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Cattle industry’s struggles discussed at hearing

The long stretch of financial losses in the cattle feeding business came up for discussion this morning at a House Agriculture subcommittee hearing in Washington.

Dr. David Anderson, an ag economist at Texas A&M University, said the depressed cattle market is fairly easy to explain.

“I think it’s worth remembering that markets and incentives work,” Anderson said. “Record high prices and drought recovery have provided the profit incentive to increase production of cows, calves and beef. Increased production leads to lower prices—and certainly beef production has increased year-over-year.”

And there’s another factor to consider, Anderson said.

“The decline in cattle numbers to multi-decade lows by 2014 meant that the industry had an overcapacity problem in feeding and meatpacking. As cattle number increase, there are more cattle chasing a smaller capacity—and that also pressures cattle prices.”

In addition, Anderson says, increasing beef imports and reduced exports had the net effect of adding about 750 million pounds of beef to the market in 2015.

AUDIO: Excerpt from David Anderson’s testimony