Agriculture Outlook
Rockbridge agriculture has long been in a position where generally what is bad for the Corn Belt grain markets is good for Rockbridge agriculture. The reason being Rockbridge farms are more dependent, either directly or indirectly, on purchased feed grains like corn, barley, and soybean products and is not a large producer of these feeds.
Rockbridge has direct dependence on the purchase price of grain through the purchase of supplemental feeds for cattle, and indirectly because grain prices impact the financial health of the poultry companies that contract with our large-scale poultry growers.
U.S. beef and poultry industries depend on exports, but not as much as the grain markets. Since the imposition and/or threat of new tariffs by the new federal administration in February and March, U.S. corn and soybean prices have fallen by roughly 10% for grains that were already operating in an environment where supplies were abundant and profit margins narrow.
The circumstance of narrow profits for grain production are compounded by the U.S. dependence on fertilizer products that are mined from Canada’s extensive natural deposits of potassium and phosphorus rich minerals. Canada has imposed reciprocal tariffs on fertilizer in response to recent U.S. Government trade actions. Cattle and poultry prices have generally held steady or even gone up in recent weeks. Supplies of young cattle for slaughter are tight and the national inventory of beef breeding cattle is the smallest it has been since 1960. Individual cattle are larger now and beef production efficiency has improved dramatically over that time, which explains why the United States is producing more beef with fewer cattle.
What this all means for Rockbridge farms is cautious optimism. Increasing input costs for equipment, other capital items, and fertilizer should motivate livestock producers to enhance their grazing management and increase the number of days their animals are harvesting their own feed through grazing.
Market prices are signaling expansion of beef cow numbers. However, past experiences with similar market patterns clearly tell us that when profits are good, it is imperative the stockman first build cash reserves, second ensure infrastructure needs are met (fences, water sources, and animal handling equipment), and third management guarantees a low cost of production with high reproductive efficiency. Retention or acquisition of additional breeding females should only occur when these three criteria have been met.
Virginia Cooperative Extension will be holding an Agribusiness Management seminar on Wednesday, April 9, at the Shenandoah Valley Electric Cooperative headquarters at 180 Oakwood Drive, Harrisonburg from 10 a.m. to 3 p.m. Topics will include enterprise budgeting, farm recordkeeping, land leasing, easements and mineral rights, and Farm Bill policy development. Cost to attend is only $5 and lunch is included. Contact Jeremy Daubert at (540) 564-3080 to register to attend.
