44 NEBRASKA CATTLEMAN January 2024 ward long-run averages. The net result is a near-term decline in crop receipts that takes until the early 2030s to get back above $13 billion. On the livestock side, the story begins and ends with the cattle herd, as cattle generate around 90 percent of total livestock receipts in Nebraska. Livestock receipts grew from less than $11 billion in 2020 to a projected $17.7 billion in 2021. Dairy, hog and poultry (egg) receipts all rose during this period before falling back in 2023, but it was cattle receipts growing more than $5 billion during that timeframe that really drove the livestock sector forward. (Figure 2.) Just like crop receipts are a function of yields and prices, cattle receipts are a function of production and prices. The livestock receipts are showing the impact of a shrinking cow herd that ultimately reduces total beef production. The Nebraska beef cow herd shrunk by more than 11 percent from 2020 to 2023 as the cattle herd goes through a liquidation phase compounded by drought-induced reductions in grazing capacity. Fewer cows produce fewer feeder cattle in Nebraska, and feedlots NEBRASKA FARM INCOME CONTINUED FROM PAGE 42 take the local supply and import additional feeders from other states or countries to produce finished cattle. While total beef production (i.e., head marketed × selling weight) grew from 2020 to 2022, production fell by 4 percent from 2022 to 2023, driving beef supplies lower and prices higher. In the end, a projected 23 percent increase in prices pushed total receipts higher for 2023. This relative inelasticity in the livestock market where changes in production/marketings drive larger changes in prices may mean peak prices in the near term, but also likely lower prices in future years as the cow herd and ultimately production rebuild. This of course assumes steady demand for beef in the United States and international markets. The near-term numbers in the projections show the cow herd beginning to grow back in 2024, although the official herd estimates for the year will come quickly in January. Whether the herd grows in 2024 or delays growth to 2025, prices are projected to peak in the next couple years as heifer retention compounds the smaller calf crop and reduces marketings. Over the decade ahead, however, prices are projected to fall back moderately but remain at nominally higher levels by historical After experiencing herd liquidation in 2021, Nebraska cattle and calf inventory fell again in 2022 and 2023. This was largely driven by drought across the state, which significantly limited quality grazing options and tight forage supplies. Beef cow inventory is not projected to rise until 2024. Despite tighter 2023 inventories, cattle and calf receipts rise $2.44 billion. This is largely driven by higher prices as total marketings on a liveweight basis decline nearly 4 percent from 2022. Prices are projected to peak in 2025 and liveweight basis marketings increase in 2024 onward. Hog and pig receipts decline $96 million in 2023 as increased 2023 marketings were unable to offset decreases in prices. Dairy and poultry receipts decrease a combined $180 million from 2022 to 2023. This is largely attributed to weaker 2023 egg and milk prices. Figure 2: Livestock Receipts: 2021-2024 comparison. Total cattle receipts are projected to peak at just over $18 billion before settling to a level between $16.5 and $17 billion. As a result, total receipts across all livestock species in Nebraska (i.e., cattle + dairy + hogs + poultry + others) should peak at just over $19 billion before falling back to between $18 and $18.5 billion. While combined crop and livestock receipts grew about $10 billion from 2020 to the 2023 level of $31.7 billion and are projected to stay between $31 and $32 billion over the next decade, costs have gone up as well, and margins have remained relatively tight. Production expenses grew more than $8.5 billion during the same time period and are projected to remain higher going forward. Purchased feed and livestock may moderate in the coming years, but some expense categories look to remain high or even climb further over the decade, including labor, capital consumption (depreciation), rent and interest. For producers, these projections are a reminder of the basic challenges for production and management decisions. Higher prices (at present) in the beef industry do not reduce the need for sound management and cost control. Rather, they seemingly only increase the dollars at risk and the need to use sound production, marketing and financial management tools to manage risk and maintain positive margins in the years ahead. ~NC~
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