September 15, 2009

In the future, cattle industry may make a move to the Midwest

WEST LAFAYETTE, Ind. - Cattle producers in the Eastern Corn Belt should grab their boots. Challenges in the West mean opportunities for increased production and niche markets here, said a Purdue University Cooperative Extension Service beef management specialist.

Historically, livestock production in the state is down, but corn and soybean production is up, said Ron Lemenager, who believes the opportunities outweigh the challenges.

There are some challenges that cattle producers across the country face, such as lower beef demand domestically and globally, Country of Origin Labeling, cap and trade legislation, environmental policy and animal welfare issues, Lemenager explained. Other challenges are specific to a region.

In the Eastern Corn Belt, cattle producers have to deal with mud from an environmental standpoint, and weather plays a role in housing, he said. "If we raise cattle here, we’ve got to have some kind of shelter and facilities associated with that."

However, with the latter challenge comes opportunity, Lemenager pointed out.

"One advantage is that our animals are in relatively close proximity," he said. "We can run a cow-calf pair on an acre or an acre and a half.  If you go out west it may take 15 acres to run a cow-calf pair.

"Because the animals are within closer proximity to handling facilities, it gives us the opportunity to use newer technologies like estrous synchronization and artificial insemination. These technologies will allow producers to capitalize on the genetic potential of animals."

Another reason why Lemenager sees potential for Indiana and other Eastern Corn Belt states is the production of grain, which is fed to the cattle.

"Adding a little bit of starch in the diet early allows us to finish our animals a bit quicker than other areas of the country and also produces a more tender, higher grading product," he said.

Lemenager acknowledges the lack of processing facilities in Indiana but said there are several within a reasonable driving distance, which allows producers to shop around for the best price. Indiana also has a good interstate highway system, which gives producers easy access to markets.

Another major factor that will help the cattle industry in the Eastern Corn Belt is access to water.

"Down the road, water is going to be a huge issue nationally," Lemenager said. "Agriculture is going to lose the battle over who owns and controls the water. It's going to be used for human consumption and municipalities.  Areas of the country that use underground water resources for irrigation, like the Ogallala aquifer, will be shoved out from a cost perspective and from a use perspective.

 "This will force producers to think about where they can grow crops, and here in Indiana we can grow crops because we’ve got rainfall. One can argue about how good the humidity is in the middle of summer, but with that humidity comes the ability to grow corn."

As the demand for food increases globally, Lemenager believes that Indiana’s nonproductive land, or land in conservation reserve programs and highly erodible land, will be needed.

"There are acres that we don’t want to drag a planter through," Lemenager said. "If we're going to bring them back into food production, one of the things we can do is put the land in grass and let cows harvest the grass and produce a high quality protein product."

When looking around the state at potential locations for a more intensive operation, Lemenager said producers should consider the western and southern parts of the state, where the land is more rolling and there is less population.

"I don't see much consumer or neighbor resistance to running cows on pasture," he explained. "The fact that we can grow forages and we've got byproduct feeds coming out of the corn and soybean processing industries with corn-gluten feed, soybean hulls and distillers feeds, tells me opportunities do exist."

However, success doesn't just happen - producers need to work at it, he emphasized.

"It's a business and we need to be planning it. The days of 'If we increase production, we make more money,' are gone," he said. "It's a matter of optimizing production and maximizing profit potential. To do that you have to understand your costs."

Lemenager said it's important to understand the cost areas where a small change can be made that results in a huge impact to profitability.

"One area to examine is feed costs," he said. "Feed costs are roughly 65 percent of the cost of running a cow each year, so that's a big-ticket item."

Lemenager encourages producers to develop a business plan; look at the cost of owning machinery and weigh that against custom harvesting or purchasing hay; maximize the number of grazing days cows are on grass and minimize the number of days harvested and purchased feeds are used; and last, but not least, understand the customer.

"It's a matter of marketing your cattle, not selling your cattle," he said. "Selling is taking what somebody is willing to give for a product, while marketing is understanding what the customer wants and what they're willing to pay more for, and then producing that product."

Writer: Julie Douglas, 765-496-1050, douglajk@purdue.edu

Source: Ron Lemenager, 765-494-4817, rpl@purdue.edu

Ag Communications: (765) 494-8415;
Steve Leer, sleer@purdue.edu
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