Overview of the United States Cattle Industry Released June 24, 2016, by the National Agricultural Statistics Service (NASS), Agricultural Statistics Board, United States Department of Agriculture (USDA). Cattle Production Ranks 1st in United States Cash Receipts Cattle production is one of the most important industries in the United States, accounting for $78.2 billion in cash receipts during 2015. This represents 21 percent of the Economic Research Service's (ERS) forecasted total cash receipts of $377 billion from agricultural commodities in 2015. Corn being the United States 2nd largest cash receipt forecasted at $47.2 billion in 2015. Modern beef production in the United States is a highly specialized system that spans from cow-calf operations that typically graze pastureland to cattle feedlots focusing on finishing cattle on grain for slaughter. In 2015, the beef industry saw the first increase in cattle and calves production since 2011, producing 41.5 billion pounds, a 3 percent increase from 2014. Total cattle and calves inventory as of January 1, 2016 was 92.0 million head, also 3 percent above previous year. The Overview of the United States Cattle Industry report provides an official periodic review of changes in the United States cattle industry and its impact on cattle supplies and disposition. Additionally, this report gives a brief overview of survey and estimation procedures as well as terminology used in the National Agriculture Statistics Service's (NASS) cattle publications. The 2016 Overview of the United States Cattle Industry report will highlight data from NASS' annual Meat Animals Production, Disposition, and Income report, the January Cattle inventory report, monthly Cattle on Feed reports, monthly and annual Livestock Slaughter reports, along with the Census of Agriculture. Also, it will take an in-depth look at the United States imports, exports, cattle life cycle, and weather conditions. Gross Cattle Income down 4 percent The 2015 gross income from cattle and calves for the United States totaled $78.8 billion, a 4 percent decline from the 2014 record of $82.1 billion. All cattle and calf marketings during 2015 totaled 52.4 billion pounds, down 1 percent from 2014. This was combined with the market year average price received for cattle greater than or equal to 500 pounds decreasing $5 per hundredweight (cwt) from $152 per cwt in 2014 to $147 per cwt in 2015. At 52.4 billion pounds the all cattle and calf marketings were the lowest since 1992, while gross income was second largest on record. Cattle production in 2015 was 41.5 billion pounds, up 3 percent from the 40.2 billion pounds produced in 2014. For the second year in a row, the largest percent of the United States value of production from agricultural commodities came from cattle and calves. In 2015 the top 5 United States agricultural commodities in order from largest to smallest were cattle and calves, corn from grain, milk from cows, soybeans, and broilers. The 2015 total value of production for all cattle and calves totaled $59.9 billion, down slightly from the 2014 value of production. The second largest value of production in the United States was corn for grain at $49.0 billion. Corn for grain was the largest United States agricultural commodity in terms of value of production in 1996 as well as from 2007 to 2013. You would have to go back to 1998 when milk from cows was the largest value of production. None of the top five commodities saw an increase in value of production in 2015, cattle having the smallest decrease at less than 1 percent and milk production with the largest decrease at 28 percent. The straight annual average of monthly prices received by farmers in the United States for calves in 2015 equaled $263 per cwt, up 3 percent from 2014 and the largest on record. Identical to total cattle, farmers saw an average decrease in the prices received for steer and heifers in 2015 of $5 per hundredweight. Grain farmers in the United States saw a decline in the price received for corn for grain for the fourth year in a row. In 2015 the price for corn for grain was $3.71, down 44 percent from the peak in 2012 of $6.67. The bottom line for cattle producers has benefited from these lower prices. Cattle Inventory Saw Largest Year over Year Increase Since 1975 The United States cattle inventory officially began a new cycle in 2015. A cattle cycle is a period of time in which the number of beef cattle in the nation is alternately expanded and reduced for several consecutive years in response to perceived changes in profitability of beef production. The cattle cycle is measured from trough to trough. The last cycle spanned from 2004 to 2014, with 3 years of growth followed by a 7 year liquidation. The longest cycle since 1928 began in 1990 and ended in 2004; which saw 6 years of growth and 8 years of decreasing inventory. Interestingly the first five cattle cycles, beginning in 1928, saw more years of increases than decreases in inventory. However, during the last three cattle cycles, beginning in 1979, there have been more years of decreases than there have been years that increased. The last eight cattle cycles have been an average of 11.8 years, with the shortest cycle being 10 years. When USDA began counting cattle in the United States in 1867, there were only 28.6 million head, the lowest on record. The United States all cattle and calves inventory peaked in 1975 with 132 million head. Just two years into the current cattle cycle there has been a 4 percent increase, the largest increase in the first 2 years of a cattle cycle since the 1958 cycle. This increase is also larger than the total increase from the last cattle cycle which saw a 2 percent increase in the 3 years of growth. Looking at the last three cattle cycles; the largest increase was 8 percent during the 1990 to 2004 cattle cycle. The five cattle cycles prior to 1980 had an average increase of 26 percent. All cattle and calves inventory in 2016 was 92.0 million head, 3 percent above the 89.1 million head in 2015. The 92.0 million head in 2016 is the largest number of cattle and calves since 2011. As of January 1, 2016 heifers for beef replacement represented 32 percent of all heifers, compared to 53 percent in 1966. However, the 32 percent is up 3 percent from just 10 years ago and 2016 had the largest percent of beef replacement heifers since 1995. Other heifers represented 44 percent of all heifers, compared to 24 percent in 1966 and 49 percent in 2006. The number of other heifers equaled 8.71 million head, up 3 percent from 2015. In 1966 there was only 4.15 million other heifers with total inventory being 109 million head; 18 percent larger than 2016. Heifers for milk replacement percent of total heifers have not seen much change in the last 50 years, this class represents 24 percent of total heifers in 2016. The number of milk replacement heifers as of January 1, 2016 was 4.82 million head, the largest since 1962. The number of milk cows on January 1, 2016 was 9.32 million head, the largest since 2009. Live Cattle Imports Down 16 Percent According to the Economic Research Service (ERS) the United States imported 1.98 million head of live cattle in 2015, down 16 percent from the 2.36 million head in 2014. This was the largest decrease since 2004. In recent years, the United States has only received live imports from Mexico and Canada, the last time the United States did import live cattle from another country, Australia, was 2008. Since 1989 the United States has imported the majority of cattle and calves from Mexico and Canada. Only 0.1 percent came from other countries. In 2015 Mexico comprised 58 percent of total live imports, compare that to 2014 when Mexico comprised only 47 percent of the total live imports. ERS reported that in 2015 the US exported cattle to more than 20 different countries with the largest portion of exports, at 53 percent, going to Canada. Mexico was the second largest with 28 percent of total live cattle exports. According to ERS the United States exported 72.5 thousand head of live cattle in 2015, down 33 percent from the 108 thousand head in 2014. This is the fourth consecutive year that the United States has seen a decline in exports, and the second year in a row the United States has seen a 33 percent decline. Beef production in the United States is diversified with various types of operations, with different possible paths to be taken between calving and slaughter. The diagram on the following page is from The Beef Book published by Urner Barry and shows some of these possible paths a calf born in the spring could take. In 2015, 72 percent of all calves in the United States were born from January 1 through June 30. Calves born in the spring are then weaned in the fall once their digestive system can process whole feeds. Once the cow-calf operator has weaned their calves, the operator then makes the decision to sell their calves, retain their calves to provide the next phase themselves, or use a production contract to perform the next stage of the process. The advantage of a production contract is that the cow-calf operator retains ownership of that animal throughout the growing process. Each production stage includes a description of that stage, the weight achieved by the end of that stage, the time of year that the particular stage usually takes place, and the average number of days spent in that stage. Each path has its own advantages and disadvantages. The monthly NASS Cattle on Feed publication breaks out placements into feedlots by weight category. Drought Plays Role in United States Cattle Inventory Numbers The following three maps, provided by the World Agriculture Outlook Board, give a visual of the drought experienced in the United States at the beginning of 2008, 2013, and the end of 2015 respectively. These maps use the NASS Census of Agriculture data, broken out by county. The counties in dark green, major cattle area, combine for 75 percent of the national inventory; the light green, minor cattle area, combined with the major cattle area for 99 percent of the national inventory. The tan counties combine for only 1 percent of the national cattle inventory, and the counties in gray contain data that had to be disclosed for confidential standards. The maps are derived from the United States Drought Monitor product, and more information about the Drought Monitor can be found at http://droughtmonitor.unl.edu. January 1, 2008 was the first year of liquidation in the last cattle cycle with all cattle and calves at 96.0 million head, down 1 percent from 2007. At the beginning of 2008, 26 percent of the cattle inventory was within an area experiencing drought. Most of the drought being in the southeastern and western parts of the US. Just 5 years later, the level of cattle inventory experiencing drought jump up to 73 percent. January 1, 2013 all cattle and calves decreased 6 percent from the 96.0 million head in 2008 to 90.1 million head, with a liquidation happening each year. The largest liquidation came on January 1, 2012, with a 2 percent decrease. January 1, 2015 (no map shown) is when there was a major break in the amount of inventory experiencing drought at just 29 percent. This is also the first year all domestic cattle and calves increased to 89.1 million head, up 1 percent from the previous year, beginning the current cattle cycle. In 2015 the west and southern plains were still experiencing a drought. On December 29, 2015 the drought was in areas that combined for only 12 percent of the inventory, all in the west. Correlated, the January 1, 2016 all cattle and calves increased 3 percent to 92.0 million head. The favorable weather conditions that the United States experienced during 2015, has increased the amount of available forage. In addition, 2015 saw an increase in the weight of steers and heifers being placed into feedlots with a capacity of 1,000 or more head. Lowest Placements in Feedlots with Capacity of 1,000 or More Head on Record Placements for the slaughter market in feedlots with capacity of 1,000 or more head during 2015 was 20.4 million head, 5 percent below the 21.5 million head placed in 2014. Placements in 2015 were the lowest they have been since NASS began the monthly Cattle on Feed program in 1996. This was the fifth year in a row that placements were lower than the previous year. The feeder supply is defined as the combined total of calves under 500 pounds and other heifers and steers over 500 pounds not in a feedlot. The feeder supply in 2016 was 25.9 million head, up 5 percent from 2015. This is the largest feeder supply since 2011. The percent of the feeder supply placed in feedlots with capacity of 1,000 or more head in 2015 was 83 percent, 2 percent below 2014. This marks the lowest percent placed in feedlots since 2009. The number of heifers as a percent of the total cattle on feed inventory in the United States, for feedlots with capacity of 1,000 or more head, averaged 32 percent in the first two quarters of 2016. This is slightly below the annual average in 2015, when the number of heifers averaged 33 percent. This is the lowest percent of heifers since the series began in 1996. This correlates with 2016 having the largest increase in total cattle and calves in the United States since 1975. As placements for 2015 were the lowest on record since the series began in 1996, there was a record high number of cattle placed weighing 800 or more pounds. In 2015 the number of placements weighing 800 or more pounds in feedlots with 1,000 head or more capacity was 7.41 million head, 36 percent of total placements. This is also 7 percent larger than each of the previous 2 years, with 2013 being the second largest number of placements weighing 800 or more pounds since the series began in 1996. On the other hand the number of placements in the middle two weight groups, 600-699 pounds and 700-799 pounds, had the lowest number of placements and percent of placements since the series began in 1996. The number of placements of cattle weighing 600 pounds or less in 2015 was 4.79 million head, 23 percent of total placements. This is slightly below the average percent of cattle placed weighing less than 600 pounds. Cattle Average Dressed Weight Largest on Record Cattle slaughtered in federally inspected plants averaged an 829 pound carcass weight, up 21 pounds from just a year ago. This is the fourth year in a row cattle dressed weights have seen an increase. The average dressed weight for steers in 2015 was 892 pounds, up 2 percent from 872 pounds in 2014. This is the largest increase since 2002, when the average dressed weight for steers jumped up 3 percent. Heifers also saw an increase in the average dressed weight, 818 pounds in 2015 compared to 800 pounds in 2014. United States live cattle averaged 1,364 pounds with a dressing percentage of 61 percent, up slightly from last year. The total number of cattle slaughtered in the United States in 2015 was 28.8 million head, down 5 percent from 2014. Of the total cattle slaughtered, 28.3 million head (98 percent) were slaughtered at federally inspected plants, with 455 thousand slaughtered in non-federally inspected (NFI) plants, and 91.4 thousand slaughtered on farms. In 2015 the total number of cows and heifers slaughtered at federally inspected plants were 12.5 million head, 44 percent of the total cattle slaughtered at federally inspected plants which was down 2 percent from 2014. This was the fifth consecutive year there was a decline in the number of females slaughtered. The percent of females slaughtered in 2015 was also the lowest percent of total slaughter since 1974, and in 2016 there was the largest percent increase in cattle inventory since 1975. Historically, if the percent of heifers slaughtered is below 47 percent, there is an increase in the number of total cattle and calves on January 1. The total number of calves weighing less than 500 pounds that were slaughtered in commercial slaughter plants in the United States in 2015 was 453 thousand head, down 20 percent from the previous year. This equated to 1 percent of the calf crop, which is the lowest on record, down slightly from the percent slaughtered in 2014. This is the seventh year in a row that the number of calves and second year in a row that the percent of calf crop slaughtered decreased. Cattle Operations Average Size Decreased in 2012 The 2012 Census of Agriculture showed cattle operations decreasing in size per operation; an average of 98.5 head of all cattle and calves in 2012, compared to 100 head of all cattle and calves in 2007. This is the opposite of what happened from 1997 to 2007, when the average cattle operation grew 15.9 head from an average 84.1 head of all cattle and calves in 1997. The number of all cattle operations as of 2012 was 913 thousand operations, 5 percent below the 964 thousand operations in 2007. Mirroring this trend, the number of beef cow operations in 2012 was 728 thousand, a 5 percent decline from the 765 thousand operations in 2007. In 2012, operations with 1,000 or more head of all cattle and calves totaled 33.2 million head, 36.9 percent of all cattle and calves. The number of operations with 1,000 head or more of all cattle and calves in 2012 was 10.5 thousand, just 1 percent of the total number of operations. In 2002 and 2007 the operations with 1,000 head of all cattle and calves were 29.5 and 34.2 percent of inventory respectively. The opposite was true for beef cow operations. In 2012, operations with less than 50 head of beef cows totaled 8.63 million head, 29.8 percent of total beef cows. The number of operations with less than 50 head of beef cows was 594 thousand operations, 82 percent of the total number of beef cows. In 2002 and 2007 the operations with less than 50 head of beef cows represented 30.1 and 28.7 percent of inventory respectively. In 2015 the number of feedlots with 1,000 head or more capacity was 2.19 thousand, just 9 feedlots less than in 2005. Looking at the breakout by size, the number of feedlots with 1,000 to 7,999 head capacity decreased 11 lots from 1,751 lots in 2005 to 1,740 lots in 2015. The United States gained two lots with a capacity of 32,000 head or more from 126 lots in 2005 to 128 lots in 2015. The lots with capacity of 32,000 head or more as of January 1, 2016 had 5.56 million head, 53 percent of all cattle on feed in lots with 1,000 head or more capacity, up from 48 percent of all cattle on feed in 2005. Feedlots with 1,000 head or more capacity combined for a total capacity of 16.9 million head in 2016, up 100 thousand head from 2006. Statistical Methodology: Cattle Survey Procedures: For the January and July Cattle report a random sample of United States producers were surveyed to provide data for these estimates. Survey procedures ensured that all cattle producers, regardless of size, had a chance to be included in the survey. Large producers were sampled more heavily than small operations. A random sample of roughly 50,000 United States producers is surveyed during the first half of January to provide data for the January Cattle report. Data is collected by mail, telephone, and face-to-face personal interviews. For the July survey, data is collected during the first half of June from about 40,000 small and medium sized operations. These operators were contacted by face-to-face personal interviews. About 10,000 large producers and feedlots were contacted during the first half of July by mail, telephone, and face-to- face personal interviews. Regardless of when operations are surveyed, they are asked to report inventories as of the first of the month. Usable reports for both the January and July surveys average about 74 percent. Estimating Procedures: These cattle estimates were prepared by the Agricultural Statistics Board after reviewing recommendations and analysis submitted by Regional Field Offices. National and State survey data were reviewed for reasonableness with each other and with estimates from the previous year using a balance sheet. The balance sheet begins with the previous inventory estimate, adds estimates of births and imports, and subtracts estimates of slaughter, exports, and deaths. This indicated ending inventory level is compared to the Agricultural Statistics Board estimate for reasonableness. Revision Policy: Revisions to previous estimates are made to improve year to year and item to item relationships. Estimates for the previous year are subject to revision when current estimates are made. The reviews are primarily based on livestock slaughter and additional foreign trade and survey data. Estimates will also be reviewed after data from the five-year Census of Agriculture are available. No revisions will be made after that date. Reliability: Since all cattle operators are not included in the sample, survey estimates are subject to sampling variability. Survey results are also subject to non-sampling errors such as omissions, duplications, and mistakes in reporting, recording, and processing the data. The effects of these errors cannot be measured directly. They are minimized through rigid quality controls in the data collection process and through a careful review of all reported data for consistency and reasonableness. To assist users in evaluating the reliability of estimates in January and July Cattle, and monthly Cattle on Feed report, the "Root Mean Square Error" is shown for selected items in each report. The "Root Mean Square Error" is a statistical measure based on past performance and is computed using the differences between first and latest estimates. The "Root Mean Square Error" for the January 1 cattle inventory estimates over the past 10 years is 0.6 percent. This means that chances are 2 out of 3 that the final estimate will not be above or below the January 1, 2016 estimate of 92.0 million head by more than 0.6 percent. Chances are 9 out of 10 that the difference will not exceed 1.1 percent. Statistical Methodology: Cattle on Feed Survey Procedures: During January and July all known feedlots in the United States with capacity of 1,000 or more head are surveyed to provide data for cattle on feed estimates. During the other months, all known feedlots from 16 States are surveyed. The 16 States account for approximately 98 percent of the cattle on feed in feedlots with capacity of 1,000 or more head. Individual State estimates are published monthly for 12 of the 16 States. Data collected from the remaining 4 States are used to establish the "Other States" estimates. These 4 States include Illinois, New Mexico, Oregon, and Wyoming. The "Other States" category represents all cattle on feed with a capacity of 1,000 or more head for the rest of the United States. Estimating Procedures: These cattle on feed estimates were prepared by the Agricultural Statistics Board after reviewing recommendations and analysis submitted by Regional Field Offices. Regional and State survey data were reviewed for reasonableness with each other and with estimates from the previous month when establishing the current estimates. Estimates Published: The monthly Cattle on Feed report includes estimates of total cattle on feed, placements, marketings, and other disappearance. Estimates are published monthly for the United States as well as 12 of the 16 Survey States. These states include Arizona, California, Colorado, Idaho, Iowa, Kansas, Minnesota, Nebraska, Oklahoma, South Dakota, Texas, and Washington. Data collected from the remaining 4 States are used to establish the "Other States" estimates. Placement weight estimates are published for the United States as well as the 4 major states. These states include Colorado, Kansas, Nebraska, and Texas. In January, April, July, and October the Cattle on Feed report includes class estimates of steers and heifers currently on feed for the 12 published states and the United States. The February 1 report includes all previous year estimates and revisions as well as United States level size group and annual fed cattle marketing estimates. Revision Policy: Revisions to previous estimates are made to improve month to month relationships. Estimates for the previous month are subject to revision in all States each month when current estimates are made. In February, all monthly estimates for the previous year, and the number of feedlots and annual marketings from two years ago are reviewed and subject to revisions. The reviews are primarily based on slaughter data, state check-off or brand data, and any other data that may have been received after the original estimate was made. Estimates will also be reviewed after data from the Census of Agriculture are available. No revisions will be made after that date and estimates become final. Reliability: Since all 1,000+ capacity cattle on feed operators in every State are not included in the monthly survey, survey estimates are subject to sampling variability. Survey results are also subject to non-sampling errors such as omissions, duplications, and mistakes in reporting, recording, and processing the data. The effects of these errors cannot be measured directly. They are minimized through rigid quality controls in the data collection process and through a careful review of all reported data for consistency and reasonableness. Cattle Terms and Definitions Backgrounded cattle are steers and heifers that are fed a warm up or conditioning ration are normally fed to approximately 700 pounds, and then sold as feeders or shipped to another feedlot to be finished for the slaughter market. Bull is an uncastrated male bovine animal that weighs more than 500 pounds. Calf is any animal less than 1 year old. Calves by NASS survey classification are animals that weigh less than 500 pounds. Cattle cycle is a period of time in which the number of beef cattle in the Nation is alternately expanded and reduced for several consecutive years in response to perceived changes in the profitability of beef production. Cattle on feed are steers and heifers being fed a ration of grain, silage, hay and/or protein supplement for slaughter market that are expected to produce a carcass that will grade select or better. It excludes cattle being "backgrounded only" for later sale as feeders or later placement in another feedlot. Commercial feedlot is a feedlot whose primary enterprise is to feed cattle and market them for slaughter. Cow is a female bovine animal that has borne at least one calf. Farmer/Feeder is an operator who typically farms and feeds cattle on the same operation. The cattle feeding part of his/her operation is usually worked around the farming, e.g., feeding cattle before or after crops are planted/harvested, grazing stalks, etc. To be included as cattle on feed, cattle must go from the operation directly to slaughter. Feeder supply is defined as the combined total of calves under 500 pounds and other heifers and steers over 500 pounds not in a feedlot. Feedlot capacity is the maximum number of cattle that an operator can feed at any one time during the year. Feedlot capacity is the common terminology used by commercial and custom feedlots. Heifer is a female bovine animal that has not calved and weighs more than 500 pounds. Marketings are steers and heifers shipped out of feedlots to a slaughter market. Net placements are placements minus other disappearance. This gives a true indication of actual placements into feedlots for the month. Other disappearance includes death loss, movement from feedlots to pasture, and shipments to other feedlots for further feeding. Other heifer is a heifer that will not be bred or used as a replacement animal for the beef or milk herd. Placements are steers and heifers put into a feedlot, fed a ration which will produce a carcass that will grade select or better, and are intended for the slaughter market. Replacement heifer is a heifer that has been selected to be bred and placed in the beef or milk herd. Steer is a castrated male bovine animal that weighs more than 500 pounds. Stockers and feeders are young steers or heifers, weighing approximately 400- 800 pounds. These animals may be on pasture and/or a maintenance or warm-up ration until being put on full feed for slaughter market or being selected as herd replacement stock. However, if these stocker/feeders are being fed to be marketed directly to slaughter from a particular feedlot, they should be included as cattle on feed. Information Contacts Listed below are the commodity specialists in the Livestock Branch of the National Agricultural Statistics Service to contact for additional information. E-mail inquiries may be sent to nass@nass.usda.gov. Dan Kerestes, Chief, Livestock Branch ........... (202) 720-3570 Scott Hollis, Head, Livestock Section ........... (202) 690-2424 Sherry Bertramsen - Livestock Slaughter ...... (202) 720-3240 Doug Bounds - Hogs and Pigs .................. (202) 720-3106 David Colwell - Sheep and Goats .............. (202) 720-8784 Donnie Fike - Dairy Products ................. (202) 690-3236 Michael Klamm - Cattle, Cattle on Feed ....... (202) 720-3040 Mike Miller - Milk Production and Milk Cows .. (202) 720-3278 Access to NASS Reports For your convenience, you may access NASS reports and products the following ways: All reports are available electronically, at no cost, on the NASS web site: www.nass.usda.gov Both national and state specific reports are available via a free e- mail subscription. To set-up this free subscription, visit www.nass.usda.gov and click on "National" or "State" in upper right corner above "search" box to create an account and select the reports you would like to receive. For more information on NASS surveys and reports, call the NASS Agricultural Statistics Hotline at (800) 727-9540, 7:30 a.m. to 4:00 p.m. ET, or e-mail: nass@nass.usda.gov. 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