The Department of Agriculture predicts cattle prices will rise 20 percent in 2011 over last year. But that pales in comparison to the price of corn, which has more than doubled in the past year to nearly $8 a bushel.
You might think this scenario would tempt plenty of farmers to flip their acres from cattle pasture to cropland. But it's a tough decision that depends on much more than recent prices.
Acres That 'Flex'
Some farmers use the term "flex acres" to describe land that can be used either to graze cattle or to grow crops like corn and soybeans.
Ed Morse has some land just like that outside Council Bluffs, Iowa.
Wearing green coveralls and a tan hat, Morse stands outside his barn watching his 17-year-old son Noah drive a feed wagon down a row of cattle while the animals feast on corn and hay.
This 320-acre farm will see some changes soon. Despite the record-high corn prices, Morse is shifting some of his land out of corn and soybeans and into pasture.
"With the cattle you're more on your own," he says. "In some ways, it's an act of faith because you have got to look out into the future a couple years and see that this will be a paying proposition as well."
Morse is used to analyzing figures. He's also a law professor at nearby Creighton University in Omaha, Neb. Morse admits corn is tempting but says he'll stick to cows for now.
An Increase In Planting Crops
But that's an unusual decision, according to agricultural economist Darrell Mark at the University of Nebraska-Lincoln.
He says there's been a drop in cattle operations in key Corn Belt states including Iowa, Illinois and Nebraska. "We're seeing an increase in acres being planted to row crops."
In central Missouri's Calloway County, farm owner Margot McMillen says one of her tenants offered her three times the rent to convert some of her pasture land into row crops. But she turned down the offer because of her long-term plans and a desire to avoid knee-jerk decisions based on what commodity is hot.
"It's almost like the gamble," McMillen says. "You make the decision because of what your neighbors are doing, what you hear — sort of the buzz. And you really can do better if you become independent and think on your terms as to what's going to work for me."
Getting Creative To Balance Cattle, Crops
Historically low cattle numbers over the last three years, combined with increasing worldwide demand, have led to some of the highest cattle prices ever.
Sean McClatchey, 38, of Lincoln, Neb., sees this as an opportunity.
"We gotta grow it to make it work," he says. "It's not like maybe it was 30 or 40 years ago where a farm the size of ours could support a family or two."
McClatchey's parents got rid of cattle when he was a boy. He now has 115 head and is slowly increasing his herd size.
He's getting creative with his wheat crop this spring to save on feed and fuel. For example, he'll graze on the wheat fields early in the growing season in a way that will still allow the wheat to be harvested.
McClatchey says these practices allow him to get more than one harvest per year. And he says growing feed on the farm also helps keep costs down.
But it will likely be a while before herd sizes increase from their lowest point since the 1950s. It takes a minimum of 14 months for cattle to move from birth to the market.
While agricultural economist Darrell Mark predicts herd sizes will increase later this year, he doesn't expect it to drive down costs at the meat counter for quite a while.
Meanwhile, farmers like Morse and McClatchey will try to figure out just where the profit tipping point will be.
Clay Masters reports for Harvest Public Media, an agriculture-reporting project involving six NPR member stations in the Midwest. For more stories about farm and food, check out harvestpublicmedia.org.
MELISSA BLOCK, Host:
But as Harvest Public Media's Clay Masters reports, it's a tough decision that depends on far more than this year's prices.
CLAY MASTERS: Ed Morse has land like that just outside of Council Bluffs, Iowa.
(SOUNDBITE OF A VEHICLE)
MASTERS: Wearing green coveralls and a tan hat, Morse stands outside his cattle barn watching his 17-year-old son Noah drive a feed wagon down a row of cattle. The cattle feast on corn and hay.
(SOUNDBITE OF A COW)
MASTERS: This 320-acre farm is going to see some land changes soon. But with record high corn prices, it's not the direction you'd expect it to go. Ed Morse is taking acres out of corn and soybean and putting it into pasture.
ED MORSE: With the cattle you're more on your own. You don't have those insurance policies on those cattle. You hope that you don't have problems with them, et cetera. And, you know, it's in some ways an act of faith because you've got to look out into the future a couple years and see that this will be a paying proposition, as well.
MASTERS: But that's an unusual decision, according to ag economist Darrell Mark with the University of Nebraska-Lincoln.
DARRELL MARK: It appears like, especially in key cornbelt states like Iowa and Illinois and, I think, eastern Nebraska, eastern South Dakota and parts of Minnesota are included in that, too, that we'd seen a reduction in the number of cow/calf operations, the number of cow/calf pairs in those states. And correspondingly, we're seeing an increase in the total number of acres being planted to row crops.
MASTERS: In central Missouri's Calloway County, farm owner Margot McMillen was offered three times the rent to convert some of her pasture land into row crops. But she turned down the offer. She says as a farmer, it's important to know what your long-term plans are for your operation and not make knee-jerk decisions based on what commodity is hot.
MARGOT MCMILLEN: It's almost like the gamble. You make the decision because of what your neighbors are doing, what you hear, you know, sort of the buzz. And you really can do better if you become independent and think on your terms, what's going to work for me.
MASTERS: The last three years have seen historically low cattle numbers. Combined with increasing worldwide demand, that's led to some of the highest cattle prices ever seen. Thirty-eight-year-old Sean McClatchey sees this as an opportunity. He grew up near the southwestern Nebraska town of Palisade but lives four hours to the east in Lincoln.
SEAN MCCLATCHEY: You got to grow it to make it work. You know, it's not like maybe it was 30, 40 years ago, where a farm the size of ours could support a family or two.
MASTERS: McClatchey's parents got rid of cattle when he was a boy. He now has 115 head and is slowly increasing his herd size. He's getting creative with his wheat crop this spring in order to save on input costs like feed and fuel. He'll graze on the wheat fields early in the growing season in a way that will still allow the wheat to be harvested.
MCCLATCHEY: You're getting essentially more than one harvest per year off that ground. You know, you can feed - you can graze cattle in the fall, if you get it drilled in time and get some moisture and get the weed up. And then in the spring, when it warms up, you can graze them for, I don't know, 30 days maybe.
MASTERS: For NPR News, I'm Clay Masters. Transcript provided by NPR, Copyright NPR.