Anyone can become a Texas cattle rancher
PEOPLE from all over the world send Jay Gray money to fatten cattle. Anyone can become a Texas cattle rancher, by contacting Gray, general manager of the Graham Land and Cattle Co feedlot at Gonzales, Texas for 15 years.
He aims to make $50 a head for customers, but is realistic enough to describe beef as a risky investment, and says you could lose $150, or make $150 a head.
Nearly 10 million cattle are going though thousands of feedlots at any time, to keep the vast US beef market supplied.
Just like the stock exchange, feedlot cattle would have lost you money in the last two years — but not nearly as much.
At least, with cattle, despite the recession, you can expect to come out with 83 or 84 cents per lb of liveweight in Texas, adding up to over $1,000 for an 18 to 24 month fat animal out of the feedlot.
“But a lot of people in between make money,” says Tim Kinnesik of the Cattle Farm Credit Co which finances local beef operations.
Gray says a lot of the investors who own the 37,000 cattle he is fattening never see them. However, custom feedlots like his get much of their business from suckler farmers (called cow-calf operations in the US), who send their young cattle to a commercial feedlot to be brought to slaughter weight.
Feedlots specialise in high concentrate finishing rations, often employing nutritionists and manufacturing their own feeds.
Compared to beef production in Ireland, a number of advantages are apparent.
Feeders have the benefit of the growth hormone implants which are banned in European beef production. They are used in nearly all the Graham feedlot cattle.
Without implants, says Gray, most Americans would be eating chicken and pork, because they wouldn’t be able to afford beef.
“Implants reduce our production cost 20%,” says the feedlot manager.
Banning hormones in the US would cut beef production by 20%, thus affecting US land use fundamentally, he warns.
Big US cattle investors can also trade in options on the future markets to protect their investment.
Nevertheless, the glory days of the industry seem to be over.
Iowa State University says cattle feeders lost an average of $120 per head in 2008, and $100 in the first seven months of this year.
The industry thrived from 1925 to 1975, 50 years of growing demand for beef in the US.
Since the mid-1970s, weakening demand and lack of profitability has cut the suckler herds which provide the key raw material by 28%, from more than 130 million head to about 94 million today.
An increase in demand from the late 1990s through 2004 now looks like a blip in the long-term decline.
KANSAS is a big beef state, and industry sources there estimate that the break-even price for a calf producer has jumped from $100 in 2006 to more than $140 this year — but prices are still falling.
However, the downturn and destocking are now coming to the point where tight supplies could set the stage for a cattle price rebound in late 2010 or into 2011.
For Gray, the low point was probably January 2008, when what he calls the “crazy ethanol” business pushed feed costs to a peak. Those costs have reduced since then by two thirds, and a bumper harvest is driving down maize future prices.
Things look better now for this Texas cattleman. His feedlot is full to capacity, because one of the worst droughts ever has hit south central Texas, where more than two million beef cows supply 6% of the nation’s beef calves.
About 30 miles from the Graham feedlot, out of state buyers have been descending on the Seguin Cattle Co auction sale, snapping up bargains, as south Texas ranchers liquidate herds on their parched lands which have got only a few inches of rain since last September (and most of that came in the past month).
Ranchers whose grass has burned up are selling off herds that took years to assemble.
This disposal of Texas beef cows is eating into the US beef cow herd — one of the reasons why a strong beef market is predicted in 2010. The young cattle go into local feedlots, if they are over 600 lbs, or are trucked to states like Missouri which have grass for extra feeding.
Numbers going through the Seguin auction have risen from the normal 750 to 800 per week to 1,250.
A notice at the cattle sale door advertises round bales of hay for $60, which explains why ‘small’ ranchers (who may have many hundreds of acres, but can carry only 10 to 15 beef cows in the dry south Texas climate) can’t afford to buy feed, and have to sell off cattle onto a depressed market.
In early August, cow and calf pairs were selling for $750, good quality baby calves of 100 lbs were $125.
It’s a two or three year drought, reckoned by local people to be the worst since 1956.
Out on the ranches, flamethrowers are being used to burn the needles off the prickly pear cactus. Hungry cattle stand around until these desert plants cool down, and then feast on the now thornless, highly palatable cactus.
But the young cattle being sold off cheap from drought stricken farms, and today’s reasonably strong US beef prices, hold out the prospect of profits for those who buy for the feedlots.
The Graham feedlot specialises in raising younger cattle, until slaughter at 18 to 30 months.
“People from all over the world send me money to feed cattle,” says Gray. Customers are refused only if the pens are full, their cattle are of poor quality, or the clearing house doesn’t like their credit rating.
“We do not limit pen sizes, so if you have one head or 10,000 head, then we can feed them for you,” says Gray.
In the feed mill beside the feedlot, his staff mix the cattle eat. The main ingredient is steam-flaked maize. Others include wet brewers grain, rice bran, and cottonseed hulls, molasses, wet brewers grains, and condensed solubles (a 35% protein liquid supplement).
Hay would be included but for the south Texas drought; instead another local product, the hulls of the seeds removed from the cotton crop, provide fibre (they scarify the rumen for better rumination, according to Gray).
For a typical 800 lbs steer, feed conversion of 6.4 or 6.5 pounds of feed dry matter per pound of gain is sought, but it ranges from 5.5 to 7.0, due to the wide variety of breeds and ages among the feedlot’s 37,000 cattle.
Slaughter target weights are 1,200 lbs for heifers and 1,300 lbs for steers.
Cattle are fed twice per day. Feed trucks go up and down the hundreds of rows, guided by satellite signals to each pen, where a computer on the truck allocates the pre-programmed amount of feed appropriate for that pen.
BUT the cowboy on horseback still plays a major role. All feedlot cattle are moved from pen to pen as required by riders on horseback. They also ride through the pens daily checking for sick cattle. “Selling feed is how we make money, so we are very interested in keeping them alive,” says Gray. Cattle in the pens are allocated a foot of feeding space, and 70 square feet of area, plus 30 square feet of shade from the fierce southern Texas sun. They drink three million gallons of water per day.
Several of the pens of cattle here are owned by Texas sport hero Nolan Ryan, nicknamed The Ryan Express for his record breaking 5,714 strikeouts as a major league baseball pitcher, over a record 27 seasons. He is now heavily involved in the beef industry, from ranching through to branded beef retail.
Ryan has purchased a string of ranches in south Texas. However, the sport star’s love of cattle ranching isn’t shared by too many of the up and coming generation.
Finding a next generation to carry on farming is a problem around the world.
In Texas, farming has to compete with another popular rural pursuit — hunting.
Texas leads the US in production of cattle and calves, horses, sheep and goats, cotton, hay, wool and mohair. But the coming generation seem more interested in hunting — hardly surprising when they grow up with the hunting tradition, and about six million people per year participate in fish and wildlife recreation in the state, supporting 139,404 jobs.
* Stephen Cadogan represents Ireland on the Executive Committee of the International Federation of Agricultural Journalists, and was in Texas for the 2009 IFAJ Congress.
