Grain Markets Encourage Forage Use
High grain prices warrant increased forage usage.
by Kasey Miller for Angus Productions Inc.
NASHVILLE, Tenn. (Jan. 31, 2012) — Intense short-term issues — namely drought and high corn prices — mean the beef industry must adjust production systems, and the markets are pointing to more forage usage, said Derrell Peel, Breedlove professor of agribusiness and livestock marketing specialist at Oklahoma State University (OSU). Peel set the stage for a forage seminar hosted in Nashville by Dow AgroSciences the day before the Cattle Industry Annual Convention and NCBA Trade Show kicked off.
Derrell Peel Photo by Kasey Miller
Peel said forage usage will be instrumental in rising to meet the challenge of increased agricultural demand due to a rapidly growing global population because it allows for flexibility to maintain the beef industry’s competitiveness. This flexibility, he said, can be one of beef’s strongest suits.
“As an industry, we have one job to do, [produce beef], but we have lots of ways to do it,” Peel said.
He explained the evolution of the beef industry, noting that it has been built on cheap energy and cheap grain. As such, it has been increasingly grain-intensive. This means that the stocker has a limited role, because more cattle entered feedlots as calves. This has affected animal genetics (carcass weights) and the use of technology.
However, with the long-term implications of increased grain prices, which are unlikely to return to lower levels, the incentives have changed. Markets have kept the stocker and feedlot gains relatively similar in the past, but it costs much more for feedlots to feed younger cattle now.
“Cheap corn kept the value of forages cheap for a long time. I admit, that subsidized a lot of sloppy forage management utilization for a lot of years,” Peel said.
“Permanently high grain prices is a game changer for the beef industry,” he emphasized. This gives the industry incentive to become more forage-intensive — capitalizing on a ruminant’s advantages — and less grain-intensive, giving the stocker a larger role. There is a lot of potential for better forage quality and more-intensive forage programs.
Markets have shown that grain is worth more for other uses, such as biofuels, Peel said, but this can be an opportunity. With ruminants, he asserted, the beef industry can survive high corn prices better than the pork and poultry industries.
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