The unemployment rate in the United States is currently reported to be a 9.6%, however this number only refers to those individuals receiving unemployment benefits and actively searching for employment. The U6 unemployment rate, which includes people who have run out of benefits and given up on searching for work, is 16%. As a result the food service industry has experienced the greatest monetary decline in has seen in twenty-eight years. Fortunately for producers the demand for beef has not substantially declined, only the value of products. However, as the value of of beef has decreased, the input costs to producers-especially corn, has increased. Corn prices began rising sharply driven by the price of oil, but even after economic downturn corn prices continued to grow, supported by subsidies. These increased prices have forced farmers to find alternate feed sources in an attempt to balance the input costs with the decrease in product value. Farmers have also decreased their herd sizes while increasing the size of individual cows and thus increasing the pounds of beef produced. This however has resulted in increased feed costs, which the producers must be aware of. Despite the decrease in product value, and increase in input costs, producers with cow/ calf herds have a potential to make a profit in the future as feeder calf process continue to increase.
International trade is also very important to beef producers. The biggest trading partners with the United States, in relation to beef exports, are Mexico, Canada, Japan, Vietnam, and South Korea. These markets have a lot of potential to continue to grow, along with exports to Colombia and Panama; however, in order to effectively establish beef exports to these countries free trade agreements need to be established. Free trade agreements remove the boundaries against trading with a country, such as tariffs, so can be beneficial to the nation as a whole but can also can harm areas that can no longer produce products at the cheapest prices.
The safety of the food supply is a concern internationally and domestically. In international trade, age verification becomes a limiting factor in exporting meat, especially to Japan, as method used to prevent the introduction of BSE or “mad cow” into the country. Other considerations, such as antibiotic usage in the live animals can affect exports as well as domestic sales. The concern about antibiotic resistance and growing support of “organic” production has greatly affected the beef industry. Organic products receive an average price increase of 73% versus the “non-organic” counterparts. This increase in price is based almost entirely on consumer ideals, although the cost of production to organic producers is increased. The concept of “organic” to consumers goes hand in hand with animal rights. Both of these concepts, however, result in numerous challenges to all animal production industries. Despite what many animal rights activists and groups, such as PETA and the Humane Society of The Unites States, would have the public believe-producers do their best to ensure that their livestock are healthy and stressed as little as possible, as sick and stressed animals result in profit loss to the producer. Furthermore, PETA and HSUS have stated numerous times that their goal is to abolish all animal agriculture-and neither group actually supports any humane shelters or animal welfare groups.
The other large concern of livestock industries, including beef production is government regulation. There are numerous governmental challenges to the industry but the two major concerns are currently the change in estate tax that will occur in 2011, and the changes to the USDA Grain Inspection, Packers, and Stockyard Administration. In 2011 the estate tax laws will change in a manner that will increase the tax rate to 55% after the first million dollars. In terms of beef producers with land values currently as high as they are if a farm owner dies next year the resulting estate tax will cause the family to break up the property, and possibly pursue other careers-breaking up family farms. The changes to GIPSA are an attempt to keep pricing between packers and stockyards fair, but will completely remove the price incentives to produce high quality products.
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