Pandemic creating cattle industry chaos
As with many other sectors of our economy, the COVID crisis hit the hospitality industry particularly hard. Not so the big box home improvement stores – they've experienced unprecedented growth.
Perhaps Charles Dickens got it right when he penned, "It was the best of times, it was the worst of times." Perspective is everything, apparently, even during economic upheaval.
Nowhere is that truer than in the chaos called the beef cattle industry.
"Today's the worst. Today's the lowest of the low," lamented Will Homer. Homer, CEO of Painted Hills Natural Beef, in Fossil, explained that the current problems are tied directly to COVID and the effect it, and media-generated fear, have had on the large processing plants. Shut downs — he uses a Tyson plant in Pasco, Washington — created a backlog of slaughter-ready cattle. In the industry's vernacular, there's a lack of "shackle space."
With a weekly kill rate of 500-600 head, this is a big problem for Homer.
"Suddenly I went with a reduced kill — to half — and now I've missed a week, so I'm behind about 2,500 head of cattle," he said. "You can hold cattle up – you don't have to euthanize them – but we're behind, and we will be behind."
But now with a glut of cattle, prices have tanked as well. According to Markets Insider, the live cattle price per pound was $1.27 at the first of the year. By the end of April it dropped to $0.90.
Not so with retail, according to Homer.
"Beef prices are off the chart. Wholesale trim used to be (in the) $1.80/$1.90 range. Now it's over $5. The reality is there's not enough."
Local processors are reaping the benefits.
"Our sales have probably almost tripled," said Bob Mehan, owner of Cinder Butte Meat Company, a custom butchering operation in Redmond and Prineville. The company is not USDA-certified, meaning it can process meat but only sell it on their premises, not to a retail customer.
"Everybody's scared they're not going to get any beef, so everybody and their brother are looking for beef. The sale barn's (Central Oregon Livestock Auction in Madras) got a lot of the backyard little ranchers who're all there trying to buy something to get it butchered. Then they're calling us, 'Hey. Can we bring a beef in?'"
Mehan said his crews usually work three or four days a week, but now they're getting overtime every pay period — everyone, not just the cutters.
"We're booked. We're not normally booked this time of the year until the fair starts."
Crook County is still cattle country. In 2017, according to the USDA Census of Agriculture, 299 operations sold 33,800 cattle/calves, worth $30.8 million — about 75 percent of the value of all county agricultural products. The current market conditions will ripple throughout the local economy.
Joe Papineau manages the Shotgun Ranch, a traditional cow-calf operation near Post. Calves are sold in early summer — via video auction — to buyers to finish for slaughter. Butcher cows are taken to the auction in Madras. With a processing bottleneck there are more calves than there is space in feedlots.
"It's not very helpful when a guy's trying to market his calves pretty quick," he said, "and/or you have some old cows you need to get rid of and you want to take them somewhere. It's almost not worth taking them anywhere because you're not getting anything for them."
Papineau said that if the low prices continue into the summer it could put them in a real bind.
"We sell our calves right off the cow; we don't wean them. So, if I was to keep them, that means I just doubled my herd in the fall when I'm looking for fall feed to keep the herd that I have."
With no more land available, they could sit on them for awhile and feed hay, hoping prices improve. But there's no guarantee and that could be a costly proposition.
A slightly different business model is working for the Blue Mountain Ranch — for now. Sarah Teskey of the Paulina-based ranch said they started the process of selling beef directly to consumers many years ago, and just last January started to develop an online site for customers to order.
"We were almost ready to launch by March when the economy took a dive," she said. "So we were blessed to have that going and because of Corona and (consumers) fear of where their food is coming from — Is there going to be enough meat? — our sales have increased over the last few months."
Teskey said they primarily sell beef by the quarter, half or whole. In effect, purchasers are buying a live animal for personal consumption, and so it can be processed at a non-USDA facility. A "handful" of animals are sent to Butcher Boys — a USDA facility in Prineville — to sell individual cuts, boxed beef and ground beef.
"We were already scheduled for processing at Butcher Boys, and were able to get extra kill dates," she said. "So, for this year we were able to meet what we needed as far as harvesting and processing."
She likes that their direct sales make the consumer more aware of buying and supporting local, and to see something less traditional than just going to the supermarket work.
However, this only accounts for 5 percent of their calf sales, Teskey said, 95% are sold to be finished on grass or in a feedlot, normally contracted in July and shipped in December.
"So, we're in kind of limbo right now as what that's going to look like. We didn't have any fat cattle ready to go somewhere and then there wasn't a place for them to go, like a lot of people are dealing with. We're kind of in prayer and positioning as far as what are we going to do. If prices are down, or if there's no feedlots taking cattle, then we'll have to decide what our game plan is.
"It's not real certain."
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