Date: 8/16/2011

Title: Beltway Beef Audio News - August 16, 2011

According to NCBA Executive Director of Producer Education Tom Field, producers liquidate their cattle inventory when the “burden of accumulated aggravation” becomes too heavy. He said the sources of aggravation are many, including the current “unfriendly regulatory environment” and a government that seems “intent on creating barriers to free enterprise.” He said weather, such as the current U.S. drought situation, simply speeds up the decision-making process for producers.

“Drought on a widespread scale does two things,” said Field. “One, it limits the opportunity for producers to have choices on how they manage their cattle. Secondly, at some point and time, it creates a cost structure to where breakevens aren’t even possible in these historic high markets and liquidation becomes an option.”

Field noted that producers have done very well at creating higher per animal productivity levels, which he says has offset herd losses. He also believes that herd expansion will occur in regions not affected by drought, which will also offset herd losses in drought inflicted areas. Once conditions improve, Field is hopeful producers who were forced to liquidate will return to the business.