It has been a good three year run to own cattle, reports Illinois Beef Association Checkoff Division Vice Chairperson Thad Tharp:
“There are some cattle out there bringing close to five bucks and that is just unheard of. Fat cattle are still very, very strong at the cash market. The feeder cattle are getting so high to this point that when you look at cash flows on them going into the spring on a backgrounding operation, that cash flow doesn’t look as good compared to what it has been doing for the last three years.”
The trouble with cash flow on the feeder cattle being not as strong next spring is that cattle farmer is playing with three times the dollars per head compared to three years ago, informs Tharp.
“Three years ago, when I started buying feeder cattle, my average cost per head was right around $890 a head, roughly. Today, to go buy that same animal it is going to be about $2,400 a head or more. So, the cattle guys are playing a dangerous game. Profits have been very good, we have a lot to be thankful for, but the trouble with high beef prices is it is going to drive consolidation in our industry.”
With the current high prices of cattle, those farmers looking to retire are cashing in and selling off their herds, but Tharp states the cost of entry for the next generation is far too high to make it work.
“It’s made people a lot of money, but how do we get the young man back into the game?”
