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Beefs and Beliefs

Younger Beef Producers Are The Ones Exiting The Business

Younger Beef Producers Are The Ones Exiting The Business
Ag census data shows middle-aged producers have been leaving the beef industry while the "old men" still hang on.

 

The second great depression now gripping our nation appears it could be thinning dramatically the next generation of beef producers.

An analysis of the latest census data by Nevil Speer, a Western Kentucky University professor who frequently writes for our sister publications Feedstuffs and BEEF magazine, shared some rather shocking data. Speer found the majority of people exiting the beef business were operators between the ages of 35 and 54.

This goes against conventional wisdom, which suggests much of the cow liquidation of recent years has been among older producers ready to "retire" from the business.

Instead, Speer says, the bulk of the liquidation has happened in the heart of the age distribution, arguably among the younger producers who should be building their herds for the future.

Further, Speer also dug out data showing the bulk of the liquidation has been among smaller herds up to 50 head. That's no surprise but when combined with the data about younger operators leaving the business it seems a real riddle.

In the past 20 years the cow/calf sector has endured a decline of nearly 175,000 operations, of which 141,000 were of the size classed 1-to-49 beef cows.

Further, if you look at Speer's chart on herd consolidation you'll see liquidation of these smaller herds has slowed in the very time frame we're examining -- the second great depression from 2007 until today.

Whatever the causes, whether these younger producers sold out at high prices and plan to re-enter at a later date, or whether they are gone for good, it appears the near future of the beef industry is in the hands of people 65 years and older. As Speer notes, this is more than 40% of all operations.

The effects of the economy on all this are uncertain. What is certain is that the Gross Domestic Product from 2009-2013 is lower than during the 10 years of the Great Depression. Kansas City-based economist and consultant Bill Helming recently revealed this in one of his newsletters. He said the U.S. Bureau of Economic Analysis lists GDP growth from 2009-2013 as 1.22%. For 1930-1939 the GDP growth rate was 1.32%.

These numbers compare with a 3.82% GDP growth rate 1940-2007, which includes 11 recessions. For further comparison the GDP growth rate 1999-2008 was 2.59%.

We also currently have the highest real unemployment rate of all these time frames and 92 million Americans estimated not to be in the workforce as of April 2014. Plus the main type of new jobs being created in our economy are part-time and low-wage.

Perhaps most important, real median household income has declined by 6.5% since 2009, according to data from the BLS, the Federal Reserve and the US Department of Commerce.

Clearly, it's not easy living in our current economy, so liquidating assets could be a real survival tactic for many families of child-rearing age.

In the beef industry we're not getting any younger and we're not getting any more in number, either counting cattle or of people. I wish somebody would look into his or her magic ball and tell us where we're headed.

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