How Much Beef Is Grown in California

The cattle and beef sectors in the Us accept evolved in rapid and central ways. The "boxed-beefiness" technology introduced in the 1960s and concurrent advances in shipping technology have enabled carcasses to be candy into individual cuts, packed and shipped nationally or internationally from the same institute where slaughter took place. This capital letter-intensive technology resulted in expanded economies of calibration. Technological modify, coupled with declining consumption of red meat during the 1970s and 1980s, triggered a wave of mergers and acquisitions in the beefiness-processing sector. In 1977, the four leading beef packers were estimated to hold xxx% of total U.S. slaughter capacity; past 1999 that share had risen to 82%. Analysts generally agree that this technological change, coupled with the increment in packer concentration, has increased efficiency in the processing sector (Morrison-Paul 2000). However, benefits to producers from enhanced efficiency can be prodigal or eliminated if packers are able to do market ability as a result of industry consolidation (USDA 1996; Azzam and Schroeter 1997).

California Beefiness Council While cattle and beef are California's 5th nearly valuable agronomical product, the industry is struggling due to technological change and consolidation. Cattle are rounded up at a California ranch.

Rapid alter has also occurred in the marketing arrangements between cattle producers and beef processors. In particular, there is show of tighter vertical command, such equally packer-fed cattle, producer-packer forward contracts, and marketing agreements between producers and packers wherein cattle are priced according to a predetermined formula. All of these arrangements are lumped under the term "captive supplies" because the cattle are tied ex ante to a particular processor, and not sold on the open marketplace.

Empirical evidence from various markets suggests a negative correlation between the use of captive supplies in a region and the cash-market price (Ward 2002). Accordingly, various producer groups, government regulators and academics accept expressed concern about the development of these marketing arrangements, especially in low-cal of rising packer concentration and reduced selling opportunities for producers. A ban on packer feeding was debated simply not included in the Subcontract Bill that recently passed, and is now being debated by Congress as a stand-alone piece of legislation.

Most of the aforementioned investigation has focused on the major cattle-producing states in the Midwest, and comparatively little attention has been paid to California'south cattle industry. However, beef cattle and calves remain one of California's near important agricultural products, ranking 5th (behind dairy, grapes, nursery products and lettuce) in 2001 value of production at $1.35 billion. Cattle and calves were the leading agronomical commodity, based on value of production, for nine California counties: Calaveras, Regal, Mariposa, Nevada, Plumas, Shasta, Sierra, Trinity and Tuolumne. They are second in importance in six others: Amador, Inyo, Marin, Modoc, Placer and San Bernardino.

Because of its importance to California's agronomical economy and the comparative neglect it has received in the multitude of studies conducted on the U.Southward. cattle and beef industry (Ward 2002), we undertook an investigation of the condition of those industries in California. The main goal was to document the evolution of product and marketing and to obtain a perspective on the impacts of increasing packer concentration and vertical coordination on the California manufacture.

Cattle product and processing

California'due south greatest concentrations of cattle are in the Fundamental Valley counties of Fresno, Kern, Merced, Stanislaus and Tulare, and the barren southern region comprised by Purple, Riverside and San Bernardino counties (fig. 1). Although cattle production is a leading agricultural industry for such northern counties as Modoc, Plumas, Shasta, Sierra and Trinity, product in those counties pales relative to the Cardinal Valley and southern counties.

Fig. ane. Cattle and calves, average inventory levels by county, 1982-1997, and locations of facilities reporting slaughter of cattle and calves, 1997. Sources: California Demography of Agriculture; USDA Grain Inspection, Packers and Stockyards Administration.

The major growth has occurred in the Central Valley and desert-south regions, with an boosted pocket of growth in North Coast counties such every bit Del Norte, Humbolt, Mendocino and Trinity (fig. 2). Non surprisingly, cattle product has declined in the counties that represent the major urban growth corridors within the state, particularly the central- and southward-coast regions.

In 1997, 10 facilities in California reported slaughter of cattle and calves to the U.S. Section of Agriculture (USDA)(fig. i). Only iii of those process significant numbers of cattle: an IBP plant in Fresno, Harris Ranch in Coalinga and Shamrock Meats in Los Angeles. The others are minor specialty operations that practice not contribute importantly to the land'due south processing chapters. By way of contrast, 52 facilities reported slaughter of cattle and calves to USDA in 1972. Due to the rapid decline in its slaughter capacity, California is now a pregnant net exporter of alive cattle for slaughter, with cattle being shipped to plants in locations ranging from Washington to Utah and Colorado. Long-altitude shipping of cattle is costly, due both to the transportation costs and stress on the animals, and then the necessity of such travel reduces the profitability of cattle production in California.

Producer survey

But a express amount of information specific to California cattle product tin can be gleaned from the standard statistical sources, so we undertook a survey of cattle producers in the land during 2000 and 2001. To facilitate the survey, we cooperated with canton-level UC Cooperative Extension livestock advisors. The county personnel contributed to development of the survey and distributed the survey forms, either in-person, at trade shows or through the mail. To farther encourage compliance, we kept the survey class brusque, i double-sided page with 12 categorical or short-answer questions, focusing primarily upon marketing bug.

In total, nosotros received 280 completed surveys. We obtained responses from ranchers in 40 of California'southward 58 counties. Counties with the nearly respondents were Shasta (66), Stanislaus (58), Merced (58) and Calaveras (34). (A single respondent might operate, and hence be counted, in multiple counties.) Nosotros focused the survey on three regions of the state to come across if in that location are geographic differences in industry structure and marketing opportunities. The north region was centered in Lassen, Shasta and Tehama counties. The central region focused on Stanislaus and surrounding counties, while the littoral region included counties ranging from Humboldt to Monterey. In general, our survey results signal that average ranches in the n and key regions are nearly identical in size, herd composition and marketing strategies. Ranches in the coastal region, on average, are much smaller and more than often part-time operations.

TABLE 1. Number of cattle marketed annually by type for survey respondents

State ownership

The vast bulk of respondents (246) owned some of their ain ranch land and likewise rented boosted land in either the summertime or winter. In particular, 178 rented summer land and 167 rented winter land from private parties, while 38 reported renting summertime state and 12 reported renting winter land from the U.S. Agency of Land Management or Forest Service.

Fig. 2. Cattle and calves (excluding milk cows), percent change in inventory levels, 1964-1997. Source: California Census of Agriculture.

Ranching experience

The average years of feel in ranching among the survey respondents was 34.9, meaning that ranching has been a lifetime functioning for almost and that, collectively, they represent a well-seasoned group. Well-nigh of the operations are family unit oriented, and so the fact that many operators appear to be nearing retirement age raises questions about continuity of the operations if sons/daughters choose not to carry on the family business.

Cattle sold

We used categories of one to 50, 51 to 150, 151 to 300, and more than than 300 to ask well-nigh the number of cattle marketed annually by blazon (tabular array i). Ranchers in the north, central and coastal regions are primarily cow-calf operators, who specialize in raising and marketing immature cattle and choose cows or bulls. In particular, relatively few engage in feedlot operations. Only 16% of respondents in the north, 20% in the central and viii% in the coastal region marketed fed cattle.

The largest category of response for all types of cattle was the 1 to 50 animal category. Such operations stand for part-time businesses. In the primal and north regions, calves and yearlings are the primary focus, and large operations brand upward a significant part of the industry. For example, in the central region, 11% of ranches sell more than 300 calves per year, and 12% of ranches sell more than than 300 yearlings annually. These operations are clearly total-time business with sizeable avails invested.

Sales mechanisms

We likewise asked respondents to indicate the selling machinery they utilized to market their cattle. The predominant marketing mechanism amidst the respondents in all regions was the traditional, privately operated auction sale yard, which 240 reported utilizing for at least some sales. Sixty-one ranchers likewise indicated using an auction operated by a cattle association. One hundred v respondents reported directly sales to local buyers, with 52 reporting straight sales to regional or national buyers. Interestingly, the much-touted "high-tech" selling mechanisms, such as video and electronic auctions, were used infrequently by the respondents — 27 reported using a video sale (none from the coastal region) and only one person reported using an electronic auction.

In a survey covering nigh 300 ranches in 40 counties, the authors plant that only 29% of the land'southward cattle destined for feedlots remained in California, with the residuum shipped to the U.South. Northwest, Midwest and Southwest.

An important bespeak in considering the marketing tools utilized by California ranchers is that substantial economies of scale exist with respect to some selling mechanisms, including various forms of straight sales and video or electronic auctions. The standard trucks used to haul cattle adjust, for example, upward of 50 yearling calves. Ranchers who cannot provide at least this much volume in a sales transaction are at a competitive disadvantage. Private or cattle-association auction yards stand for the primary sales outlet for these small-scale-scale producers because buyers tin rather easily aggregate small lots from various sellers to attain truck chapters. For example, amidst the respondents to our survey, 93 marketed more than 150 cattle annually in at least one of the iv categories indicated in tabular array i. Amongst this group of larger producers, 35 (37.6%) reported sales to regional or national buyers, whereas only 17 (10.two%) of the 167 with sales of 150 cattle or less in whatever category were able to concenter the involvement of these buyers. Due to the ascent concentration in the manufacture, information technology is important for ranchers to be able to access the widest pool of potential buyers possible.

Other marketing tools

Our respondents were reluctant to use futures and/or options contracts, with only 6% reporting utilise of these marketing tools (none from the coast). Similarly, the much discussed and disputed captive-supply mechanisms were little in evidence among our respondents, with just 8.vi% reporting using either forward contracts or marketing agreements. The limited utilise of these marketing tools is due in part to the fact that California ranchers in most cases are not selling cattle directly to packers, where these mechanisms have been used most widely, and also due to the small scale of many respondents' operations.

Cattle destinations

Most probable due to the limited processing capacity in the state, a large portion of California production nowadays consists of young cattle, which are and then sold for fattening elsewhere. This conclusion is supported by responses to a question about the cattle's destination later leaving the producers' ranch. A full of 135 respondents indicated that cattle were headed for further evolution on grassland, while 205 indicated that cattle were destined for a feedlot. Merely 58 reported making sales direct to a packinghouse. (Totals sum to more than the number of survey responses because ranchers may accept multiple destinations for their cattle.)

Among the cattle destined for further evolution on rangeland, 53% were reported to remain in California, with Northwestern states (Idaho, Oregon and Washington) representing the 2d-virtually reported destination. Among the cattle destined for feedlots, simply 29% remained in California, with 19%, sixteen% and 12% destined for feedlots in the Northwest, Midwest (Kansas, Nebraska) and Southwest (Arizona, Nevada, New United mexican states, Texas), respectively. Almost 62%-of cattle destined for packinghouses remained in California, based upon survey responses.

Potential buyers

Finally, because of the consolidation amongst firms in the beef sector, we asked well-nigh the number of potential buyers bachelor to cattle producers in a given selling environment. The respondents indicated either i, two, three to five, or more than 5 potential buyers. The modal response (with a total of 115) was three to five buyers. Ninety-eight ranchers (more often from the central region) reported more than five buyers, with 29 reporting only i or two possible buyers. A business firm consensus has not emerged amongst economists as to the number of0 buyers needed to create a competitive selling environment. About, yet, would concur that v or fewer buyers correspond an oligopsony market place setting, where buyer market ability is a potential business concern.

Future of California beef manufacture

While cattle production remains i of California's nearly important agricultural industries, information technology is now at a crossroads, for a multifariousness of reasons. Equally noted, many operators of these predominantly family-run businesses are nearing retirement age, with uncertain prospects for continuity of the family operations. Moreover, the country'due south industry now consists predominantly of moo-cow-calf ranching operations, with a pregnant share of cattle leaving the state for feeding and slaughter. A key gene in explaining the paucity of feeding operations in the country is California's status as a net importer of feed grains such as corn. This status was reinforced through the 1990s when significant acreage in California moved from annual crops such as corn and wheat to perennial tree and vine crops (Bare 2000). Feed grains for cattle are now grown in California primarily as a rotation crop. In practical terms, information technology is cheaper to incur the onetime expense of hauling the steer to the feed than to continuously haul the feed to the steer.

Concerned about economical trends that are leaving them with a shrinking percentage of the beef dollar, cattle ranchers gathered at the Shasta Livestock Sale in Cottonwood in June to hash out futures contracts, packer concentration and improved cooperation among producers. Left, Duane Martin of Clements, Calif., helped organize the meeting. Right, Ellington Peek of Shasta Livestock looks on equally Ron Anderson moderates.

Considering of the expense and chance of shipping fattened cattle long distances, it is economical to locate processing facilities in close proximity to feedlots, helping to explicate the exodus of packing facilities from California. The transaction costs associated with out-of-state shipment inevitably place California at a competitive disadvantage relative to states (such as Colorado, Kansas, Nebraska and Texas) and regions (such as the Midwest and Southwest) that combine substantial capacity in production, feeding and processing. Moreover, the lack of local selling alternatives may place California producers in a disadvantageous competitive position in dealings with out-of-state buyers.

The rangeland utilized for cattle product in California often has few alternative uses, except other grazing operations. This fact may explicate the resiliency of this segment of the cattle-beefiness chain, despite the generally poor economic climate for cattle production in recent years, and the mid-1990s in particular, when weak need and the high-product phase of the cattle cycle acquired most producers to lose money. Nonetheless, the long-run viability of these operations requires a stream of revenues that is at to the lowest degree sufficient to compensate for all costs, including opportunity costs for owned land and operator labor. Achieving such revenues will be a challenge if the state continues to operate with cost disadvantages relative to competing states. The sale yards, which provide the master marketing outlet for most of the survey respondents, crave a large volume of activity in society to operate efficiently. If some ranchers exit the business, their departure volition impose external costs on those who remain by threatening the vitality of these commutation mechanisms. In turn, if spot-market exchanges wane, ranchers volition be compelled to aggrandize or consolidate to attain the selling economies needed to participate in straight sales or other loftier-tech selling mechanisms.

Furthermore, feedlots and packing plants are non popular enterprises in a populous and environmentally conscious country like California due to odor and waste matter-disposal bug. Withal, these operations provide favorable marketing outlets for California's ranch operators and, hence, affect the vitality of the entire cattle-beef sector. The political challenges in gaining approval for such facilities notwithstanding, the economic science of these operations favor locating them in regions with extensive feed-grain production, and so California is at a cost disadvantage. For a diversity of reasons, there is little chance that these operations will aggrandize in California and they may well continue to reject. California cattle ranchers must keep to search for marketing innovations that will enable them to compete effectively in a challenging environment.

lamblealred1975.blogspot.com

Source: https://calag.ucanr.edu/Archive/?article=ca.v056n05p152

Share this post