Idaho Dispatch interviewed cattle rancher and Farm Bureau CEO Zak Miller about the current climate of the cattle industry in Idaho.
The goal of the interview was to continue a series of articles Idaho Dispatch is working on regarding the current state of the economy and how it is impacting Idahoans. Previously, we released an article on the impact of inflation on local gun stores, as well as a story on how Idahoans are changing their spending habits at the grocery store.
One of the first questions Idaho Dispatch asked Miller was what impact inflation was having on his cattle ranching operation. Here is what Miller said,
Inflation’s really been hard on us because we’re on the producing side, which tends to have the lowest margin and the tightest supply. So we’re feeling a real crunch on the input side.
Five-dollar diesel, high fertilizer cost which goes into our feed production, and it’s really put us in a margin crunch.
While Miller said that the higher prices could be good for some in the cattle industry, it doesn’t necessarily benefit the ranchers right now who are fighting the inflationary costs of production. Miller said that as a wholesale, they feel optimistic that they will see some benefit from the higher prices, but right now, they are in a significant crunch.
Miller continued his response about the inflationary pressure saying,
Their just hitting on our input side faster than we can see the change coming on the outlet side. Even though the consumer is feeling it, we’re not filling enough of that gap to offset our costs. We’re feeling more of a crunch.
Idaho Dispatch asked Miller if the inflation was negating any benefit from the higher prices or if other factors were at play. Here is what Miller told Idaho Dispatch,
Honestly, I don’t think that the actual producer, the cow/calf guy especially, has really experienced any price increases due to inflation. We’ve been seeing price increases, and that started during Covid, but that’s been more fundamental to just simple supply and demand.
As a nation, we’ve been contracting our cattle supply, and so we’re just seeing a reduction in supply, which sets supply and demand.
In agriculture, we’re really slow at the producer level to react to inflationary pressures on the positive side. We only feel them on the negative side because we pay retail on the input, and we get paid wholesale on the output. So that just crunches us on both sides.
We feel the pain on the input side from inflation, but we really don’t get the benefit very well on the output side when inflation hits us.
When asked about the change in demand, if any, Miller stated,
I’m speaking on national levels now because that’s where our data is coming from. We’re starting to feel like we are seing a slight reduction to demand. So there’s a couple things, it’s hard to really know because when Covid happened, speaking as a beef producer, beef is very much a food service type of a protein.
You’re more likely to eat beef when you go out to eat. So when we went through the pandemic, we had tremendous freezer demand. We had a lot of people reach out to our ranch specifically, and my sister really does a lot of that, to sell beef. We saw a slight reduction in demand, but it was more negated because of supplies issues with packers and whatnot.
We really are starting to think we may be seeing a reduction in demand. We know that beef is on the higher end of the protein, so when consumers start to feel pinch, and they start to feel concern over their budgets, they’re a lot more likely to switch from beef down to pork or more likely poultry. And so we don’t have indications and stuff that consumers have done that really a lot, in fact, we’ve been surprised at how high the demand stayed as the inflation’s come up, but we think we’re staring to get some leading indicators that are telling us that the consumer’s starting to feel the pain with the beef prices.
Miller went on to explain that consumers appear to be moving from simply complaining about the beef prices to actually changing spending decisions because of them, which he stated was “concerning to our industry.”
Currently, the poultry industry has experienced a major problem with the bird flu. Millions of chickens have been slaughtered to slow the bird flu from spreading to other farms and factories. The loss of so many birds has caused the price of eggs and poultry to increase, along with the higher inflation already taking place.
Idaho Dispatch asked Miller if he felt the issues with the poultry industry could be offsetting some consumers from switching to chicken rather than beef.
Miller told Idaho Dispatch that while he doesn’t know for sure whether that is the case, he said it makes sense and that perhaps the bird flu issue in the poultry industry is helping the beef industry.
In part two of our discussion with Zak Miller, Idaho Dispatch asks about the biggest frustrations facing cattle ranchers in Idaho and what they think needs to happen to correct the issue.
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Tags: Beef, Cattle, Chicken, Demand, Farm Bureau, Inflation, Poultry, Ranch, Supply, Zak Miller