Beef producers are not the only ones benefitting from record high beef prices.
According to John Freitag, executive director of the Wisconsin Beef Council, dairy farmers are beef producers, too.
"Between 25% and 28% of the beef in this country comes from dairy," Freitag says. "In Wisconsin, 80% of our beef comes from dairy steers and dairy cows that are culled."
Several years of drought in Texas and other western states followed by a widespread drought that gripped most of the nation in 2012, forced cattle ranchers to send cattle to market early and in extreme cases liquidate their entire herd because they didn't have enough feed. That combined with a couple of harsh winters on the Plains which killed thousands of cattle, in 2012 led to the smallest beef herd in the United States in more than 55 years.
Three years later, the national beef herd is growing, but slowly, providing an opportunity for beef and dairy producers to cash in on record high prices for their livestock.
Doug Rebout of Janesville farms 4,300 owned and rented acres with his brothers Dan and Dave and his mother Mary Jo. The Rebouts milk 240 Holstein cows. They also raise their dairy bull calves and sell them as Holstein steers.
"We always raised some steers and then the neighbor quit raising beef cattle and we starting renting his facilities about 15 years ago," Doug explains. "We sell 200 Holstein steers per year."
He says he sells most of his steers at Equity Livestock in Monroe when they weigh between 1,500 and 1,550 pounds and are usually 17 to 20 months old.
Doug says they are receiving about $1,800 per steer and $1,000 per cull cow -- nearly double what they were bringing eight years ago.
"This has provided a nice additional revenue stream," he says. "My dad (the late Roger Rebout) was a big believer in diversification. We have dairy, beef and cash grain. One or two of those are usually down -- you need a revenue source that can pay the bills."
Rebout says he and his family have automated calf raising on their farm to make it easier to handle feeding about 250 dairy heifer and bull calves per year.
"When my brothers' kids were younger, it was their job to feed the calves," says Doug. "But they grew up."
The Rebouts built a calf facility to handle all of their calves from birth to 4 months old. Calves are divided by age and kept in six pens. They have ample room to move around in the group pens which are bedded with plenty of straw to keep them clean and dry. Calves from birth to 2 months old have round-the-clock access to two self-feeding stations where they drink milk replacer.
"We wean them at 2 months old but we keep them in group pens in the calf barn until they are 4 months old," Doug explains.
Calves are then moved to an-open front barn for larger calves where they are kept in group pens. At 6 months old, steers are separated from heifer calves and are moved to a barn where they stay, grouped by age, until they are about a year old.
"Then we move them to an enclosed steer barn that we lease from our neighbor," Doug says. "We finish them on a cemented lot with access to a loafing shed."
Doug buys some 400-pound steers from Reynolds Livestock in Dodgeville to fill in groups. He pays about $2.35 per pound.
"Sometimes I need a few 800-pound steers to fill in a group," he says. "We used to ship out 300 to 350 steers per year, but when grain prices got high in 2007, we decided to not buy any feeders and just raise our own," Doug says. "We haven't increased our steer numbers even though grain prices dropped in 2013 and beef prices have gone up. The facilities we rent from our neighbor are older and I don't want to over pack them."
When the steers are about 17 to 20 months old and weigh between 1,500 pounds and 1,550 pounds, he loads them into a 24-foot goose-neck trailer and takes them to Equity Livestock in Monroe.
"I can haul 11 at a time."
Doug is proud of the beef he and his family produce.
"If you put a ribeye steak from one of our corn-fed Holstein steers next to a ribeye steak from a corn-fed beef breed, you can't tell the difference," he says. "And they taste the same, too."
In addition to marketing his steers at Equity, Doug has quite a few customers who buy quarters and halves of beef to fill their freezers.
"I take steers to Hoesly's in New Glarus, which packages them in shrink wrap, and to Johnstown Food Center east of Janesville, where they use paper wrap," he explains. "My customers have different preferences. They call the meat market and tell them how they want the meat cut. I charge them market price for that day plus a trip charge. It's a great deal for them and me too."
While raising dairy beef is a profitable venture for the Rebouts and other dairy producers who have the feed, facilities and the time to care for dairy steers, Freitag says raising dairy beef isn't for everyone.
"If you have low-cost facilities, you can make good money at this," Freitag notes. ""Dairy bull calves are selling for between $450 and $550 at just a few days old," he says. "I have had some dairy producers tell me they are selling dairy bull calves for as much as $600. They don't have to deal with the risk of the calf dying and many don't have the space or the feed to raise them."
Wisconsin isn't the only state raising dairy steers.
"We have a lot of Holstein steers leaving the state and going to Iowa, Kansas and Nebraska," says Freitag. "Some of them are as young as a day old."
So how long with high beef prices last?
According to John Freitag, executive director of the Wisconsin Beef Council, it will probably be a couple more years before prices for beef decline.
"I think it will be 2017 before we see beef prices get back to where they were," Freitag says. "Some beef producers are saying they don't want to see beef prices drop -- they want to try and keep the beef supply growing more slowly."
But Freitag says a lot of them are keeping back heifers and expanding their herds.
"And if they have the feed, they're going to increase their herd size."
Freitag says beef exports are declining (due to the high dollar) and imports are increasing.
"We're importing lean trim from Australia, New Zealand and Argentina," he explains. "They're selling the middle cuts -- the steaks and roasts -- and they're sending us the frozen lean trimmings. We're not importing steaks. Our consumer doesn't prefer 80/20 (80% lean vs. 20% fat) hamburger anymore. They want 90/10 or 93/7. They want lean beef.
"They mix the lean beef with the 80/20 ground beef and that gives us the lean hamburger that consumers want," he says.