More vertical coordination — not necessarily integration — key to rebuilding cattle herd

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After decades of trending smaller, rebuilding North America’s cow herd will not begin until 2025 at the earliest, according to a new report from Rabobank’s senior animal protein analyst.

One of the challenges that needs to be overcome to rebuild a resilient supply chain is the boom-bust nature of each segment, from the cow-calf producer to the packer and retailer, says Lance Zimmerman, speaking with RealAgriculture’s Shaun Haney at NCBA’s Cattle Convention in Orlando, Florida in the interview below.

While cattle prices shot to record highs last year, there were vast differences in profitability between different stages in the beef supply chain, he notes.

“One of the solutions I speak to in the paper is we can lean more into vertical coordination where each segment can maintain their independence, but that we all share in the successes and failures that occur along the way,” Zimmerman explains. “As cow-calf producers are fighting drought, the other segments can help prop them up. And vice versa. When we’re in a period where maybe demand is a little bit softer. Again, the other supply segments can help prop the end user segments up.”

Unlike the vertical integration seen in the pork and poultry sectors, he suggests the cattle sector could implement more vertical coordination, where each link in the supply chain retains ownership.

“In this system, everybody maintains their independence and does what they do best. But they do it in mind of what the other supply segments are doing around them,” he says.

Check out the interview below for more on Rabobank’s report on rebuilding the U.S. cattle herd and Zimmerman’s outlook for 2024:

Find more coverage of the 2024 NCBA Cattle Convention here, brought to you by Alltech.

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