Lower cattle prices impacting farmers, businesses - KXXV Central Texas News Now

Lower cattle prices impacting farmers, businesses

(Source: KXXV) (Source: KXXV)

Current cattle prices, which are lower than after the 2011 drought, has had positive and negative effects for farmers and businesses in Central Texas.

Farmer Gerald Bergen who attended the West Auction Inc. plans to buy four or five bred cows this year and take advantage of the low prices.

“It’s a good gamble to buy right now,” Bergen said. “You can buy them at $600 cheaper than you could five to six months ago, so your pocket is going to be better as long as the market goes back up in the next five, six months.”

Associate Director Tracy Tomascik, Commodity and Regulatory Livestock and Animal Health at Texas Farm Bureau said cattle prices are much lower than they were in years directly following that 2011 drought.

“I think the biggest factor is just a simple response from supply and demand, moving from record high prices in 2014. We've got an increase in cattle and calves in the state of Texas and at the same time we have sustained demand,” Tomascik said.

He added there are fewer buyers actively looking for market cattle and a risk management tool is not quite as trustworthy as it has been in the past few years.

“Markets are swinging up and down from day to day without a lot of reason why it's doing it,” Tomascik said.

According to Tomascik a lot of farmers who are trying to sell their cattle are noticing their animals are not worth what they once were. He said that a calf bought today is only bringing half of what the same calf was worth a year ago.

West Auction Manager Adele Uptmore has also noticed the price changes and said the impact has been mostly negative.

“Our business has been affected drastically because when we had bigger prices, we had bigger commission and that’s how we get money here,” Uptmore said.

According to Uptmore, they are not doing as much as they would if they were making more commission.

“We are not adding any extra pens. We’re not building good things like we would in a normal good year. We are still trying to keep our people paid at a good price. We have not adjusted those prices” Uptmore said.

Bergen said he won't know if he will make a profit on the bred cows he purchased until he sells their calves.

“It just depends on how the market is going to fluctuate. Hopefully it goes up,” Bergen said.

The number of cattle in the state has historically been 13 million but that number is currently at 11.5 million. However, Tomascik said he believes there is a chance that number could go up in the future.

 “I think there is still more room to increase our supply and inventory in the state. A big reason for that is that we have an abundance of water across the state right now,” Tomascik said.

For consumers, the drop in cattle prices have not really changed the price of beef at the grocery store, according to Tomascik. However, beef is $1 cheaper than it was last year.

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