Foreign demand for Colorado cattle equals cash cow for ranchers
Delta rancher Michael Ripp is seeing something he’s never seen before in the cattle industry: Beef prices are going up at the same time as prices for feed grain.
“Usually, when grain goes up, cattle goes down, and vice versa,” Ripp said. “Here this last year, both have been going up pretty strongly, and that’s kind of unusual. It kind of points to the demand for beef is strong, so the price keeps going up in spite of the fact the feed’s going up.”
Colorado Department of Agriculture officials say there’s a good reason for the uptick.
The state experienced an unprecedented 32 percent year-over-year increase in foreign exports of Colorado agriculture products in the first quarter of 2011, making it 15th in the nation in export increases. Meat products, primarily beef, but pork and lamb as well, make up about 61 percent of all exports from the state, said Tim Larsen, the department’s senior international marketing specialist.
According to numerous national computer databases that Larsen gets, the rise in exports is because the state’s agriculture products are going to places around the world as never before.
In addition to the state’s usual customers in Canada, Mexico and Japan, exports rose 88 percent to South Korea, 158 percent to Hong Kong and 209 percent to the United Kingdom, just to name a few.
Along with that, Colorado agriculture products have found new markets in such unlikely places as Bangladesh, Kenya, the Dominican Republic and the United Arab Emirates.
Larsen attributes the increases to the department being under orders from Gov. John Hickenlooper and his agriculture commissioner, former U.S. Rep. John Salazar, to increase the state’s exports of agricultural products by 40 percent by the end of the governor’s first term, which is in 2015.
“I had to chuckle when I went into a meeting with (Salazar) the other day and said, ‘Well, I’m already at 20 percent over my quota, so I’m going to take the rest of the year off,’ ” Larsen quipped. “He didn’t laugh.”
According to Larsen’s data, the state’s overall exports in the first three months of the year were nearly $285 million. That’s a $68.7 million gain over the first quarter of 2010.
By comparison, the first quarter of 2010 experienced a 12 percent increase over the same period a year earlier.
That’s partly because more countries than ever are looking to Colorado for meats and produce, Larsen said. In 2009, the state’s agricultural products were going to 79 different counties. Now, it’s up to 105.
Larsen said the state achieved much of that increase through its membership with the Western United States Agricultural Trade Association, which consists of the 13 western states. Through it, the state trains Colorado producers about how they can increase sales to overseas markets, and it brings in buyers from other countries to introduce them to what the state has to offer.
“Thirty-three percent of all the fresh, chilled beef shipped to Canada came from Colorado,” he said. “Korea’s up 88 percent. That’s in beef and hides, too.”
That’s good news to people such as Bill Martin, co-owner of the Loma Sale Barn.
Martin said western Colorado ranchers aren’t directly exporting beef to foreign markets, but they’re a major part of the cattle industry statewide. As a result, they, too, are benefiting from the export boom.
“We produce the animals here, and then we sell to the big feeding companies, most of which are on the Front Range or Nebraska ... and their exports are up huge,” Martin said.
“There’s always demand for U.S. grain-fed beef, but the real driver is our dollar is so weak on the global economy that those (buyers) are getting 20 to 30 percent more for the same product. A lot of people don’t understand, but that is huge.”
Another piece that’s helped was the Legislature’s decision this year to restore a sales tax exemption on the products farmers and ranchers purchase to operate their businesses, such as pesticides and feed grain, he said.
That exemption can add another 6 to 8 percent to a rancher’s bottom line.
“All our costs are way up, but the big income at the end of the day for ranchers is the calf prices, and they are at a historical high,” Martin said.
“You can pay a few more cents for fuel and a few more cents for seed corn per bushel, obviously it can go up to the point where they (and beef prices) offset, but we’re not there yet. We’re still receiving a lot more benefit.”
Martin said the industry is entering its slow months, when ranchers move their herds to the high country to graze.
During that time, several are rebuilding their herds and increasing the number of heifers in their stocks for breeding next year.
Joe Schuele, spokesman for the Denver-based U.S. Meat Export Federation, said Colorado always has been in a good position to take advantage of the international market because of its diversified cattle industry. It offers numerous breeds, including Angus, Hereford, Gelbvieh and Charolais.
“You don’t turn that on or off like a faucet,” Schuele said. “You have to be positioned to capitalize on it when the climate is good, and right now it’s good. People who for years have put a lot of sweat and a lot brain power into how to capitalize on the global markets are reaping the benefits right now.”
As a result, Colorado is 10th nationally in beef exports, Schuele said.
For Ripp, who also is president of the Western Colorado Angus Association, all this means is more money in the pockets of local ranchers. He said that helps them weather the slowdown elsewhere in the economy, and it solidifies their economic futures for years to come.
“I’ve talked to a lot of guys who are pretty optimistic about the way the cattle business is going,” Ripp said.
“Certainly, if we can continue to get a bigger piece of the export pie, that’s going to help everybody.”