The Emporia Gazette

February 14, 2012

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No single factor caused a shortage of finished cattle for slaughter in Kansas — and there is no solitary solution to correct it.

“There are a whole host of factors that are affecting the industry right now,” said Todd Domer, vice president of communications for the Kansas Livestock Association. “They all go back to, we have a smaller cow herd and are producing fewer cattle than we have in years past.”

A variety of conditions contributed to that situation, he said.

Beefier cattle

“Number one is, our cattle are much more productive today than they were five or 10 years ago, or maybe 15. They’re producing more beef per animal than they did in the past,” Domer said.

Beef is sold by the pound, and there is demand for a certain number of pounds.

“So, if the same animal can produce more beef than it did in the past, it’s going to take fewer head of cattle. That definitely has an impact on the amount of slaughter capacity needed,” he said. “We’ve produced ourselves into this position. It’s a good thing, but it also produces challenges.”

International markets

Demand, and subsequent greater need for slaughter capacity, could increase if international markets, such as in South Korea and Japan, would open fully to the United States’ beef exports.

“We have improved our export situation, but we’re still not back to where we were prior to the first case of BSE at the end of 2003. So, 2003’s kind of the benchmark for U.S. beef exports. We hit a high there, but at the end of the year, it pretty much shut down our exports early in 2004,” Domer said.

BSE — Bovine Spongiform Encephalopathy — is a chronic, degenerative disorder that affects the central nervous system of cattle. Its common name, mad cow disease, is a combination of words that Domer would prefer never to see linked together again.

Cattle from Canada temporarily were banned from the United States in May 2003, when Canada reported an 8-year-old cow in Alberta had tested positive for the disease, which can be transmitted to humans through ingesting brains or spinal tissues of infected animals.

Shortly after the BSE incident in Canada, in late December 2003, the disease was diagnosed in a cow that had come from the Yakima, Wash., area.

Within hours of the announcement, Japanese officials said that imports of U.S. beef would be banned in that country. The following day, the ban had been extended to South Korea, Taiwan, Malaysia and Singapore, according to news reports. Outright bans have been lifted, but the restrictions that remain have been harmful to the beef industry.

The U.S. has found a total of three BSE cases, while in Japan, “the number of cases is in the upper 20s,” Domer said. “But they won’t let ours in, which makes no sense at all.”

Scientific findings say that cattle 30 months of age and under are not susceptible to BSE, he said; in cattle over 30 months, the tissues that are susceptible to carrying the disease (spinal tissue and brains) are stripped out so they are not consumed.

“That makes beef from any age cattle safe to eat,” Domer said.

Negotiators with the U. S. Department of Agriculture and the U.S. Trade Negotiator’s Office continue to emphasize that science should be the basis for trade agreements, not emotions or politics.

“Once these trade things become a political football, it’s really difficult to try to get it back to a scientific level,” he said. “I think eventually we will. It’s just taking a lot more time than it should have.”

Being limited in the beef cuts that can be sold in certain international markets has limited profits for cattlemen and also discouraged increasing production.

Greater value overseas

“It actually has a pretty big impact on profitability,” Domer said, because many beef cuts that would be purchased by overseas customers are not typically consumed in the U.S. Domer mentioned liver, tongue, and the “short plate” as examples. The short plate, located directly below the primal rib on a side of beef, accounts for approximately 9 percent of the overall weight of the carcass and is made up of rib bones and cartilage, according to the Web site for Victoria Packing Co., which has headquarters in Brooklyn, N.Y.

“Those items in the export market are worth much more than they are domestically,” Domer said. “If a processor doesn’t have the ability to sell those in the export markets, then they’re not realizing the full market value of those animals, nor is the producer.”

Domer provided a dollars-and-cents example: prior to the first case of BSE in the U.S., tongue was selling at $4.25 per pound, primarily because of export demand.

“Post-BSE, which would have been about a year later, it was worth 70 cents a pound,” he said. A tongue weighs about 3.5 pounds, making the per-head loss about $12.50, Domer said. A sale lot of 500 cattle would make $6,250 less in the U.S. than it would if the tongues could be sold overseas.

“This is just one example; this isn’t why the plant quit slaughtering. There are multiple factors at work here,” Domer said.

On the other side of the trade coin, Canadian cows now are being allowed into the U.S., though the numbers shipped in for processing have not reached the levels of the past. Canadian cows, however, could help processors fill the slaughtering capacity that now exceeds the supply of cattle.

Feed and energy

Feed and energy costs are having an impact, too, causing producers to react more cautiously.

“When you see prices where they’ve been the last several years, you would have an expansion in the cow herd, which would increase the number of cattle available to the processor,” he said. “… From a cost standpoint, there were disincentives there that are pretty much making it a wash in the producer’s decision.”

The situation has existed for several years, and Domer expects it to continue.

“That’s had an impact for the need for processing capacity,” he said.

Production of alternative fuels, like ethanol and some of the biofuels, have had an impact, too. “It’s definitely created a little more competition,” he said, adding that the livestock industry continues to be a larger consumer of grains.

The cost of fuel to transport cattle greater distances also adds to the production costs, and that, too, will create hardships for producers in this area.

Domer said that cattle producers were sending cattle to Emporia from “a fairly large radius —100 to 150 miles. … Those cattle are going to have to go somewhere else. The further away from (Emporia) you are, the more it’s going to cost, and that’s going to cut into your margin on those cattle.

“For some producers, that may mean the end of feeding cattle in a farmer-feeder situation,” he said. “You have to try to find the most efficient way to put pounds on those cattle, and adding a bunch of transportation costs to the bottom.”

Kansas Cattle Facts

Kansas traditionally has been a cattle state. From the bluestem grasses of Chase County to the feedlots and farmlands from border to border cattle have helped keep the Kansas economy humming since Texas ranchers herded thousands and thousands of them to Dodge City and other locations in the state.

The following facts from the Kansas Livestock Association and Kansas Age Statistics provide an overview of the value of beef to Kansas and its citizens:

• Kansas ranked third nationally with 6.4 million cattle on ranches and in feedyards as of Jan. 1, 2007.

• The cattle population is approximately 2.33 times the state’s human population of about 2.7 million.

• Cattle accounted for 60 percent of the state’s 2006 agricultural cash receipts.

• Kansas ranked first nationwide in commercial cattle processed, with 7.5 million head in 2006.

• Meat-packing and prepared meat products manufacturing provide employment for more than 18,700 people in Kansas.

• Kansas ranked second in finished cattle sent to market -- 5.4 million -- in 2006. That represents 24 percent of all cattle fed in the United States. Only Texas ranked ahead of Kansas.

• Kansas ranked third in total red meat production in 2006, with beef representing 6.1 billion pounds of the total.

• Kansas ranks first in hides and skins exported from the U.S. Sales totaled $382.2 million in 2006.

• Kansas has about 18.3 million acres of pasture and rangeland that are not suited for cultivating crops. Cattle utilize the grasses and plants efficiently and turn what could be wasted into essential protein and nutrients for human use.

The figures above are the most-current available from these sources.