As markets soar, farmers weigh cattle vs. crops

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April 17, 2011 - 7:00pm

In agriculture, it's called flex acres land that could be planted as pasture for cattle grazing pastures or row crops like corn and soybeans.

And it presents quite a choice these days.

In the last year, the price of a bushel of corn has more than doubled and is now flirting with $8. At the same time, the U.S. Department of Agriculture forecasts cattle prices to be 20 percent higher than they were last year.

You might think more farmers would be looking to flip their acres from cattle pasture to cropland. But that's not always the case.

Consider Ed Morse's 320-acre farm just outside of Council Bluff, Iowa. Morse is taking acres out of corn and soybean and putting it into pasture.

"With the cattle you're more on your own; you don't have those insurance policies on those cattle," he said. "In some ways it's an act of faith where you have to look out to the future a couple years and see this will be a paying proposition as well."

Morse is used to analyzing figures; he's also a law professor at nearby Creighton University in Omaha. He admitted it's tempting to switch to corn, but he'll stick to cows for now.

That's an unusual decision, according to agricultural economist Darrell Mark with the University of Nebraska-Lincoln.

"It appears like in key corn belt states like Iowa, Illinois and eastern Nebraska and South Dakota and parts of Minnesota, that we've seen a reduction in the number of cow/calf operations, cow/calf pairs, and correspondingly we're seeing an increase in acres being planted to row crops," he said.

In central Missouri's Calloway County, farm owner Margot McMillen said one of her tenants offered three times the rent to convert some of her pasture into row crops.
But she turned down the offer because of a commitment to her long-term plans and a desire to avoid knee-jerk decisions based on what commodity is hot.

"It's like gambling. You make the decision because of what your neighbors are doing, the buzz," McMillen said. "You really can do better. Become independent and think on your terms as to what's going to work for me."

It would be a challenge to leave the cattle market. The last three years has seen historically low cattle numbers. Combined with increasing worldwide demand, that's led to some of the highest cattle prices ever seen. The problem is that input costs including feed and fuel are rising as well.

Still, Sean McClatchey sees this as an opportunity. The 38-year-old grew up near the southwestern Nebraska town of Palisade, but lives four hours to the east in Lincoln.

"We've got to grow it to make it work," he said. "It's not like it was 30 to 40 years ago where a farm our size could support a family or two."

McClatchey's parents got rid of cattle when he was a boy. He now has 115 head and is slowly increasing his herd size. He's getting creative with his wheat crop this spring to save on input costs like feed and fuel. He'll graze on the wheat fields early in the growing season in a way that will still allow the wheat to be harvested.

"You're getting essentially more than one harvest per year off that ground, you can graze cattle in the fall if you get it drilled in time and in spring when it warms up you can graze them for 30 days," he said.

And keeping feed on the farm is one way to keep costs down.

But it'll likely be a while before herd sizes increase from their lowest point since the 1950s. It takes a minimum of 14 months for cattle to move from birth to the market.

While ag economist Mark predicts herd sizes will increase later this year, he doesn't expect it to drive down costs at the meat counter for quite a while.

"Retail prices that we see in the restaurant and grocery store do change, they don't change as often as we see at the farm level," Mark said. "So when we continue to see cattle prices going up to record levels each week in the first couple months of this year that doesn't mean you're seeing retail prices go up in the grocery store."

Meanwhile, farmers like Morse and McClatchey will try to figure out just where the profit tipping point will be.


Clay Masters also reports for Harvest Public Media, an agriculture-reporting project involving six NPR member stations in the Midwest. For more stories about food, fuel and field check out HarvestPublicMedia.org

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