Economist: Livestock's 'Mini-boom' Likely to Last for a While

Economist: Livestock's 'Mini-boom' Likely to Last for a While

Livestock producers can expect strong economics to favor expansion in years to come; communities with large animal populations may also see boost

Livestock producers can look forward to an economic "mini-boom" that may last for the next several years, Purdue University agricultural economist Chris Hurt said in a recent farmdoc daily article.

The mini-boom, brought on by lower grain prices and record-high animal prices, could foster opportunities for expansion of herds and flocks.

It's a change from 2006-2012, when livestock farmers downsized to cover higher feed costs.

Related: Beef Herd Poised For Expansion; Price, Consumer Demand Remains High

Now, profit margins for the animal industries have risen to strongly favorable levels, Hurt said. Profit prospects have these industries ready to expand.

Livestock producers can expect strong economics to favor expansion in years to come; communities with large animal populations may also see boost

"If the years from 2007 to 2013 could be described as the 'Grain Era,' in which crop sector incomes had an extraordinary run, the coming period may be described as the 'Animal Era,' when producers of animal products have strong returns," Hurt said.

Rising per-capita consumption of meat will also be a driver in this mini-boom phase, since animal products will become more affordable, Hurt said. As an example, the amount of meat available each year reached about 220 pounds per-capita when corn was $2 a bushel. By this year, only 200 pounds is available.

"We can expect that a portion of this lost consumption will be recovered in the next three to five years as producers increase supplies and drive down retail prices of animal products for consumers," Hurt said.

Related: Should You Expand Your Beef Operation? (Farm Futures Now)

This positive period for animal agriculture will also be economically good for rural communities with large numbers of livestock, along with businesses that carry animal management supplies.

"Animal industries are expected to rebound in coming years led by rising per-capita consumption, continued small growth in U.S. population and growing export demand," Hurt said. "The animal industries finally have a positive multiyear outlook."

Enjoy following livestock markets? Check out John Otte's weekday morning column, Morning Livestock Review.

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