Cost Challenges to Cow-Calf Producers

USDA’s Economic Research Service spelled it out last February.   In a quarterly report on farm income and costs, ERS said, “The current economic downturn has weakened beef demand, offsetting the positive effects of lower grain prices. Prices paid for feeder steers in 2009 are expected to remain almost exactly the same as in 2008.” ERS predicted cash receipts for cattle and calves in 2009 would move slightly upward to a nominal record high of $50.2 billion, but the weak demand would keep feedlots from increasing placements, and cow slaughter would continue to run above usual levels as producers cull cows to increase herd efficiency. In short, 2009 was expected—for the first time in a dozen years—to put many cow/calf operators in negative earnings territory.

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