Nationwide drought drove up beef prices, and Arizona's small ranchers are grateful
Download mp3 (12.09 MB)As ongoing drought shrinks herds to smaller and smaller numbers — prices for beef are going up.
CNBC reports retail beef prices reached a record high of $8 a pound this fall. But, Nate Brawley says most cattle ranchers he knows aren’t getting that much, though prices are up.
“They would absolutely fall apart if they had $8 a pound,” he said. “I mean, they would be so beside themselves at $8 a pound.”
Brawley is an assistant area livestock agent for the Graham County Cooperative Extension Office and the University of Arizona Cooperative Extension based in southeastern Arizona — and he’s a fourth generation rancher.
The Show spoke with him more about what he’s seeing in terms of pricing and how it’s affecting cattle ranchers in Arizona.
NATE BRAWLEY: Yeah, So we definitely have seen a significant increase, especially towards the later part of this year. I’m looking at the (CME Group) live cattle price right now, and it’s at $1.73 a pound. So that’s roughly, for an 800-pound steer, that’s roughly just under $1400, I think. That’s going to be $400 or $500 higher than this time last year.
LAUREN GILGER: OK. So let’s talk about what’s driving that hike. You read about high beef prices, and they’ll say herds are smaller because of drought, essentially. But connect the dots for us. Where does the line go from drought in the Southwest to, you know, paying more for a hamburger?
BRAWLEY: Well, typically for a spike like this, it’s not just an area’s drought. It’s an entire nationwide drought. So Arizona producers, most of them are going to be cow-calf producers, meaning we’ve got cows and bulls. They have calves. And that’s our that’s our crop. That’s what we harvest at the end. It’s our calf crop. So we will market our calves at roughly a year old. And then predominantly those calves are going to be exported to Kansas, Nebraska, Oklahoma — places where they get rain and they have wheat, pasture and grass. So they’ll leave our ranch about 500, 600 pounds, they’ll go to grass till 8-900 pounds, and then they’ll go from grass to the feedlot, which we hear a lot about, good and bad. But they go to the feedlot, and they’re finished at the feedlot. So they may finish at 12-1,400 pounds, basically.
So there’s a pretty good process to get cattle to that finished weight. But predominantly Arizona producers, our calves are being shipped out of the state just because we don’t have the grass to feed them. And it’s too expensive to put them into feed yard that early at 500 pounds It’s way too expensive. So when we had that nationwide drought where Oklahoma, Kansas, Nebraska, they were out of grass as well, all those calves that were on grass had to go somewhere. So they had to go to the feed yard. So that caused an increase in price. Because there’s an increase in costs, there’s an increase for the cost of feed, the cost of maintenance — everything went up, right? So basically it caused a supply and demand issue in the country. It flooded our feed yards. So we had a ton of finished beef ready to sell. So it again, it just drove the price way high.
GILGER: That’s a really interesting. So I wonder in Arizona in particular, is it about access to land at all? Like why did you say in Arizona you have to ship them out because you just don’t have the grass to feed them?
BRAWLEY: So the biggest part is Arizona is 80%, I think, state or federally owned land. So a huge majority of your Arizona producers, your Arizona ranchers are leasing land from the state or from the BLM or forest service. And those entities have rules and regulations on what you can and can’t do on that land. And so, for instance, down here in Graham County, we’re going to be two animal units or two cows per section. One section is 640 acres. Whereas when my calves go to Oklahoma, they may have a thousand head of calves on 100 acres. Completely flopped because they have a lot more feed, and it’s accessible and they get a lot more rain.
GILGER: That’s really interesting. OK. So the drought is directly related, essentially. Tell me what that means for ranchers like you and your family. Like, are you seeing people in the industry sort of quit the business, especially in Arizona, because these things are just too hard to accomplish right now?
BRAWLEY: … Arizona’s followed the national trend of, you know, your smaller ranches are being bought by bigger entities, and the big ranches get bigger, and the small ones are going away. So you definitely do see that. But I would say a lot of our Arizona producers, if they make any money, they’re tickled to death. Most of us have to have a job in town. And we ranch because we love it, because it’s a culture, because — like for me, a fourth generation part of an operation — that’s just what we do. That’s how we raise our kids, and that’s what we do for fun. So that’s definitely a part of it. But yeah, I would say that we, because of the drought and expenses and things like that, yeah, it’s getting harder and harder to be a part of the industry.
GILGER: That’s fascinating. So for most people doing this here in Arizona, like you, it’s a second gig. It’s like it’s almost you just do it for the tradition itself. You’re not making any money on it?
BRAWLEY: I wouldn’t say that we’re not making any money, but it’s dang sure not a lot. Again, for our Arizona ranchers, in order to do a full time you need to have upwards of 500 cows to beat your full time job. And again, that’s just not a lot of ranchers in Arizona have that many. But, you know, the beef side of things was hard because after COVID came, everything went sky high. We heard a lot about cost of building materials for building homes and different things. Everything went higher. The cost of fuel went high. Everything went high except for the beef price. And so COVID was hard on the ranching community because our slim profit margins got even more slim. And so this uptick in the prices is, again, just extremely beneficial and very, very grateful for it.
GILGER: So is there any end in sight here? Like, what’s next on this front? Do you anticipate prices going down or any kind of shift in policy so that this changes? Or is this going to continue to be the way it is in Arizona, you think, for the foreseeable future?
BRAWLEY: Oh, everything that I hear and read and listen to says that it should steady for a while, but it will go down. The cattle market is kind of in a 7-year trend historically where we have highs, we have peaks and valleys. So our last big peak was in 2015. And in 2014, 2015, prices were fairly high then as well. And we’re about to those and should surpass those. But, not to be Debbie Downer, but I think that the prices are probably to go back down. That supply and demand issue will get figured out, and it’ll rain in Oklahoma and panhandle of Texas and those two places. And and again, things will kind of get caught up to where that supply and demand will not work in our favor.
GILGER: Yeah. So, I mean, what are you anticipating on the horizon? What do you think this will mean for the ranching industry in the long term?
BRAWLEY: Well, I think the guys that are producing quality products will always be better off and be more successful. Again, going back to COVID, people paid a lot more attention to where their food came from than ever, at least in my generation. And so people were really paying attention to to where their food came from, and especially in their beef. So now more than ever, consumers care where their beef came from. How was it raised, were their antibiotics used? Was there any growth hormones used? And I wouldn’t speak bad about those things, but that is getting to be where we can market our cattle in a way that we get a premium for having a quality product. So those guys get a raise in prime and choice beef. They’re going to be paid a premium. If you can certify your animals to be able to ship to Europe and China, then you’re going to get paid a premium. So you’re going to have to be more and more of a businessman as well as a cowboy to be successful in ranching.
GILGER: That’s a fascinating way to look at it. All right. We’ll leave it there for now. That is Nate Brawley, assistant area livestock agent for the Graham County Cooperative Extension Office and the University of Arizona Cooperative Extension based in Safford, a fourth generation rancher here joining us. Nate, Thank you so much for coming on. Thanks for your perspective here. I appreciate it.
BRAWLEY: You bet ya.
