Beef production in U.S. expected to continue growth

DENVER — U.S. beef production is expected to continue its growth over the next two years, and beef packers will handle the increase by ramping up production hours instead of adding new facilities.

That’s the prediction of CoBank’s Knowledge Exchange Division, the research arm of CoBank that tracks performance of various industries across the country. CoBank is a member of the Farm Credit System, a nationwide network of banks and retail lending associations chartered to support the borrowing needs of U.S. agriculture. Its headquarters is near Denver.

The bank’s prediction is good news for the beef industry in Colorado, especially Weld County, which is home to the largest cattle feeder in the nation and the No. 2 packer in the nation.

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JBS Five Rivers Cattle Feeding, Greeley, is the largest feeder, and JBS Beef Co., also Greeley, is the No. 2 packer behind Tyson Foods.

Weld County ranks among the largest agricultural counties in the nation and is in the top 10 counties with numbers of cattle on feed.

CoBank predicts that cattle herds will increase over the next two years and beef production will increase 3 percent to 5 percent in 2018 and 2019. Strong profitability and years of excellent pasture conditions nationwide spurred the expansion, the report said.

Peak inventories of cattle occurred in 2001 and declined, for the most part, until 2014 when growth re-started. Trevor Amen, animal protein economist for the bank, said 2014-2017 has seen “the most aggressive three-year start to any expansion on record. Recent slaughter numbers and the cattle on feed mix indicate the expansion rate is slowing, but barring any significant export market disruptions or weather events, expansion will continue through the end of the decade.”

The USDA estimates the 2017 calf crop will top 36 million head, an increase of 2.9 percent over 2016.

Beef demand has exceeded expectations so far in 2017, the report said, which has supported beef prices. Per capita consumption of beef is about 55.7 pounds, according to the National Cattlemen’s Beef Association.

Strong beef exports, which also support prices, are on pace to increase 7 percent to 9 percent in 2017 and 5 percent to 7 percent in 2018. Top markets for beef exports are Japan, Mexico, South Korea and Canada, according to the U.S. Meat Export Federation.

“Export demand has been strong,” Amen said. “Combined with decreased imports, we’re experiencing a more favorable net trade balance and keeping domestic per capita supplies in check while supporting prices levels.”

Amen said the industry will continue to focus on export growth and domestic consumption. Dependence on exports, however, will increase risk given the current climate to rewrite trade agreements.

The report said slaughter capacity at U.S. plants is sufficient to handle the projected volumes without expansion of facilities. Adding production hours on Saturdays, for example, are among the capacity solutions available to most packers. “The biggest potential concerns as the industry drifts closer to maximum packing capacity are labor availability and temporary plant closures for unforeseen maintenance issues,” Amen said. Packers likely will increase automation and robotics to reduce risk of labor shortages, the report said.