Peel Says Strong Market Impacting Cattlemen Nearing Retirement

Oct 31, 2014

The United States is in historic times with the strength of the current cattle market. The industry continues to see record high prices and prices may go higher yet the next couple years. That's the opinion of Oklahoma State University Livestock Market Economist Dr. Derrell Peel. One segment that is contemplating their future in the cattle business are older producers that thinking hard about hanging it up. Do they do it now with the current high prices or should they wait another wait another year or two? Peel said producers that are close to retirement age are contemplating those choices, but he thinks producers recognize this is a fundamentally strong market.

Peel said the bigger challenge exist for those producers who were forced to liquidate cattle during the drought.

"They are in a situation now where they can rebuild, but they are asking themselves sort of what is the time frame here, do have time to get in, is it worth the financial investment that it is going to take to get in at this point and its all relative to your expectations about the market as well as your personal time horizon on how much time you've got to work with this market," Peel said.

The demographic makeup of the cattle business changed some with the latest drought. High prices could be another tipping point for demographic change. Peel said the 2012 Census of Agriculture report showed about 35 percent of the all of the beef cows in the US are owned by producers that are retirement age 65 or older and about 34 percent of all the pasture was controlled by producers of that age. He anticipates a lot of transition will happen in the next few years.

"Depending how that happens, I think we will see some change in demographics of the producers and it also may impact how fast the herd rebuilds," Peel said. "Because if these producer transitions are happening at the same time or in advance of herd rebuilding decisions, then that may change the timing a little bit in how fast we can rebuild this cow herd."

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