Trends in the cattle feeding industry became more clear in the most recent USDA Cattle on Feed report.
Katelyn McCullock, economist with the American Farm Bureau Federation, says the report indicates the number of smaller feedlots is increasing.
“Smaller sized feedlots did increase capacity adding 2,000 lots (locations) compared to 2015 and increasing the number of head marketed during 2016 by just over 200,000 head year-over-year,” she says in her In the Cattle Markets analysis.
“This relatively large increase in small feedlots is driven by cheap feed, but is unlikely going to be a long-term trend. Over the last decade feedlots with 1,000 head or less have fallen by 65 percent. The largest increases have been in feedlots with 50,000 head or more, up 28 percent since 2006.”
She says larger feedlots also continue to grow, with annual marketing numbers growing by 710,000 head
“The number of head marketed in this largest capacity category represents 34 percent of the total cattle marketed,” McCullock says. “The smallest proportions of cattle were marketed in feedlots with 1,000-31,999 head capacity.”
She says while the USDA report only surveys feedlots with a capacity of 1,000 head or more, “this represents only 7 percent of the industry’s capacity. There are just over 30,000 feedlots in 2016, and 93 percent of them held less than 1,000 head. Those 7 percent, however, marketed more than 87 percent of the total cattle sold.”
McCullock says the bigger the feedlot, the better the feeder can take advantage of its size to handle weak market conditions.
“These facilities on farmer-feeder operations are fluid and tend to operate when the market conditions are favorable,” she says. “When conditions are less favorable those facilities remain empty and producers sell calves and corn.
“Mid-sized operations have less flexibility. In the smaller mid-sized categories, feedlots added capacity as seen in the 1,000-15,999 head capacity groups. In the larger mid-sized categories (16,000-49,999 head capacity), those that could not grow, exited.”