Editor’s note: This story is part of an ongoing series called “Smart Moves for 2027,” which outlines steps to guide farmers in the coming year.
So far, consumers show no signs of reducing their demand for beef. So, will the sizzling market for beef cattle producers continue to roll?
Normally, inflation stifles beef demand, as consumers switch to less-expensive pork and chicken. That’s not happening now.
“We still continue to see beef as a primary protein choice,” said Fallon Savage, senior vice president of corporate credit at Farm Credit Services of America.
That’s partly due to a surprising reason: patients who take GLP-1 drugs for obesity.
“Because they are consuming less calories, these consumers are willing to spend more on protein,” Savage said. “They don’t balk at paying $8 per pound for ground beef, and they still patronize high-dollar steakhouses.”
She sees the same pattern occurring with GLP-1 and beef that occurred with corn and the ethanol industry 20 years ago.
“Ethanol completely changed the landscape for agriculture,” Savage said. “I think that GLP-1 [drugs] could be the next game-changer [for beef].”
Declining cow numbers also bode well for cattle prices, as drought has helped drive the U.S. cow herd to its lowest level in 75 years.
“Severe drought in western Nebraska, Colorado, parts of South Dakota and Kansas has caused massive liquidation,” Savage said.
Retain or sell heifers?
“When we talk about herd rebuilding, the first question we ask is, ‘What is your access to grass?’” Savage said. “If you need to put up hay or put cattle in the lot early, your margin just gets much tighter and thinner.”
Heifer calf sales do provide quick cash that cattle producers may need to pay off debt or fulfill other monetary needs, she noted.
However, access to ample grass creates a friendly environment for cattle producers to retain heifers and expand their herd. This bodes well for areas such as central Iowa, which has lush fall pastures spurred by the heaviest September precipitation in over 100 years.
“If you have access to grass, this is a really great time to continue thinking about expanding,” Savage added.
This includes crop farmers who are considering buying beef cows. Still, they should first examine their balance sheets, Savage said.
“It’s always a good idea to think about diversification,” she said. “But your balance sheet has to have the ability to withstand a couple years to build up a cow herd.”