The global outlook for improved meat demand is promising but in North America the beef industry is flat lining.
“Export demand is positive, which in part is offsetting declining domestic demand,” said economist Bill Helming at the international livestock congress held in Calgary Aug. 10.
A grim economic picture has a direct impact on the meat industry so producers need to plan accordingly because live prices could plummet 30 percent between 2012 and 2015.
The U.S. experienced 10-year depressions in the 1800s and 1930s and he believes a third downturn is imminent.
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The U.S. is also going through a demographic change.
There are 75 million baby boomers and 10,200 of them turn 65 every day. That will continue for the next 20 years. Those aging boomers spend less on all consumer goods, including meat at a time when making a living as a beef producer is becoming more costly and volatile.
Global meat demand outlook is positive but North American producers face volatile currency and higher feed costs, said Jean Philippe Gervais of Farm Credit Canada.
“Prices are moving up, which is good, but profitability is not what might be expected because of costs.”
In the last 18 months, corn appreciated faster than barley, which ultimately made feeding cattle more competitive in Western Canada.
Feed prices do not entirely determine profitability but they are a good proxy for profit margins and all the costs incurred on the farm.
“When you look at the cattle to barley ratio, they look pretty good as to what profits will be,” he said.
He sees a bullish cattle market and promising exports, but the extra beef the world needs will come from places like Brazil, Australia and India.
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