McCann's bullish on beef

Jason McCann spent last year promoting the beef industry as president of the Missouri Cattlemen’s Association. You’d think he’d be ready to relax at his spread in southwest Missouri. Yet he remains excited about sharing his views on the business and how it contributes to the region’s economy. 

“Beef prices are the best they’ve ever been,” said McCann, who raises 135 head of mostly Angus and Simmental near Miller, between Joplin and Springfield. “New records are being set for every sector from calves to steers headed to the packer. Record-setting prices will continue, and may climb faster if a few international markets open up and bolster imports even more.”

McCann sensed the trend and recently expanded his own herd for the third straight year. He runs up to 220 stocker cattle from December to July. As with most Missouri cattle growers, his is a cow-calf operation, and his cattle mostly feed on grass pasture and hay, except for a few calves he finishes out with corn to put in his freezer for his family’s use.
Beef tops Missouri ag sales

Jeff Windett, executive vice president of the Missouri Cattlemen’s Association, paints Missouri as a big green nursery full of mama cows raising babies. “We are a grazing state,” he said. “We’ve got a lot of rolling hills unsuited for growing crops, and we have more moisture than other states, which makes for good grass.”

Surrounding states like Nebraska, Oklahoma and Kansas also raise cow-calf pairs, but host more feedlots. Missouri calves frequently end up in the feedlots, where they’re finished with corn and soybean feed that makes beef taste like what most American consumers expect.

Ron Plain, an agricultural economist with the University of Missouri, specializes in the beef industry. “The largest source of farm income in the state is cattle sales,” he said, pointing to 2007 Census of Agriculture data showing that Missouri’s farms sold $1.7 billion in cattle compared to $1.4 billion in corn and $1.3 billion in soybeans. Of Missouri’s 107,800 farms, more than half—59,000—raise cattle. Overall, agriculture ranks as the state’s second-largest industry, after the service industry.

“Only Texas has more farms that raise cattle,” Plain said. “Texas has more beef cows than Oklahoma and Missouri combined.” But then Texas has more land—you could fit about four Missouris into Texas.

Commodity prices nip pasture
Until recently, Missouri ranked second only to Texas in terms of the number of cow/calf pairs, but Oklahoma recently overtook Missouri. McCann thinks he knows why. “In one word, corn,” he said. “The corn bonanza has made people sow corn in the median strips around here.”
Plain and Windett back him up on the trend. “The high price of corn and soybeans is causing farmers to convert pasture to cropland where feasible,” Plain said. “Missouri has more acres of pasture suitable for cropping than does Oklahoma.” He cites statistics showing beef cow numbers dropping faster in crop-growing states like Missouri and Iowa than in Texas, Kansas and Oklahoma. 

 

“Converted pasture has had a huge impact,” Windett agreed. “Our average-sized herd in Missouri is 40, and that’s small enough that it’s hard to make a living—it’s more of a part-time operation. Many of our beef producers are older, and in the last few years we’ve seen drought and higher feed and fertilizer costs. You put all those factors together, and some probably saw it as a good time to exit.”

But most of these producers exited the industry before beef prices went up. McCann isn’t complaining—shrinking pastureland may have cut herd sizes, but a smaller U.S. herd led to today’s higher beef prices. And he isn’t that concerned about Missouri’s ranking in terms of cattle numbers. “Missouri is still one of the best states to raise cattle, so we will always be strong, but we won’t always be the biggest,” McCann says. 

Windett estimates that about half of the 5,000 members of Missouri Cattlemen’s Association raise their own feed. The others, like McCann, buy all their feed. While cattle prices are up, producers still face high feed costs.

Cattle growers like Missouri

McCann grew up on a ranch in Arizona, where it takes about 100 acres to raise one cow-calf pair. Shrinking land availability, along with dry conditions, propelled McCann to move in another direction. He earned a master’s degree and entered a medical career before taking a job in Missouri in 2004. His life story illustrates how Missouri is a good place to raise cattle.

“My eyes were opened,” he said. “You could own a couple of hundred acres in Missouri without being a movie star, and lo and behold, you could put a cow-calf pair on three to five acres. So we rekindled the dream of cattle and planted it here.”

Missouri generates a lot of cattle seedstock for the rest of the country, and McCann’s operation helps the effort. Almost 50 of McCann’s cows are recipients for embryo transfer—they act as surrogate mothers for eggs transferred from other, more high-dollar females. “We cooperate with a breeder who owns the embryo, pays for the synchronization and pays us for the calves we wean,” he says. “Since the high-dollar momma cow can only carry one pregnancy at a time, we expand that many times over by embryo transfer.”

Cattle growers go high-tech
Many members of the Missouri Cattlemen’s Association rely on technology these days. “We have some of the most progressive producers in the state,” Windett said. “Overall, cattle growers are becoming better managers.” For example, more growers use Expected Progeny Differences (EPD), which measures traits in bulls, allowing growers to select those that improve their herds. Producers also crossbreed more to gain traits that today’s consumers desire.

Windett and McCann comment on another high-tech trend—animal identity preservation, where a consumer can trace a steak back to the farm and the farmer who grew it. “We see the value, but it should be left up to the producer,” Windett says. The organization opposes the government-mandated animal ID that some propose. 
“Consumers tell us what they want based on what they buy,” McCann said. “If our customers want individual ID, and they are willing to pay for it, we will do it. If they want us to feed each cow a four-course meal of freshly picked greens, we will do it, as long as they are willing to pay for it. The consumer should be telling us what is important to them, not the government.”

Windett and McCann also bristle at the recent successful ballot initiative driven by the Humane Society of the U.S. that limits the number of dogs that breeders can own in Missouri. They worry that such limits could eventually extend to livestock producers.

When we caught up with Windett, he had just returned from the state capitol where he urged improvements in the new law. “From our standpoint, putting a limit on the number of dogs you can own is unconstitutional,” he said. “It’s like telling a car dealer they can only sell 50 cars.” Legislators cleaned up the law to protect livestock growers, and added state funds needed to go after unscrupulous, unlicensed dog breeders.

Along the way, the Missouri Cattlemen’s Association joined a coalition, Missouri Farmers Care, designed to educate the public on issues like animal welfare.
Meanwhile, back at the ranch

Back home, the McCann kids, ages 13 and 10, help out more as they grow older, but it’s too soon to tell if they’ll stay in the cattle business.
“The next generation has fewer people willing to work harder and make less than most,” McCann said. “They are more hat than cattle, if you know what I mean.” Attracting and servicing the heavy debt load needed to start a cattle operation makes entering the business a challenge, he added.

Still, McCann continues to be bullish about the cattle business. “Protecting and promoting the business of raising cattle has always been a part of my legacy, from my grandparents to me,” he said. Every chance he gets, he reminds people that farmers support many other industries, including equipment sales and service, banking, insurance, veterinary, agrichemical, fuel and oil.

“And did I mention we grow everyone’s food?” McCann asked. “Our industry is like the foundation of your home. You don’t think of us unless there is something wrong down there. We quietly make the rest of the world possible.”

Changes brewing in beef cycles
Agricultural economist Ron Plain studies beef inventories to learn more about the lag between consumer demand and the response by cattle producers. He sees the cycles becoming more unpredictable, making it difficult for cattle producers to plan ahead.
“The cattle industry tends to go through periods of herd expansion when the profits are good followed by herd reduction when profits are not good,” Plain said. “The cattle industry moves slowly. Add together a nine-month gestation period with a typical slaughter age of 19 months and you have 28 months from breeding a cow until the calf is slaughtered.”
Plain takes a deep breath before explaining how the cycle works: “When cattle prices are high, cattlemen tend to increase cow numbers, which eventually results in more calves to feed and slaughter, which causes lower prices, which leads to herd reduction, which eventually results in fewer calves to feed and slaughter, which boosts cattle prices—and the cycle starts over.”
Plain looked at the cattle cycle as measured from peak inventory year to peak inventory year starting in 1890. Here’s when the cycle peaked since then:

•    14 years later in 1904
•    14 years later in 1918
•    16 years later in 1934
•    11 years later in 1945
•    10 years later in 1955
•    10 years later in 1965
•    10 years later in 1975
•    7 years later in 1982
•    14 years later in 1996
•    11 years later in 2007

“Over the last 120 years, we have had 10 complete cycles,” Plain said. “The average length was 11.7 years with the shortest being 7 years and the longest 16 years. During the middle of the 20th century, the cattle herd would consistently peak in years ending in five. That regularity made it easier for the industry to plan for the future. The lack of a predictable cycle length makes planning much more difficult today.”

At the same time, Americans are demanding less beef. In 1970, the U.S. per capita beef consumption was 84.4 pounds per year, Plain reported. In 2011, it’s forecast to drop to 58.5. Fortunately, he pointed out, we’re selling more beef to international markets. In 2010, for the first time since 1947, we exported more beef than we imported. Domestic beef exports totaled 2.3 billion pounds last year, about 9 percent of all production.