Even with beef plants staying open, reduced capacity means #Colorado ranchers feel the #coronavirus pinch — The Colorado Sun #COVID19

Photo credit: Bob Berwyn

From The Colorado Sun (Jesse Paul):

To be a cattle rancher in Colorado is to expect setbacks.

There are droughts and fires and economic volatility. There are snowstorms and tornadoes and tricky equipment. There are changing consumer demands.

But rarely do the stumbling blocks line up one after another and all at once the way they have now with the crisis caused by the new coronavirus, which has placed a wide-ranging economic drag on one of Colorado’s largest industries. Nationally, the cattle industry is expected to take a hit as large as $13.6 billion, according to a study released by the National Cattlemen’s Beef Association.

Cattle prices have plummeted, some types of feed have become difficult to find and schedules for readying animals for market have required rearranging. Meanwhile, slaughterhouses have either closed or, in the best case, reduced capacity because of worker infections, meaning feedlots have had to keep feeding animals that are past their processing prime…

[The] President’s executive order Tuesday that meat-processing plants stay open provides some assurance that the beef market won’t collapse altogether. But Gov. Jared Polis has indicated that he may take action if workers’ health is put at risk.

“I will not let any executive order stand in the way of us protecting people in Colorado,” Polis said Wednesday.

Even if the facilities do stay open through the pandemic, ranchers who work in Colorado’s $4 billion cattle industry are still expecting a decline in slaughterhouse capacity that will eat away at their bottom lines. Any delay in moving cattle from feedlots to processing facilities — like the JBS beef plant in Greeley and Cargill Meat Solutions in Fort Morgan — is a major problem…

Terry Fankhauser, executive vice president of the Colorado Cattlemen’s Association, said that even with beef processing plants staying open, he expects a 30% or more reduction in their capacity nationwide.

There is only about a two-week span when cattle are in their prime for slaughter. If the animals are kept for longer, ranchers begin losing money as the meat quality declines and the cost of feeding animals becomes uneconomical…

Fankhauser estimates that for every 10% drop in slaughterhouse capacity, there’s a $40-$50 reduction in cattle price per head. “If that exacerbates over a long period of time — say, five weeks — that will continue to compound. A five-week, 50% reduction in harvest knocks fat cattle prices back to 1970s levels,” he said…

Colorado’s congressional delegation is working to increase the options for ranchers. Republican U.S. Reps. Scott Tipton of Cortez and Ken Buck of Windsor joined Republican U.S. Sen. Cory Gardner and Democratic U.S. Sen. Michael Bennet in sending a letter to Agriculture Secretary Sonny Perdue asking him to suspend the rule that cattle must be processed through a U.S. Department of Agriculture-regulated facility if a rancher wants to sell on the national commercial market…

If there’s one thing the cattle industry wants people to know it’s that the beef supply chain isn’t at risk of failing. There’s a great deal — millions of pounds — of chilled and frozen meat stored across the state and plenty of cattle available to be slaughtered.

There’s no reason to panic buy.

The pork and poultry industries have had to euthanize animals because of coronavirus-related disruptions, but that won’t happen to Colorado cattle, Fankhauser said. “We will not be euthanizing cattle because we have a different system that’s able to hold animals longer.”

But while there may be plenty of beef, economic realities are definitely threatening ranchers. In the long term, they’re worried about falling beef prices related to a shift in consumption as restaurants stay closed and more people get their meat from supermarkets.

Restaurants typically buy higher-end cuts of beef, as do cruise ships. Both industries either aren’t operating or are operating at a reduced capacity, reducing demand and redrawing supply chain lines…

And the market — also impacted by the reduction in slaughterhouse capacity — has reacted in a way that doesn’t favor ranchers. Live cattle futures, for instance, have fallen about 35% since January. That represents a reduction of several hundred dollars per head of cattle…

“We’ve got businesses that are pretty well-designed to weather movement within markets through the course of the year,” [Steve Wooten] said. “We’re a pretty resilient group of people in this industry. We take on weather, we take on markets and keep our chin up and keep working because it generally tends to work out for us.”

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