sustainability commitments throughout the value chain, and my eyes will be on potential changes to USDA-NRCS programs, including Partnerships for Climate-Smart Commodities and other conservation programs.”