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.
“We’ve been slowly limping along,” said Grant Bledsoe. His family’s 100-year-old Bledsoe Cattle Company — a feedlot, pasture and farm on about 80,000 acres of land on the Eastern Plains — stands to lose some $3 million in equity because of crashing cattle futures.
President Donald Trump’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.
“Any slowdown has an effect on the industry,” he said. “There’s a cost. It’s a cost that could actually move profitability into the red for producers.”
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.
The JBS beef plant in Greeley, which can process about 5,400 head of cattle per day, was closed for about 10 days because of an outbreak of the coronavirus among its workers that sickened dozens and killed six people. That created a bottleneck that still has not cleared.
The Cargill facility in Fort Morgan, which has a lower capacity than JBS, has also had an outbreak of the virus. While the plant didn’t have to close, its ability to process cattle was significantly reduced as a result, the industry says.
Lacie Harman said her family’s Harman Family Farms, near Akron in northeast Colorado, has about 200 head of cattle waiting to move from feedlots to slaughter that have been delayed by two or three weeks. “Every day that we have to keep them on feed they become less and less efficient,” she said.
But Harman said the situation hasn’t hurt her family’s operation too badly so far.
“It hasn’t exactly been a dire issue for us yet,” she said. “It’s not crisis mode yet.”
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.
“We urge you to consider lawful regulatory action to provide more meat and poultry producers with direct access to the national commercial market, while maintaining food safety,” the group wrote.
“A lot of producers are not selling cattle like they normally would”
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.
“We’ve had food service totally shut down and then, on the retail side, demand going up,” said Todd Inglee, executive director of the Colorado Beef Council.
Inglee said there’s typically a 1% to 2% variation in retail meat sales year over year. When the coronavirus crisis began in earnest, retail sales began shooting up.
One week it was a 10% increase. The next it increased by 77%. Then it topped out at a 95% year-over-year increase in retail sales before settling back to about 38% above normal.
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.
“A lot of producers are not selling cattle like they normally would. They’re keeping them on their ranches or in their feedlots and waiting for the market to come back,” Inglee said.
Those who are selling, including Steve Wooten, who ranches near La Junta in southeast Colorado, are taking a hit. Drought conditions mean he needs every blade of grass on his pastures that he can spare, so he has no choice but to sell about a dozen cows for about half the normal price.
“If we had available grass in extra pastures we’d probably weigh those cows up and sell them as fat cows 60 days later,” said Wooten, who is president of the Colorado Cattlemen’s Association and operates Beatty Canyon Ranch on about 75,000 acres. Fat or finished cattle are cows that are fed a dense diet over a matter of weeks so they grow rapidly just before being sold for slaughter.
Wooten is facing problems in the months ahead as well. The calves he is raising now are due to be sold in the fall and he’s not sure prices will bounce back by then. That will make it tough for his ranch to meet its bottom line.
“This probably won’t recover by fall,” said state Sen. Jerry Sonnenberg, a Sterling Republican who is also a cattle rancher. “We’re going to take a huge hit. I anticipate that this will put some in the livestock industry, cattle ranchers out of business”
Bledsoe, of Bledsoe Cattle Company, said the price of cattle has dropped $450 a head below what they were expecting.
“We’ve seen just a huge decrease in the value of our cattle,” he said. “It’s going to hurt us for a long time.”
Wooten is taking the long view.
“We’ve got businesses that are pretty well-designed to weather movement within markets through the course of the year,” he 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.”