2024 Fall Farm Outlook Lincoln Daily News Oct 2024 Page 11 When considering the challenges beef producers face, much of the focus is on the economy at both the farm and macroeconomic levels. While much of the discussion is on the financial health of grain operations across the country, livestock producers face unique economic challenges. The United States Department of Agriculture (USDA) estimates that overall cash receipts for cattle and calves in the U.S. are expected to increase by over $6 billion from 2023 due to higher market prices for beef. An article from farmdoc daily in February 2024 projected the market price for beef to be at some of the highest levels ever. This is primarily driven by a decrease in the total number of cattle and calves in the country. Another analysis from farmdoc daily placed the U.S. cattle inventory on July 1 at 94.2 million head, roughly one percent lower than the July 2023 inventory. The larger national herd means fewer cattle go to the slaughter, thus raising the cattle market price. Larger herds, however, come with higher costs for producers. The USDA estimated that increases in labor and feed costs and more money spent on livestock purchases represent the largest increases in overall farm expenses. An increase in herd size and production costs are not only economic pressures for beef producers. Macroeconomic conditions are also impacting consumer demand for beef. It is no secret that inflation and high prices have put pressure on consumers in recent years. Food is one of the indicators economists use to measure inflation and its impact on consumers. The USDA reported that overall food prices increased by almost ten percent from 2021, the fastest increase since 1979, and all food categories saw at least a five percent increase. Food prices slowed in 2023, only increasing by around six percent. Pork was the only food category that did not see an increase in 2023. So, what does this mean for beef producers? As the price of food increases and a consumer’s income remains steady, the consumer will make a choice about the type of food they purchase at the grocery store. Let’s say that a consumer usually purchases a ribeye steak when they go to the store. However, with food prices increasing, the price of that ribeye also increases. The consumer will look at other, lower-quality cuts of beef, such as ground beef, to try and save money. The consumer may also look at proteins other than beef. The consumer may look to chicken or pork as a cheaper alternative to beef. Now, let’s recall the laws of supply and demand - an increase in the price of a good leads to a decrease in the demand for that good. So, as consumer preferences shift away from beef, then the price of beef will continue to increase. Beef cattle producers in Logan County and across Illinois face diverse and unique challenges to their operations. Financial pressures on producers due to rising costs of
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