Page 37 - MWC 10-5-2023s

The Midwest Cattleman · October 5, 2023 · P37
key issue driving structural this year will exceed 2015 by says, but a reality that must The precipitous drop comes
change,” he says. “The U.S. three billion pounds. be factored into their busi- from a projected 7.9% decline
cattle herd peaked at 132 “We will see a slower herd ness plans. in steer and heifer slaughter
million in 1975 and produced buildup than in previous cy- Sterling Marketing has in 2024, which, if realized,
24 billion pounds of beef. Our cles,” Nalivka says. “Since the calculated packer capacity would be one million head
herd is now one-third small- peak inventory of 132 million utilization weekly and annu- fewer than 2023, according
er, and we will produce 27 head in 1975 and subsequent ally since 1988, and the cur- to Sterling estimates. Couple
billion pounds, or 15% more liquidation down to 110 mil- rent data provides a caution that with the fact beef pack-
than 1975.” lion, every buildup has peak- flag for the startups. ers need capacity utilization
Efficiency gains are even ed at a lower number than “Beef packer capacity uti- to run from 90% to 94% to
more pronounced in the cur- the previous peak. This time lization will be about 87% capture efficiencies of size
rent cycle. At the beginning will be no different.” this year, and I project it will and maintain profitability.
of 2023 the herd size was As a whole, the beef indus- be about 80% next year, with- “This cycle will produce
roughly the same as in 2015, try does not need additional out any additional capacity further structural adjust-
which was the smallest cat- packing capacity. That’s not added,” Nalivka says. “The ments in packer capacity,”
tle inventory since the early an argument against any of drop at cow plants will be Nalivka suggests. “The suc-
1950s, yet beef production the new ventures, Nalivka even greater.” cessful packers — either the
current ones or the new ones
— will develop their margins
on value-added further pro-
cessed product, coordinating
that with their slaughter ca-
pacity.”
Or, as he calls the strategy,
“The right cattle for the right
market.”

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