About 75 ranchers and folks from allied industries were at Montana State University on Friday for the Montana Stockgrowers Association’s mid-year meeting.
During the general session Friday morning, association president Gene Curry, of Valier, ran down a list of lobbying successes in Helena. The passage of the CSKT water compact, state funding for the Department of Livestock and its Veterinary Diagnostic Laboratory in Bozeman, and defeating the Humane Society of the United State’s proposals were highlighted.
Curry was followed by MSU agricultural economics professor Gary Brester. He optimistically told the ranchers that the short- and long-term outlook on cattle prices, which hit a record high in 2014, were likely to remain high.
“Not many countries have the same quality of product that the U.S. has,” Brester. “The trend (over the last decade) seems to be pretty fast expansion of production, but that seems to be flattening off.”
Even so, the U.S. imported 4.5 billion pounds of beef, veal and live animals in 2014. Beef is primarily imported to the U.S. from Australia, New Zealand, Canada and Mexico. Most of the beef from Canada is trimmings used to increase ground beef’s lean percentage.
In 1980, the world’s beef production was 43 million metric tons (carcass weight). Last year, total world production was 60 million metric tons, according to the USDA’s Foreign Agriculture Service. While the U.S. cattle inventory peaked in 1976 at about 125 million cows and calves, it was about 80-90 million in recent years. The 2014 calf crop was the lowest since 1950 at 33.9 million head.
“Increases in those cattle numbers have always been spawned by increased profitability by higher prices. Rational people see dollars that could be earned by taking additional risks, adding to the cattle herd,” Brester said. “I don’t think we’re going to see much of that in this next round.”
Supply will continue to be tight in the short term, and consumer demand, domestic and foreign, is strong, he said.
“I saw a sale ad the other day in Bozeman for 85 percent lean ground beef, $3.99 a pound if you buy five pounds. That sounds like really strong demand to me,” the economist said.
He forecasts a 2 percent decline in U.S. beef production in the next two years and that world production will stay flat.
Brester argued that cost factors like drought, feed prices, lack of grazing land and labor will constrain increases in U.S. production. And alternative crop farming, made less risky with crop insurance, will keep some from jumping into cattle.
The size of a beef cow is growing, and larger cows need more feed, but there’s little available. In 1975, the average carcass weighed about 450 pounds, by 2014 the average weight has grown to 700 pounds.
“Corn production in particular and some wheat has taken some land out of grass and alfalfa hay,” Brester said, citing additional decreases in hay crops caused by drought and the inability to graze more on federally-managed public lands.
After the economics lesson, Montana’s Republican U.S. Sen. Steve Daines gave a brief update.
Daines told the crowd there was a “big vote” coming up in the House on the Trade Promotion Authority (aka fast-track authority), a step toward allowing President Barack Obama to finalize the Trans-Pacific Partnership — a contentious free trade agreement with a dozen countries in the Pacific rim. The deal is strongly supported by businesses but loathed by labor unions, human rights activists and environmental groups.
“I’ve been a strong supporter of that in the United States Senate,” he said, citing tariffs on imports from Japan and Vietnam. “It’s going to be a real close vote in the House.”
The public has not yet been given official access to the secret trade deal. The Republican senator said he has, and knows what he is voting on.
Daines said that he is working on highway funding and export terminal laws that would prevent labor strikes from keeping Montana’s exports from reaching foreign markets.
Daines also told the ranchers he is co-sponsoring Senate Bill 1140, which would prevent the Environmental Protection Agency from applying regulations to non-navigable water ways like spring creeks or irrigation ditches. And he is hoping to keep the sage grouse off the Endangered Species List and supports Gov. Steve Bullock’s plan to address the bird’s declining numbers.
“Look no further that what the Spotted Owl did to the timber industry to the west of us,” Daines said. “That is potentially what could happen to us here.”
State Sen. Eric Moore, R-Miles City, was also in attendance along with Rep. Kathleen Williams, D-Bozeman, and Jennifer Madgic from U.S. Sen. Jon Tester’s office.