Special Report: Despite Pandemic-Caused Disruptions to the Cattle and Beef Industries, It Could Be Business-as-Usual Down the Road

Kansas State University agricultural economists say that short-term disruptions in the fed cattle and beef industries have not changed longer-term motivations for how buyers and sellers establish prices for cattle. They have finished an exhaustive review of price discovery in the fed cattle and beef industry over the past 20 years, which not only explains current ways of doing business, but also where cattle markets may be headed in the future.

 “We recognize COVID and the constraints it imposed on the beef industry; labor constraints and packer capacity became a major concern,” said Ted Schroeder, a livestock economist with K-State Research and Extension. “The ability to move cattle through a constrained packing system was an issue and something we need to stay aware of.”

But the global pandemic – as well as a 2019 fire at a packing plant in Holcomb, Kan. and a cyber-attack in late May on the world’s largest meat supplier – are “black swan events,” according to Schroeder.

“We can’t predict those events. We have to deal with them as they occur and we have to manage through them and build systems that are going to be resilient to such events. They have not altered longer term opportunities for the beef industry and must not deter progress made in improved supply chain alignment.”

Schroeder and colleagues Brian Coffey and Glynn Tonsor have published a study in which they note factors that have transformed the fed cattle and beef industry over 20 years, factors that have contributed to resilience.

The full study, ‘Effective and Efficient Cattle and Beef Market Alignment: Price and Value Discovery, Divergent Incentives, Risk Management and Future Prospects,’ is available online. The complete report from K-State’s Department of Agricultural Economics is available online at https://agmanager.info.