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Extreme drought causing farmers in Canada and U.S. to thin their cattle herds

Extreme weather events and drought have beef farmers in Canada and the U.S. thinning their herds in near-record numbers.

Hereford cattle in pasture. Source - Keith Weller, U.S. Department of Agriculture. Public Domain
Hereford cattle in pasture. Source - Keith Weller, U.S. Department of Agriculture. Public Domain

Extreme weather events and drought have beef farmers in Canada and the U.S. thinning their herds in near-record numbers.

This could all lead to supply problems in the beef industry over the longer term, as farmers increasingly struggle with profitability amid the unpredictable seasons as climate change makes drought, flooding, and wildfires more common.

Desmond Sobool, the principal economist with Farm Credit Canada, says that for the past few years, dry conditions and droughts in both countries have prompted farmers to reduce their herd sizes by sending more cattle to slaughter, which has resulted in increased production of beef products, according to CTV News Canada.

Sobool says while this would normally drive cattle prices down, inflation and high demand mean prices are remaining elevated — and if there’s less supply in the future, that will drive prices up further, which could affect consumer prices as well.

As reported in the USDA Livestock, Dairy and Poultry Outlook (December 2022), roughly 69 percent of the U.S. cattle herd is in drought-stricken areas, a 33 percent year-over-year (YoY) increase, according to Farm Credit Canada.

The increased heifer slaughter has led to the largest contraction of the North American herd in a decade, with U.S. cattle inventory down 4 percent YoY as of January 1, 2023. The full contraction will be official when the count of Canadian cattle as of January 1, 2023, becomes available.

Feed costs are still historically elevated, but down from the record levels set last year but still very much a downside risk for producer profitability

Canadian production of feed grains, estimated to be almost one-quarter larger YoY by Statistics Canada, led to fewer imports of U.S. corn in the second half of 2022 and has helped manage costs. That’s been good for producers who grow their own feed but leaves more risk for those forced to buy.

In the United States, on average, per acre, net revenue from corn in the long-term projections is down in 2023 by $124 compared to 2022. Revenue is lower by $134, cost is lower by $11. As is usually the case in production agriculture, input prices may come down as commodity prices fall, but usually at a much slower, lagged pace, according to Farm Progress.

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We are deeply saddened to announce the passing of our dear friend Karen Graham, who served as Editor-at-Large at Digital Journal. She was 78 years old. Karen's view of what is happening in our world was colored by her love of history and how the past influences events taking place today. Her belief in humankind's part in the care of the planet and our environment has led her to focus on the need for action in dealing with climate change. It was said by Geoffrey C. Ward, "Journalism is merely history's first draft." Everyone who writes about what is happening today is indeed, writing a small part of our history.

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