January 2015
Ag Insight

Ag Insight

U.S. dressed-cattle weights reach record levels

The average weight of cattle slaughtered in the United States increased in 2014, as rising prices for cattle and beef coupled with declining feed costs have induced growers to feed cattle for longer periods.

The average dressed weight - the weight of the carcass minus feet, head, hide and organs - of U.S. slaughtered cattle has been increasing in recent years, but rose sharply from 799 lbs./head to 822 lbs./head between September 2013 and September 2014.

U.S. cattle and beef prices have set a number of successive record highs since mid-2013 because of declining cattle inventories resulting from drought-degraded pasture and forage conditions during 2010-12. With improved weather, cow-calf operators appear to be rebuilding herds by retaining heifers for breeding, adding upward pressure to cattle prices.

As a direct result of placing fewer heifers in feed lots, there is a larger proportion of steers that typically weigh more than heifers in the slaughter mix, contributing to heavier average weights.

USDA funding boosts agricultural exports

The U.S. Department of Agriculture’s Foreign Agricultural Service has awarded funding to more than 60 U.S. agricultural organizations to help expand commercial export markets for American products.

Through the Market Access Program, FAS partners with U.S. agricultural trade associations, cooperatives, state regional trade groups and small businesses to share the costs of overseas marketing and promotional activities to help build commercial export markets for U.S. agricultural products and commodities. The program, focusing on consumer promotions including brand promotion for small companies and cooperatives, is used extensively by organizations promoting fruits, vegetables, nuts, processed products, and bulk and intermediate commodities.

Through MAP, FAS will provide $173.2 million to 62 nonprofit organizations and cooperatives in fiscal 2015. Participants contribute an average 214 percent match for generic marketing and promotion activities and a dollar-for-dollar match for promotion of branded products by small businesses and cooperatives.

The Foreign Market Development Program focuses on trade servicing and trade capacity building by helping to create, expand and maintain long-term export markets for U.S. agricultural products.

Under FMD, also known as the Cooperator Program, FAS will allocate $26.7 million to 22 trade organizations representing U.S. agricultural producers. The organizations on average contribute nearly triple the amount they receive in federal resources and will conduct activities to help maintain or increase the demand for U.S. agricultural commodities overseas.

The past 6 years represent the strongest period for U.S. agricultural exports in the history of the United States. Farm exports in fiscal year 2014 reached a record $152.5 billion and supported 1 million jobs in the United States.

 

Farms are big users of energy

Agricultural businesses, particularly those specializing in crop production, are heavy users of energy and energy-intensive inputs. Ignoring the energy embodied in purchased machinery and services, energy-based purchases accounted for over 25 percent of farm operator expenses in 2012, on average.

U.S. farm businesses are classified as industrial users of electricity and poultry production has the highest share of electricity expenses (5 percent) among all types of agricultural producers, while cotton and rice producers have the highest share of electricity expenses (3 percent) among crop producers, primarily for irrigation.

While motor fuel accounts for about 6 percent of operator expenses, the farm sector is a heavy indirect consumer of natural gas. For example, up to 80 percent of the manufacturing cost of fertilizer can be for natural gas.

Expenditures for fertilizer were over 11 percent of total operator expenses among farm businesses in 2012, with much higher expenditures for most crop farms. Natural gas as a source of electric power has been increasing in recent years, reaching 27 percent of electricity generation in 2013. As a result, the farm sector is particularly sensitive to fluctuations in the price of natural gas.

USDA launches market for carbon credits

A USDA grant has helped initiate a partnership designed to improve the environment by creating a market for carbon credits generated on working grasslands.

Chevrolet, a division of General Motors, recently purchased almost 40,000 carbon dioxide reduction tons generated on working ranch grasslands in the Prairie Pothole region of North Dakota.

The amount of carbon dioxide removed from the atmosphere by the company’s purchase equals the amount that would be reduced by taking more than 5,000 cars off the road, according to USDA Secretary Tom Vilsack.

Chevrolet’s first purchase of third-party verified carbon credits generated on working ranch grasslands was undertaken voluntarily as part of its commitment to reduce 8 million tons of carbon dioxide from being emitted. This is comparable to the annual carbon reduction benefit of a mature forest the size of Yellowstone National Park.

USDA’s Natural Resources Conservation Service awarded a $161,000 grant to Ducks Unlimited in 2011 to develop the necessary methodology to quantify the carbon stored in the soil by avoiding grassland conversions, resulting in the generation of carbon credits.

This is how the credit system works:

Landowners voluntarily place lands under a perpetual easement, but retain rights to work the land such as raising livestock and growing hay.

The carbon-storage benefits of this avoided conversion of grasslands are quantified, verified and formally registered, resulting in carbon credits.

The carbon credits are made available to entities interested in purchasing carbon offsets.

The landowners receive compensation for the carbon credits generated on their lands.

"Ranchers benefit from new revenue streams while thriving grasslands provide nesting habitat for wildlife are more resilient to extreme weather, and help mitigate the impact of climate change," Vilsack said.