The Work’s The Same The Pay Isn’t: COVID-19 Killing Cattle Markets
By Lura Roti, South Dakota Public Broadcasing
May 18, 2020
Unlike many careers, COVID-19 did not change the way farmers and ranchers do their jobs. What the pandemic did change was how much they get paid.
“You know, being out here on the farm, it’s kind of the definition of social distancing. Thing is, at this time of year, I don’t go to town anyway. We are calving and planting.”
It’s calving season on Scott Kolousek’s farm. But instead of feeling joy with each new life, the Wessington Springs, South Dakota cow/calf producer says he’s anxious.
“This is my favorite time of year. But I just hope in the fall what we’re doing today is going to give us some rewards because at the current prices and situation it’s not looking good,” says Kolousek.
The situation Kolousek references is the impact of COVID-19 on crop and cattle markets. When the stock market took a nosedive, cattle producers across South Dakota and the nation watched their profits burn. In Kolousek’s case, he lost around $70 on each 800-pound steer he sold late February. Basically, in a few short hours, because of COVID-19, he lost more than $20,000 on cattle he spent x months raising. And he considers himself fortunate.
“I felt sick for about two weeks after we sold. But then, its sad to say that other people’s misfortune made me not feel so bad. I’m glad we sold when we did because we lost some money, but we didn’t lose as much as other guys,” Kolousek said.
By April 9, on average cow/calf producers lost an estimated $247 dollars per head according to an Oklahoma State University study. Overall, the U.S. beef cattle industry lost an estimated $13.6 billion.
So, why sell cattle when there are no profits to be had? The fact is, when calves are ready to go to the feedlot, farmers are limited in the choices they have.
“You can’t just sit on them forever. You have some flexibility. We could have waited another week or two, but you know in hindsight, selling them was the best thing we did. We would have had to scrounge to find more feed and the price just kept going down,” Kolousek explains.
If you own a feedlot, like Eric Sumption holding onto cattle is not an option. When cattle are about 1500 pounds and ready to send to the processor to harvest, if a farmer hangs onto them, they will get too fat and their meat will lose quality.
“It’s really bad. You know, we were running at break even to maybe just a few dollars over break even. And now we’re going to run at a loss of probably over $200 a head on cattle that we have on feed. And we haven’t penciled in the calves that are hitting the ground now. What are they going to be like when you look out on the future’s board and how bad it is?”
Sumption farms with his dad, four brothers and nephews near the small town of Frederick in Brown County South Dakota. To support multiple families, the farm is quite diverse. Along with their large feedlot, the family has a cow/calf herd and raises several thousand acres of corn and soybeans.
When the family sat down in January to go over 2020 income projections, things were actually looking up. Like most South Dakota farmers, before COVID the Sumptions’ profits already down and had been for three years now.
“We’re going to have to go back in and run all those numbers, and it’s going to be really scary how bad it is,” Sumption says.
At this point, Sumption says they will bring in 20 percent less than projected on grain and 80 percent less than anticipated on cattle.
Unfortunately, Kolousek and Sumption’s stories are not unique...
more, including slideshow, audio [5:30 min.]