RED DEER – In 1965, the money earned on the sale of six steers could buy a new pickup. In 1999, six steers can still buy that 35-year-old truck but they can’t buy a new model because inflation has eaten away the price of cattle.
“Prices for cattle are not that much different today than they were in the past, but your expenses are very different,” said trade researcher Gary Brester of Montana State University.
When prices are adjusted for inflation, Brester’s figures show the real price for 1,100 to 1,300 pound steers Nebraska direct has dropped steadily since 1970.
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“We see a very strong downward trend in fat cattle prices,” he said at the recent Alberta Cattle Feeders Association annual convention in Red Deer.
The feeder cattle market has followed the same downward trend. The greatest price dive occurred in 1996.
In fact, the inflation-adjusted prices for beef, corn, barley and wheat are all declining and will continue to fall, said Brester.
More economical
Technology is one reason producers have been able to produce more raw commodities for less.
In feeder cattle production, it is now possible to wean 600-pound calves in the fall because of improved genetics, health and nutrition.
Fewer cows can produce heavier weight calves at lower costs than 20 years ago. However, many Americans blamed the influence of imports for the low prices.
But Brester said imports were not responsible for eroded farmgate prices.
In 1991, the U.S. imported record numbers of live cattle and beef, which people complained were ruining the U.S. market.
However, later in the decade the market saw record imports alongside record domestic prices.
The U.S. needed more fattened cattle because it had excess slaughter capacity. It imported more feeders from Canada and Mexico.
At one time, Americans imported large amounts of beef from Australia and New Zealand, which landed in California. But it wasn’t until Canadian beef, which enters the U.S. through Washington and Montana, started to replace offshore products that more producers began to notice the imports.
The U.S. is expected to continue as a net importer of Canadian beef with a $1 billion trade deficit with Canada. By 2003, the U.S. will likely export the same quantity as it imports. It has become a powerful proponent of increased free trade.
Brester added that North America should back off on the beef hormone battle with the European Union.
The real market opportunity is in the Orient. The EU produces enough of its own beef and if Canada and the U.S. continue to push for acceptance, new customers like Japan may balk and question the quality of the beef from North America.
