Published: May 01, 2008 01:44 am            

Rising commodity costs impacting cattle industry

“Feed, fuel and fertilizer are the three things that have really taken the joy out of Christmas on this thing.”

Walker County cattle raiser Robert Bruner was not alone when pinpointing the three factors having a big impact on the Texas cattle industry.

The rising cost of feed, fuel and fertilizer and how to cope with those costs were among the issues Walker County and area ranchers and cattlemen discussed during a regional meeting Wednesday night at the Walker County Fairgrounds.

An estimated 80 people heard three industry officials cover a variety of occurrences keeping cattle prices from increasing.

The meeting is one of 12 being held statewide by Richard Wortham, executive vice president of the Texas Beef Council; Jason Skaggs, executive director of government affairs and public relations for the Texas and Southwestern Cattle Raisers Association Inc.; and Ross Wilson, president and CEO of the Texas Cattle Feeders Association.

Bruner, who is a member of the Texas Beef Council’s executive committee, said “we want to let people know that there is not a lot of money in this business right now.”

“A cow is the only thing that can eat grass and convert grass,” said Bruner, a 1962 graduate of Sam Houston State University. “We should have a cheap source of protein, but we are going to have to adjust and start thinking out of the box.

“We anticipate that the cow numbers in East Texas and Southeast Texas will probably go down, or at least hold where they are because of the high fertilizer prices and we are in an area that has been geared for high fertilizer. We used to buy it for $150 a ton, now it’s $650 a ton. We’re not going to be able to just fertilize pastures anymore.”

Cattle numbers in Walker County vary from 18,000 to 35,000.

“When you look at Walker County, you will see that about half of it is in pine timber and the other half of it starts to open up like in West Texas and other places,” said Bruner, who recently received the National Cattle and Beef Association Vision Award. “That is why we have a small amount of cattle.

“We are only using half of our county for cattle and the other half is in timber. When you get over to Navasota or into Madisonville, you see the whole county is open. They don’t have the timber like we do.”

With rising costs, Bruner said “I think you will probably find that the smaller cattle raisers are going to get out. That what it boils down to.

“I think it will be a real challenge for them to stay. I think they are going to get disenchanted with it if they are not real careful because of the cost. We built our cattle indusry on cheap fertilizer and it’s not cheap any more.”

“It’s tough to hang in here when you can’t make it work,” Bruner said. “If you don’t love this business, you are not going to stay long. That’s for sure.”

Pat Shields of Brazos Valley Livestock in Bryan said, “Cattle are not cheaper now than the historical average. I think they are above historical prices.

“I think we are still in a good market, but for what the value of a dollar is we are not near where we were at this time last year with the cost of fertizlier, the feed and the fuel.”

“As far as the actual cost per pound, we’re not extremely below where we’ve been the last couple of years,” Shields said. “It’s gonig to cost more to raise a cow and keep a cow for a year than what is has in the last several years.

“But, a lot of these cattle are a dollar higher than they were in ’96 when we got into the high feed situation. The price per pound is not bad now relative to where it has been in the past. We are off 25 to 30 cents from the top of the market a year or so ago, but we’re still all right.”

Shields said the Bryan auction barn is “not running near the amount of cattle from a year ago.”

“We are probably selling 65 to 70 percent of what we ran a couple of years ago,” he said. “This situation is not changing the price of cattle. Prices are about the same as they were two years ago. The problem is the other side of it — what it costs to produce it.”

Greg Goudeau, owner of the Navasota Livestock Auction Co., said, “The biggest challenges facing the cattle producers right now is the same thing that is facing most people right now — the cost of gasoline, the cost of diesel and the cost of fertilizer.

“All of those have an impact on the cost of cattle every time you move them or ship them somewhere. That is another cost added into the cost of the cattle.

“If you figure how much fuel it costs by the time you raise that calf until it goes to the plate, there’s a lot of dollars spent just in transportation.”

“The other big problem facing us right now is the fertilizer,” Goudeau said. “You go out and figure the fuel cost to bale your hay and what it will cost to fertilize your hay, and not even add your land cost. A lot of your hay from start to roll will cost $50 to $75, the actual cost before you get to put your first bale out.

“Fuel prices are having a big impact because your ethanol and your feed prices are so high. All of your commodities and your ingredients to mix feed. All of your feed prices have gone up greatly.”

Goudeau said “cattle prices have been holding steady the last few weeks. A lot of the cattle are still going to grass and some have gone to grow yards.”

He expects cattle prices to decline through the summer and fall “due to the condition of the calves and the high grain prices and fuel prices.”

“Until we get some relief with the commodities, we will have a ceiling on cattle prices,” he said. “If people have to spend dollars at the pump and they are not able to buy ribeyes and T-bones, they are going to cut back somewhere. Competitive meats are cheaper.

“They might go to chicken or pork. Any time somebody orders a chicken salad instead of a steak, it hurts our business.”

        

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