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ICA: Cattle growth foreseen in future

By Staff | Aug 13, 2010

AMES (AP) – The new head of the Iowa Cattlemen’s Association sees opportunities for economic development in southern counties.

“There would be an excellent place for expansion of Iowa’s cattle industry,” Duane Gangwish said. Earlier this year, he came from a lobbyist and environmental position with the Nebraska Cattlemen’s Association to succeed the retiring Bruce Berven as executive director of the Iowa Cattlemen’s Association.

“You’re not going to see other opportunities for economic growth along there,” Gangwish said. “But the rolling grasslands would be perfect for cattle production.”

To expand cattle production in southern Iowa, the industry would first have to change rules restricting grazing on lands set aside in the federal government’s Conservation Reserve Program.

The cattle industry also would have to prepare for what is expected to be increased enforcement of federal and state air and water regulations.

Finally, the cattle and beef industry needs a long period of prosperity, which has been lacking since mad-cow disease fears in 2003 cut the heart out of many export markets for U.S. beef.

“Our industry has been contracting,” said Gangwish, 51, who grew up on a hog and corn farm in central Nebraska, graduated from the University of Nebraska with a degree in agriculture and worked for several years with a company that planned, engineered and did permit work for commercial feedlots before joining the Nebraska cattlemen’s group.

Gangwish’s environmental background will be helpful as Iowa’s cattle industry expects more oversight from the U.S. Environmental Protection Agency.

Until now, the agency has confined itself to enforcement against the larger mega-feedlots in the Southwest and left the enforcement over the smaller and medium-sized lots in the Midwest to state agencies.

“Most of the big feedlots have come into compliance, and we expect more oversight from the EPA,” Gangwish said.

Karl Brooks, regional agency administrator whose Kansas City office includes Iowa, said the federal agency’s inspections in Iowa “have increased slightly in the last year.”

The environmental agency and Iowa Department of Natural Resources are interested primarily in issues involving manure runoff, with requirements for collection basins and disposal of manure and what the industry calls “brown water.”

“The unintended consequence of more enforcement is to increase the concentration in the cattle industry, since it is very expensive to comply with the laws and regulations,” Gangwish said.

Brooks, for his part, said recently that “we would rather work with the livestock industry. It isn’t our intention to just swoop in and close people down.”

Gangwish and Iowa’s 23,000 cattle producers hope his tenure with the cattlemen’s group represents a turning point for Iowa’s cattle industry. While Iowa’s grain and hog production industries have either grown or at least held their own in the last half-century, Iowa’s cattle industry has declined.

In 1960, Iowa was the nation’s No. 1 cattle-feeding state, with more than 7 million animals fattened on its corn. A half-century later, Iowa’s cattle population is less than 4 million, and the state has fallen to fifth behind Texas, Nebraska, Kansas and Colorado.

Theories abound for the reason.

The first wave of the “boxed-beef” revolution in meats in the 1950s and ’60s favored Iowa because it was centered at the old Iowa Beef Processors Inc. plant across the Missouri River from Sioux City at Dakota City, Neb.

But after a series of labor battles in the 1970s at Iowa Beef, further expansion of the beef industry stretched far into southwest Kansas and the Texas Panhandle, into traditional cattle territories beyond the reach of unions but still able to use Midwestern corn as feed.

“The cattle industry decided that it was cheaper to haul the corn to Texas and Kansas to feed cattle there than to ship the cattle to Iowa to feed on our corn here,” said veteran Iowa cattle producer Bill Couser of Nevada.

Economies of scale have worked against Iowa. Farmers are reluctant to carve up productive Iowa cropland to compete on an economic scale with feedlots in Texas and Kansas that can handle up to 50,000 animals at a time.

The average feedlot in Iowa handles 300 to 1,000 head.

“Economies of scale are important in agriculture, and they’ve worked against us in Iowa,” the soft-spoken Gangwish said.

But he added: “Iowa should be the sweet spot for cattle production. The best corn in the country is here, and we are closer to the big markets for beef.”

The cattle industry hasn’t been in a mood for expansion in Iowa or elsewhere for decades. The number of cattle on feed, about 12 million nationally, is the lowest since the late 1950s and reflects a 25 percent drop in per-capita beef consumption by Americans since 1960.

The retreat of the industry became more pronounced after the mad-cow disease scare, which caused several of U.S. cattlemen’s export customers to bar American beef.

Then came the economic downturn of 2008, which put the pricier cuts of choice beef off many tables at homes and cut seriously into restaurant business. At the same time, corn and soybean prices rocketed to record-high levels, making feed costs prohibitive.

“We still put out a product that is the best source of protein,” Gangwish said. “But we’re vulnerable to the economy.”

The economic upturn, combined with a 21 percent rise in exports this year and tighter supplies, has pushed up cattle prices 15 to 20 percent and given cattle producers a good shot at profits.

Earlier this year, live cattle rose from a low of around $85 per hundredweight a year ago to $100 per hundredweight. That price drifted down below $90 per hundredweight after Memorial Day, but rose again on reports of heat losses in Southwestern states.

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