MU Specialist Shares Economics Of Switching From Dairy To Beef
COLUMBIA, MO.
Consolidation in the dairy industry has University of Missouri Extension helping dairy producers switch to beef.
MU Extension recently sponsored a session for producers at MU’s Southwest Research Center in Mount Vernon.
The dairy industry began consolidating after World War II as farms began to specialize in just milking cows, says MU Extension agricultural economist Joe Horner. The 1960s and 1970s saw more consolidation as fewer dairy farms made the expensive switch from selling milk in cans to bulk tanks.
Consolidation sprinted again over the last 10 years as dairies with more than 1,000 cows emerged. Their lower costs put downward pressure on milk prices.
Years of tight profit margins and a shortage of labor led many Missouri dairies to switch to beef production. Dairy operations have dropped by two-thirds in Missouri in the past 15 years. The story is repeated in almost every traditional dairy state, Horner says.
Missouri lost 27,000 dairy cows from 2009 to 2019. By contrast, the state added 67,000 beef cows over the same period.
There are important differences between dairy and beef operations. Beef cows require less labor, but it takes a lot more of them to make a living, Horner says.
Culling rates are different: 29.9 percent over five years for dairy compared to 13 percent for beef. Beef producers do not have to raise nearly as many heifers to keep the same size of herd.
There are aslo seasonal differences between dairy and beef. Dairy's best prices come in the fall and the worst in the spring. Beef calves fetch higher prices in spring and lower prices in fall when spring calves go to market.
Beef cow-calf operations typically sell cattle twice a year, but most of the wealth comes through land appreciation, Horner says. Beef is a long-inning game. It is about holding onto land and keeping input costs low.
Horner urges dairy producers switching to beef to clean up their balance sheets, pay off bills and clear short-term debt by selling assets they no longer need. Work with your accountant to manage taxes as you sell, he says.
“The switch to beef is a good way for dairy operators to use their livestock knowledge, skills and abilities built through a lifetime milking cows,” Horner says. It is also a good way to use existing resources as farmers approach retirement, he adds.
“Missouri is a huge producer of feeder calves,” he says. “Dairy farmers who switch to beef have a natural fit for backgrounding those calves. They already have high-quality forage and feeding systems in place and are accustomed to managing lots of dollars.”
The good news is that you do not need to milk beef cows every morning and night, and it is easier to get away from the farm for a few days. ∆