The Future of Cattle Farming: Why Young Farmers Are Needed

The cattle industry is grappling with a significant challenge: a shortage of young people entering the business. In South Dakota, the average age of a cattle producer is 63, raising concerns about the future of the industry as older farmers approach retirement.

Declining Numbers of Producers

Adam Bode, CEO of DemKota beef processing plant, highlighted the issue. In 2024, they sourced cattle from 400 producers, but this year, the number dropped to 300. The reduction isn't due to a choice to buy from fewer producers but rather a decline in the number of producers available.

High Costs and Financial Hurdles

Starting a cattle farm is expensive, requiring substantial initial investment. This financial barrier is a significant obstacle for young aspiring farmers. Bode urged bankers to provide loans to young producers, emphasizing the industry's potential opportunities.

Volatility in the Cattle Market

Dave Geraets, who manages 2,500 head of cattle, discussed the volatility in the cattle business. Fluctuating prices make it challenging for farmers. While he hopes his children will continue the family business, the high costs and price swings present considerable difficulties.

Market Price Swings

This year, cattle prices experienced dramatic fluctuations. In August, prices hit an all-time high due to low inventory. However, President Trump's announcement to import more beef from Argentina caused a 25% market drop in just two weeks. Ryan Eichler, founder of the South Dakota Cattlemen’s Foundation, likened this to a 25% stock market drop in the same period.

Industry Reactions and Investigations

Craig Bieber, vice president of the South Dakota Cattlemen’s Association, described the move as a "gut punch." U.S. Sen. Mike Rounds met with the Trump team to address ranchers' concerns. Trump later directed the Departments of Justice and Agriculture to investigate the "big four" packers for potential collusion and price manipulation.

High Costs in Beef Processing

Bode also discussed the exorbitant costs of entering the beef processing business. He jokingly remarked that to make a few million dollars in beef processing, one needs to start with a few billion, illustrating the industry's high financial entry barriers.

Challenges Faced by Big Beef Packers

Even the large beef packers are not immune to these challenges. Tyson recently announced the closure of its Lexington, Nebraska plant, which could process 5,000 cattle a day but was only processing around 3,600. Bode noted that this closure won't affect DemKota but underscores the industry-wide issue of insufficient cattle to meet demand.