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Why expand if a smaller cattle herd brings higher prices?

The January 2012 Cattle report provides numbers to indicate this is the smallest cattle herd since 1952. However, it should be noted that beef production totaled over 26 billion pounds in 2011, compared to about 10 billion in 1952. The beef industry produces much more beef with the same number of cattle that existed in the 1950s. The record highest beef production was the 27 billion produced in 2002. Unfortunately, genetics will make is harder to continue producing more beef with less cattle.

Smaller beef production leads to smaller beef consumption. Beef consumption is measured by adjusting beef production for international trade and freezer stocks. When this number is divided by the current population, we get per capital beef consumption of 55.3 pounds, a 3.5% decline from 2011 levels.

It is vital for the long-term health of the industry not to have beef production fall too low. With declining cattle numbers, smaller packers and feedlots will likely exit the business. This infrastructure is not easily re-developed when cattle numbers increase.

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