I recently wrote about productivity and its impact on the beef industry. These productivity gains are not unique to the beef industry, The entire red meat and poultry industry has become more productive and in fact, we have seen this across all of agriculture. It is not my intention to harp on this topic, but the impact is significant, and this goes beyond agriculture and to the U.S. economy.
Worker productivity as defined by the total output of the economy divided by the total number of hours that Americans have worked posted a 2% gain during third quarter 2024. This was the fifth straight quarterly gain of 2% or more and far surpasses the five years before the pandemic when there was only two straight quarters with gains of 2% or higher.
So, you ask where is this discussion headed and what does productivity in the beef industry have to do with productivity in the U.S. economy? The short answer is that just as American workers are the source of economic growth in the U.S. economy, economic growth in the beef industry is impacted by the U.S. cattle herd. When American workers become more productive, this fuels economic growth, but at the same time, reduces the demand on the labor force, By the same token, a more productive cowherd fuels the growth of beef production which in turn reduces the need to increase cow numbers to generate that same growth. This was the crux of my article on beef productivity that I referenced.
Every analyst has an opinion about the timing and speed of growing the cattle herd based partly on market analysis but also based on opinions of cattlemen’s intentions which concern many distinct factors. Generally speaking, we are generally on the same page with indicators pointing to slow growth in rebuilding of the U.S. cattle herd. This is an important discussion. But, more important in this discussion, is the implication of not needing as many cows to produce the same amount of beef as 10 years ago or even 5 years ago. The implications for every aspect of the industry from business management to resource management are substantial.
This topic of herd productivity does not appear in many, if not most, of the discussions or articles about herd building going forward. It should. Productivity gains do impact the rate of herd growth, but at the same time, create capacity challenges for the industry.
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