CNAS Overview

New Mexico Overview: Agriculture continues to be a major contributor to the State's economy with the livestock industry accounting for approximately 70% of the agricultural cash receipts. Cattle sales and milk receipts dominate the livestock cash receipts. Sale of Cattle and calves is an important source of agricultural income in New Mexico and ranks either first or second with milk sales as the leading agricultural commodity. The 2003 gross income increased 24 percent to $761 million.

New Mexico's inventory of all cattle and calves as of January 1, 2004, was 1,510,000 head, a 2.6 percent decrease from 2003. The growing dairy industry continues to impact total inventory. The January 1, 2004, milk cow inventory increased 3.5 percent from the previous year to a total of 325,000 head. Dairy producers kept 75,000 dairy heifers for replacement, 7.1 percent above the 2003 total. Beef cow inventory fell to 455,000 head. Ranchers maintained 85,000 heifers for beef cow replacement, 6 percent lower than the previous year's total of 90,000. The inventory of steers weighing 500 pounds and over dropped to 190,000 head, from 210,000 head the previous year. Bulls on hand remained steady at 45,000 head. The 2003 calf crop, including both beef and dairy calves, was estimated at 590,000 head, a 10,000 head decrease from the previous year. Calves on hand totaled 230,000 head. Cattle and calves on full feed for the slaughter market on January 1, 2004, dropped to 115,000 head, 4,000 less than a year earlier.

Ag in New Mexico

U.S. Cattle Background

With its abundant grasslands and large grain supply, the United States has developed a beef industry that is largely separate from its dairy sector. The United States has the largest fed-cattle industry in the world, and is the world's largest producer of beef, primarily high-quality, grain-fed beef for domestic and export use. The industry is roughly divided into two production sectors: cow-calf operations and cattle feeding.

Cow-calf operations

These operations are located throughout the United States, typically on land not suited or needed for crop production. Cow-calf operations are dependent upon range and pasture forage conditions, which are in turn dependent upon variations in the average level of rainfall and temperature for the area. Beef cows harvest forage from grasslands to maintain themselves and raise a calf with very little, if any, grain input. The cow is maintained on pasture year round, as is the calf until it is weaned. If additional forage is available at weaning, some calves may be retained for additional grazing and growth until the following spring when they are sold. The average beef cow herd is 40 head, but operations with 100 or more beef cows comprise 9 percent of all beef operations and 51 percent of the beef cow inventory. Operations with 40 or fewer head are largely part of multi-enterprises, or are supplemental to off-farm employment.

Cattle feedlots

Cattle feeding is concentrated in the Great Plains, but is also important in parts of the Corn Belt, Southwest, and Pacific Northwest. Cattle feedlots produce high-quality beef, grade Select or higher, by feeding grain and other concentrates for about 140 days. Depending on weight at placement, feeding conditions, and desired finish, the feeding period can be from 90 to as long as 300 days. Average gain is 2.5-4 pounds per day on about 6 pounds of dry-weight feed per pound of gain. While most of a calf's nutrient inputs until it is weaned are from grass, feedlot rations are generally 70 to 90 percent grain and protein concentrates.

Feedlots with less than 1,000 head of capacity comprise the vast majority of U.S. feedlots but market a relatively small share of fed cattle. In contrast, lots with 1,000 head or more of capacity comprise less than 5 percent of total feedlots but market 80-90 percent of fed cattle. Feedlots with 32,000 head or more of capacity market around 40 percent of fed cattle. The industry continues to shift toward a small number of very large specialized feedlots, which are increasingly vertically integrated with the cow-calf and processing sectors to produce high-quality fed beef. NASS provides monthly Cattle on Feed reports.

U.S. Market Outlook

ERS contributes to both short- and long-run cattle and beef market outlook activities through several venues. Working with USDA's Agricultural Marketing Service, Farm Service Agency, and Foreign Agricultural Service, ERS analysts develop the monthly estimates of beef supply, use, and prices that are reported in World Agricultural Supply and Demand Estimates (WASDE), released by the World Agricultural Outlook Board. Monthly and quarterly cattle and beef industry data and cattle market outlook are also provided in Livestock, Dairy, and Poultry Outlook, which is released monthly by ERS. USDA's Agricultural Baseline Projections provide a long-run cattle and beef market outlook.

U.S. Policy

Regulatory policy

The trend toward fewer and larger enterprises has brought environmental issues to the forefront of public policy regarding the U.S. livestock industry. As animal density (number of animals per unit of land area) increases, so do concerns regarding air and water quality, occupational health, and waste management. The Environmental Protection Agency posts information about the environmental requirements for the production of livestock in animal feeding operations.

Cattle are also affected by other government policies and programs related to animal health, food safety, mandatory price reporting, and country-of-origin labeling.

Government assistance programs

Federal Government assistance to the cattle sector is limited to emergency measures approved for a specific scope and period of time to address the needs of producers suffering losses due to drought, hot weather, disease, insect infestation, flood, fire, hurricane, earthquake, severe storms, or other natural disasters.

The Agricultural Assistance Act of 2003 provides assistance to producers who have suffered losses due to weather-related disasters or other emergency conditions. The Livestock Compensation Program provides immediate assistance to eligible owners and cash lessees of certain classes of beef cattle, dairy cattle, buffalo, sheep, and goats for damages and losses due to any natural disaster, while the Livestock Assistance Program reimburses producers for grazing losses. Even though both programs may provide assistance for the same loss, producers cannot receive payments under both programs.

USDA has other disaster-related programs in place that may affect cattle producers. These include the Emergency Haying and Grazing and Non-fat Dry Milk Livestock Feed Assistance programs.

U.S. Trade

Please note
The discovery of bovine spongiform encephalopathy (BSE, or mad cow disease) in a dairy cow in Washington State in December 2003 has caused importing countries to either ban or restrict beef and cattle imports from the United States. Due to the uncertainties associated with these bans, it is assumed that these restrictions will remain in place until importing countries announce a policy change. For the most current U.S. meat and animal trade outlook, see the Livestock, Dairy, and Poultry Outlook report. Annual trade statistics reported here are finalized each spring. In addition, recent trade data are presented for major meats and livestock on a monthly basis, as well as year-to-date and annual, and for year-to-date imports under tariff-rate quotas. As of July 2004, the trade-related tables contain expanded coverage of additional variables and regions, with historical data available for these additions. Export data are for major U.S. markets; import data are for major supplying countries.

The United States, while the largest producer of beef in the world, is a net beef importer. Most beef produced and exported from the United States is grain-finished, high-quality choice cuts. Most beef that the United States imports is grass-fed beef, destined for processing, primarily as ground beef.

The largest export market for U.S. beef is Japan, which through 2000 imported at least twice as much U.S. beef as the second-largest U.S. export market. However, imports by Japan fell by about one-third late in 2001 when BSE was discovered in the Japanese cattle herd. Mexico is the second-largest market for U.S. beef, and continued growth is expected but at a slower pace than in the past. The third-largest export market for U.S. beef, and the fastest growing, has been South Korea. The Korean market became fully liberalized at the end of 2001 and rapid growth is expected to continue. Canada, in fourth place, has been gradually declining in importance for several years. The Canadian market is expected to grow slowly at best.

Over the past several years, the largest percentage of U.S. beef imports has come from Australia, with Canada a close second. The third-largest exporter of beef to the United States is New Zealand. The United States also imports a significant portion of its cooked beef from Argentina and Brazil, but their combined share of the U.S. beef market is less than half that of the three largest exporters. The remainder of U.S. beef imports comes from Central America and Uruguay.

In May 2003, Canada reported the discovery of a case of BSE in one of its beef cows. Cattle and beef products from Canada were barred entry into the United States after the announcement. In August 2003, beef imports from Canada resumed but were restricted to boneless products from cattle under 30 months of age. As of early 2004, the trade situation continues to evolve as officials review the risks and revise trading rules accordingly.

The United States imports a significantly greater volume of cattle than it exports. The countries from which the United States imports cattle are also the same ones to which it exports cattle: Canada and Mexico. The geographical proximity of these countries and complementarity of their cattle and beef sectors explains why they are the United States' only significant cattle trading partners. Imports of Canadian cattle into the United States, however, have been banned since the May 2003 BSE announcement.

U.S. cattle exports to Canada and Mexico vary from year to year in the relative percentage exported to each country, although the absolute level of trade has been greater over the last several years. Historically, the United States exported primarily slaughter cattle to both countries. However, changes in Canada's policies have led to increased exports of feeder cattle.

In past years, cattle imports from Canada and Mexico have varied. The relative share of cattle imported from Mexico has tended to increase over the last several years. Imports from Mexico tend to be lighter cattle for finishing in U.S. feedlots, while those from Canada tended to be primarily for slaughter.



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