WASHINGTON – International forecasters predict a rosy outlook for beef producers worldwide over the next decade, but ranchers in Montana are proceeding with caution.
“Cattle prices are more or less an attitude,” said Jim Baker, a regional director at the Montana Cattlemen’s Association in Hot Springs.
A joint agricultural forecast released Wednesday by the Organization for Economic Cooperation and Development, and the Food and Agriculture Outlook, a United Nations operation, predicted calmer and more stable food markets across the globe in coming years.
The forecast has been issued annually for the past 20 years to predict prices, production trends and demand changes in the global agricultural sector using statistical analysis and input from groups like the World Bank and the International Monetary Fund. The OECD is an international economic organization with 34 member countries that provides data and policy recommendations.
Wheat, the No. number 1 crop in Montana, may face more price decreases, according to the report which made projections for the years 2015 to 2024. Buildup of wheat stocks in the past two years is the main driver.
“But the demand is not able to follow it,” said FAO Director General José Graziano during a news conference in Paris on Wednesday that was streamed live.
However, Montana farmers don’t really have a choice.
“Unlike the Middle West, 90 percent of the grains in Montana are wheat,” said Lola Raska, executive vice president at Montana Grain Growers Association in Great Falls and a lifelong farmer. “We are going to grow wheat no matter what the price is. If the wheat prices get really low, our farmers need to find out ways to be profitable, such as cutting input cost, other than planting other more profitable products. You have to be optimistic to be a farmer.”
One downside in the forecast was the trend showing a growing number of importing countries and fewer exporting countries. That means more risk for those exporters that specialize in fewer products.
Possible disrupters include changes in oil prices and climate events such as the flooding that farmers on Montana’s Hi-Line endured last August, or the droughts that seem never to abate.
“In 2001 we didn’t cut a stick of hay off our whole entire ranch,” said Maggie Nutter, also of the Montana Cattlemen’s Association, who lives in Sweet Grass. “And that’s a hateful thing—when you’re paying for land that isn’t producing.”
About 80 percent of the wheat in Montana gets exported, according to Raska, so global situations such as the current oversupply of the crop can impact wheat farmers significantly.
But beef will be more profitable than usual, the forecast says. Feed costs are predicted to stay down as oil prices remain low, and supply is relatively limited. Ranchers are still rebuilding their herds after downsizing amid the global economic crisis of 2008. The market rebound means consumers will continue to buy more high-cost meat, like beef.
A price dip is in store for pork, Montana’s No. 2 meat product, after record high prices in 2014, following disease outbreaks in the U.S. and Europe.
While grain growers hailed the passage of the Trade Promotion Authority bill on Monday as a promising sign for U.S. exports — and thus, farmers’ incomes — cattle ranchers like Baker fear the move toward more free trade could hurt U.S. beef. Cattlemen, he said, would have to compete with cheaper products from abroad once a deal is in place.
“The cattleman is kind of on a different side of the mountain as the grain growers,” Baker said in a phone interview. “One guy’s feast is another guy’s famine.”
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