Evolution of U.S. Cattle Feeding Sector
The geography and structure of the U.S. cattle feeding sector has changed dramatically over the last four decades. In 1960, using the 13 major cattle feeding states as a basis for comparison, 41 percent of fed cattle marketings came from three Corn Belt states: Illinois, Iowa, and Minnesota. Six Plains states (Colorado, Kansas, Nebraska, Oklahoma, South Dakota, and Texas) marketed 35 percent of the fed cattle in 1960. The number one cattle feeding state in 1960 was Iowa with a 24 percent share of the 13 state's fed cattle marketings. Interestingly, California was the second largest cattle feeding state in 1960, with a market share of 15 percent.

Cattle feeding began to shift away from Western (California, Arizona, Idaho, and Washington) and Corn Belt states, towards Plains states, during the 1960s and 1970s, as specialized cattle feeding firms began to dominate the industry. The Corn Belt's share of fed cattle marketings fell to 20 percent by 1980, while Plains states' share nearly doubled, increasing from 35 percent in 1960 to 67 percent in 1980. The Plains states' relative importance continued to grow over the next two decades. During 2002, 81 percent of fed cattle marketed by the historic 13 major cattle feeding states, and 74 percent of the fed cattle marketed in the U.S., originated in the Plains.

More fed cattle were marketed from Texas in 2002, with Kansas a close second, than any other state. Iowa, once the nation's largest cattle feeding state, ranked fifth. California, ranked number two in 1960, marketed just 2.4 percent of the cattle in the U.S, enough to rank eighth. The three largest cattle feeding states, all located in the Plains (Texas, Kansas, and Nebraska), collectively marketed 60 percent of the fed cattle in the U.S. during 2002.

The increase in Plains states' market share actually understates the growth in cattle feeding in the Plains since the industry's size was also growing. For example, fed cattle marketings in the 13 major feeding states totaled 22.9 million head in 1985, up 115 percent from the 1960 total of 10.7 million head. By 2002, the volume of fed cattle marketed by the 13 major feeding states totaled 25.2 million head and U.S. marketings reached 27.4 million head. Throughout the 1960s and 1970s, the Plains states rapidly gained market share in an industry that was increasing in size. And the industry continued to grow, albeit at a slower pace, in the 1980s and 1990s.

Changing Structure of Cattle Feeding
At the same time the U.S. cattle feeding industry was shifting geographically, its structure was also changing. The result is an industry that, today, is comprised of far fewer, and larger, firms than just a few decades ago. Three decades ago (1972), 23.9 million cattle were marketed by 104,613 feedyards located in the 13 primary cattle feeding states. In 1995, the last year USDA reported data from feedyards of all size categories, there were just 42,435 feedyards marketing 23.3 million cattle. Average marketings per feedyard rose 141 percent from 1972 to 1995. Cattle feedyards with a one-time capacity of 1,000 head or more marketed 65 percent of the fed cattle in 1972. By 1995, feedyards in that same size category marketed over 90 percent of the fed cattle.

Not only did feedyards grow in size, but growth was concentrated among the largest feedyards. Two decades ago (1982), feedyards with a one-time capacity of 32,000 head or more marketed 29 percent of the cattle marketed in the 13 historic cattle feeding states. By 1992 the market share of feedyard's in this size category grew to 38 percent. And in 2002, fed cattle marketings from these large feedyards climbed to 49 percent of all cattle marketed in the U.S. Furthermore, only large feedyards (32,000 or more head capacity) have been increasing their market share over time.

While large feedyards have become more prevalent, large cattle feeding firms that own and operate multiple feedyards have also become a strong force in the industry. Data published by Cattle Buyers Weekly indicates the ten largest feeding companies in the nation had a one-time feeding capacity of approximately three million head during 2002. Assuming a typical inventory turnover rate, this implies that annual fed cattle marketings from these ten firms likely totaled six, to as much as eight, million head, or about 22 to 29 percent of U.S. fed cattle marketings during 2002.

What does the future hold? Economies of size are motivating the shift towards large feedyards. Growth in large multi-feedyard cattle feeding firms indicates that multi-plant, likely managerial, economies also exist. The shift in industry structure was also motivated by the advent of improved technology. Successful implementation of rapidly evolving technology often required more intense, specialized management (and in some cases larger operations) than was available in many smaller operations. The ongoing shift away from live weight pricing of fed cattle towards grid based pricing could increase the need for specialized management yet again, encouraging even more industry consolidation in the future. ©