Economic and Marketing Information
FOR INDIANA  FARMERS
Prepared by the Agricultural Staff of Purdue University, Lafayette, Indiana   
November 28,  1969
Longer Run Prospects for Cattle and Hog Production George D.irwin*
More and more livestock producers
are thinking about confinement feeding facilities. Before making the big
investments required by these facilities,
producers must inquire about the
longer run outlook. How are prices
and production costs going to change
while they are trying to pay off the
investment? Are other regions going
to expand production, cutting into the
income expected to be available to
repay debts and provide a return on
investment? This article draws a few
highlights from a research study of
supply and demand in the feed grain-
livestock industry.1
Demand for Beef, Pork
And Feed Grains
The number of consumer mouths
continues to increase, and each is
backed by an ever increasing purchasing power. Both, according to past experience, indicate an increased need
for beef. More mouths also tend to
call for more pork, but per capita incomes are rising at the same time.
Consumers have tended to favor beef
over pork as incomes increase and they
buy more meat. The gross effect of a
$100 increase in disposable income
per capita is an increase of about 1
pound of beef but only .2 pound of
pork. Even this slight gain for pork
has been offset by anticipated increases in chicken and turkey consumption, which apparently have a
more negative effect on the demand
*The study was a cooperative project of
12 north central regional universities and
USDA, over the years 1959-67. Readers
who are interested in more detail and further explanation may write the Bulletin
Office, Agricultural Administration Bldg.,
Purdue University for a copy of the report
Beef, Pork, and Feed Grains in the Corn
Belt: Supply Response and Resource Adjustments by Dale Colyer and George D.
Irwin. North Central Regional Publication
178 (Missouri Research Bulletin 921)
August 1967.
for pork. Some persons would suggest
that 1969 consumption patterns may
be beginning to show a more favorable attitude toward pork. But any
evidence on this would have to be considered very tentative and not a basis
for projections.
As of July 1, 1969, the U. S. population was estimated as 203.2 million,
aand per capita income for 1968 was
S2474.2 The study assumes there will
be about 215.4 million domestic population by 1972, $2,640 per capita disposable income, and continued recent
trends in price and consumption of
other meats.
Total beef needs will increase substantially from mid-1960 levels. But
the income and population effects
about offset each other for pork, leaving total needs very nearly unchanged.
Depending upon the level of cattle
and hog prices, U. S. consumers may
take 383 to 473 million hundredweight liveweight of beef, compared
to 342 million in 1964. The pork estimates vary from 197 to 245 million
cwt. liveweight compared to 231 million in 1964. We can foresee only insignificant changes in exports and imports.
Assuming a continued increase in
the proportion of grain-fed beef and
continued improvement in the feed
conversion rates for hogs, we can get
some idea of feed requirements. Estimates suggest little change from 1959
for hogs, but a doubling of concentrates fed to cattle. For all livestock, a
15 to 21 per cent increase from 1959
would be needed. At 1964 yield levels,
about 13 million acres would produce
the extra grain, compared to 29.3 mil-
2 Income figures are in constant (1958)
dollars in order to abstract from inflation.
In current dollars, the figure is equal to
$2,918. With no further inflation, the
assumed 1972 figure would be $3,112 in
current dollars.
lion idled under the 1964 Feed Grain
Program. The same increase in production could also be obtained if
yields on 1964 acreage (64.3 million)
increased from 1.6 to 1.9 tons per
acre. This offers further evidence that
we will continue to have excess grain
production capacity.
Only a part of these totals can be
expected to accrue to North Central
region farmers. Since no long-term
trend is apparent, we use the 1954-63
average share of the U. S. total production as a base point—45.7 per cent of
cattle and calves and 76.4 per cent of
the hogs.
However, within the North Central
region there have been some rather
large westward shifts in production
among states. To some extent, the
shifts parallel increased grain production in the western part of the region.
Looking at these figures provides some
clue to the relative position of Indiana
producers over the past few years.
Recent Trends Within
The North Central Region
States and areas were classified by
whether they had more or less production in 1967 than the 14-year average
(Tables 1 and 2). They were then
cross-classified by whether their percentage of the U. S. total increased or
decreased. The U. S. beef total was
up 18.1 per cent and the pork up 4.5
per cent, so these were the dividing
lines.
Columns 1 and 2 simply report the
amount of production in 1967 and the
share of the U. S. figure for  1967.3
* Agricultural Economist, Farm Production Economics, Division, Economic Research Service, U.S. Department of Agriculture, stationed at Purdue University.
* The cattle and calf data refer to value
added. That is, weight of feeder calves
shipped into Indiana is deducted from
weight of fat beef sold. Thus the weights
consider contribution of beef cow herds,
feedlots, and also of dairy beef.