In beef we trust

What record-high market prices and a lingering drought have to do with dinner

In a world of 4x4 trucks, muddy boots, and dusty cowboy hats, Oklahoma cattle ranchers also play the role of broker, calling the shots on when their companies should buy, sell, and trade. Most transactions occur amid the chatter of an auctioneer’s cackling microphone. Thousands of dollars swap hands in a matter of minutes. Cattlemen congregate to watch the fruits of their labor translate to a paycheck.

Oklahoma’s beef industry is a $3-billion business, the state’s largest agricultural sector. Homegrown meat raised on the prairie is served up on plates locally as easily as it is exported around the world to countries like Japan and Mexico. In recent years, high market prices have turned cattle into gold. According to statistics tracked by the United States Department of Agriculture’s Economic Research Service, the annual value of fresh retail beef in 2008 was $3.96 per pound. Today, it is $1.50 higher compared to the latest monthly data recorded in April, at $5.49 per pound. Even an old tired bull well past his glory days has the potential to sell for more than $2,500. Thanks to the rules of supply and demand, the price of beef—translation: that mouth-watering filet on the swanky steakhouse menu—is climbing.

These prices were unheard of five years ago. Joe Don Eaves, owner of Tulsa Stockyards, where around 100,000 head of cattle are bought and sold each year, has never seen cattle this high, he said—“not even close. All classes of cattle are at record-breaking prices and they’re in really high demand.”

It’s no wonder Oklahoma’s Department of Agriculture, Food and Forestry has its own rural crimes unit. The Wild West lives again through modern-day cattle rustlers who snatch valuable, innocent cows from Oklahoma’s wide-open spaces.

It’s a Catch 22 for Oklahoma. The high price of beef boosts the economy at the same time that it reduces our inventory. Oklahoma is a beef production powerhouse, ranking third in the nation with a total herd of 4.3 million head. But when dry conditions cripple the supplies of grass, hay, and other feedstuffs in certain parts of the state, Oklahoma ranchers and, eventually, beef consumers feel the effects.

Forage has come up short in certain parts of the state in the past few years. When rain doesn’t fall and grass doesn’t grow, ranchers must purchase expensive grain to keep their cows fed. Then, there’s water. When ponds, creeks, and streams go dry, piping in water to a large herd of thirsty cows in the middle of a hot, dry summer becomes timely and costly.

Normally, cattlemen would save promising young cows, also known as replacement heifers. These broody mamas would live out their days raising baby calves on the ranch, but the unprecedented market prices are tempting producers. Most Oklahoma ranchers are trimming back their herds because of the drought or the exciting prospect of a healthy payday at auction. But selling off large portions of valuable assets is risky. On paper, it makes sense to sell when the market is hot, but if prices remain high, cattlemen will find it twice as hard to build back their herds. Oklahoma ranchers may never again have the opportunity to purchase cattle of the same quality as the ones they once owned and nurtured from birth, and when cattlemen are forced to pay a higher price for their animals, grocery shoppers both here and abroad can expect to do the same.

“It’s been good for the economy for several years, but we’re running out of inventory,” Eaves said. “The money is just too good to hold them back.”

Neil Goucher’s heifers were “the best of the bunch – a hand-picked group” of which he and his family had spent years perfecting. Decades of careful bull selection and breeding had resulted in sound, sturdy cows that produced healthy baby calves. These calves grew big and strong on a diet of native grasses and hay (when it was available), which results in a leaner product on the plate.

Then, the ponds and streams on Goucher’s northwest Oklahoma ranch began to disappear. Even after piping in water, he knew he was going to have to downsize. “We just sold the heifers we were keeping for replacements because we didn’t have enough to feed them,” Goucher said. Slowly, successive years of drought are driving Goucher’s historic ranch out of business.

In the summer of 2011, local cattle markets in western Oklahoma became flooded with trucks and trailers. Ranchers waited in line to run their beloved cows through the sale ring and cut their losses while they still had the chance. Most of the stock landed in a different part of Oklahoma or in a different state altogether, where feed and water resources were plentiful.

As of January 1, nationwide cattle inventory was the lowest it has been since 1951. When many of the state’s ponds and other rural tributaries dried up and the year’s crop of forage blew away in the hot summer wind, cattlemen were left with two choices: spend a fortune feeding grain and trucking in water to keep their herds or make the heartbreaking decision to downsize and, in some cases, completely liquidate.

The drought has subsided in Green Country, but conditions for ranchers in much of western Oklahoma remain dire. Goucher’s family ranch near Waynoka dates back to 1893, and a creek on the homestead has never run dry – until now. Goucher wonders how long he can wait out the lingering drought. Hay supplies are low, and Goucher’s cattle pastures have been overgrazed, now producing significantly less of the nutritious forage his cows need to prosper. He sold 25 percent of his commercial Angus cow-calf operation, and he predicts another 25 percent will have to go this summer. After another dry winter, he is left with no other choice.

“When it finally does rain, everyone else is going to want to replace their herds, too, and it will be quite expensive,” Goucher said. “I don’t want to go into debt and start with another herd of cows. I’m getting old and probably won’t replace them.”

Most ranchers never really retire from the business. They raise cattle until the day they die. The average age of today’s cattleman is around 57. Fewer young adults are becoming ranchers, closing the door on family ranches, which flourished before the development of much larger corporate operations.

State cattle inventory numbers are beginning to show a modest recovery. According to January statistics, Oklahoma reported a 2.4-percent increase in total cow numbers and a 16-percent increase in the number of beef replacement heifers. “Our producers are trying to rebuild,” said Derrell Peel, an extension marketing livestock specialist at Oklahoma State University. “But it just depends on drought conditions.”

“It’s a mixed bag right now – if you have cattle, you’re enjoying the high prices and the total value of production is up, but for a lot of producers profitability is still at risk,” Peel said.

“Those who have been in drought or who are still in drought are incurring additional costs of feed while trying to maintain the animals they have.”

From the sale barn to the meat counter, the value of beef is at an all-time high. The USDA’s Economic Research Services reports consumers pay nearly double the price they did 10 years ago. Jayson Lusk, Regents Professor and the Willard Sparks Endowed Chair of Agricultural Economics at OSU, says “expenditures on beef really haven’t changed that much, so consumers might be buying less, but they’re still spending the same amount.”

While cattle ranchers hedge their bets on market trends and weather patterns, beef consumers, beset with high prices whether they buy from the grocery store or from the rancher up the road, are beginning to take a more vested interest in the origin and safety of their food. In the late 1980s and early ‘90s, consumer demand for beef dropped significantly in response to higher prices and reports that linked it to health risks, such as higher cholesterol and saturated fat. “Evidence suggests those factors did have a damaging effect on consumer beef during that time period, but in the past two years, it’s really leveled off,” Lusk said. “Beef is actually making a comeback” on the consumer market.

Omar Galban, corporate chef at Polo Grill in Tulsa’s Utica Square, says he hasn’t noticed a decline in orders for beef entrees, despite price hikes. “We’ve increased our pricing around 20 percent in the past two years, but our guests really don’t change what they eat,” Galban said.

Polo Grill’s menu features beef from three suppliers in Oklahoma, Texas, and Arkansas. Menu prices are adjusted accordingly to reflect live cattle-market values, but Galban said guests aren’t complaining. “They come in knowing what they want, and they don’t mind paying for the best quality.”

Tallgrass Prairie Table currently is constructing a climate-controlled meat fabrication facility at its location in the Blue Dome District. Tallgrass receives its beef from Z7 Bar Ranch in Pawhuska, and having the ability to butcher whole animals onsite will reduce its input costs. As a result, Tallgrass can help alleviate the climbing price of beef for customers. In the meantime, executive chef Michelle Donaldson says dining trends reflect consumers who aren’t wary of paying higher prices when they know the beef is local and sustainable.

“Consumers today are well-educated in the world of food, and they’re empathetic and understanding of why prices must increase,” she said.

This summer’s rainfall totals will write several chapters of the rancher’s story. Cattlemen like Neil Goucher may have to downsize, but they’re not ready to throw in the towel. Much like the history of his family’s business, Oklahoma’s cattle legacy is one of highs and lows, feast and famine, sustained by appetite and consumers who still crave a juicy steak.