Forage and Hay Considerations

Chris PrevattUF/IFAS Range Cattle REC

Beef Cattle and Forage Economist

Andrew GriffithUniversity of Tennessee

Extension Livestock Economist

Southern Risk Management Education Center has partnered with the Southern Extension Economics Committee to provide resources to help farmers and ranchers manage their operations during these difficult times resulting from COVID-19. The collaboration represents the Southern region Land-Grant University extension faculty, primarily composed of members from agricultural economics departments across the region.

Forage and Hay Considerations

COVID-19 Pandemic and Cattle Markets

Beef Cattle Market Price Projections –Uncharted Territory

Major Changes in Domestic and Global Consumer Beef Demand

Major Disruptions in the Supply Chain – Both Inputs & Outputs

Consumer and Governmental Reactions to COVID-19 will likely affect our future way of producing beef.

Developing a Plan for 2020• Does your Plan provide for adequate

Forage, Hay, and Feed Supplies for 2020-2021.

• Will there be input shortages?

• When the next drought happens will you be prepared?

• Potential for Drought Conditions in 2020?

$857

0

100

200

300

400

500

600

700

800

900

1000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

$ Per Cow

ESTIMATED AVERAGE COW CALF COSTSTotal Cash Cost Plus Pasture Rent, Annual

Data Source: USDA & LMIC, Compiled by LMICLivestock Marketing Information Center

02/05/20

G-NP-3610/29/19

0

10

20

30

40

50

60

May Jul Sep

Percent

SOUTHEAST REGION RANGE AND PASTURE CONDITION

Percent Poor and Very Poor, Weekly

Avg. 2013-17 2018 2019

Data Source: USDA-NASS, Compiled & Analysis by LMICLivestock Marketing Information Center

SE Hay Supply Situation• 2019 Late Summer/Early Fall Drought…

which caused Hay supplies are tighter in the southeast due to poor hay production in the late summer and early fall

• Less Hay Acres• Decline in Hay Production

G-NP-1901/11/20

100

110

120

130

140

150

160

170

180

190

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

Mil. Tons

US ALL HAY SUPPLYCrop Year

Production May 1 Stocks

Data Source: USDA-NASS, Forecasts by LMICLivestock Marketing Information Center

09/17/19

0.85

0.90

0.95

1.00

1.05

1.10

1.15

1.20

May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr

Index

SEASONAL PRICE INDEX – OTHER HAY2009/10-2018/19

Max. Index Avg. Index Min. Index

Data Source: USDA-AMS, Compiled & Analysis by LMIC

Livestock Marketing Information Center

Forage EconomicsBreak out your Costs and Focus on the BIG ITEMS

Main Forage Costs

Annual Forage System• Fertilizer• Seed• Planting Machinery and Equipment (Variable and Fixed)

Perennial Forage System• Fertilizer• Prorated Share of Establishment Cost

Forage EconomicsOther Forage Costs

• Lime Land Rent• Lime Application General Overhead• Weed Control• Weed Control Application• Hired Labor• Soil Tests• Forage Tests• Miscellaneous Expenses• Interest on Operating Costs

“Most” SE Cow-Calf Producers

Are Focused On

• LET’ER RIP• Keep Heifers• Give Cows Another Chance• Put More Weight on Steers

Cow-Calf Producers Need to Focus On:• Survive Then Thrive

•Continue to do the things that got you here

•Wage a war on forage and feeding costs (focus on mgt. & resources)

• Prepare for the next drought…

Cattle Prices are Expected to Decline,What Can Producers Do?

1) Search for ways to lower unit cost of production (such as more efficient use of inputs, reduce wastes, scrutinize capital purchases, debt, etc.)

2) Identify opportunities to enhance cattle market prices (improve quality and quantity, identify economical weights, etc.) in order to achieve higher levels of profits during the bottom of the cattle price cycle (2019 – 2021)

Thank you for your attention.I hope you have a profitable 2020!