The industry affects the Amarillo economy
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AMARILLO -- Local cattle feeders say they are losing more money right now than they were during the mad cow disease scare and that does scary things to the Amarillo economy.
There are three reasons cattle feeders are hurting: about a year ago they bought cows at abnormally-high prices, then the cost of corn and other feed went up, and finally, when the economy started failing consumers switched from steaks to ground beef.
The cattle feeding industry has about a $15 billion impact on the local economy. So when it is not doing well, it trickles down to many areas of the economy.
"It's new pickups, it's new cars, it's groceries, it's furniture, it's houses. It will go through our entire economy," said Don Close, Texas Cattle Feeders Association Market Director.
Right now feeders are losing money with each head of cattle. The cows are selling for about 10 cents less a pound than feeders need just to break even.
It is the worst the industry has seen since the early 1970's.
"(And) there was another period in the early 1980's that sticks out in cattle feeders memories and so those two periods would be comparable in both the depth of the losses and the length of period that it has gone on," said Close.
Still, no Amarillo feedyards have closed. Though they are operating conservatively... They are still operating.
"These people out here are really resilient and they use their wits and they don't get into horrible james without some way to get out and they use the futures market and they're clever about the way they go about their business," said James Herring, President of Friona Industries.
Herring says the news is not all negative.
"This winter has been without dramatic event and has been excellent so probably $20-$25 a head better production this year than in past years because of the mild winter," said Herring.
Of course the weather has not been good to farmers who need the moisture. But that is another story in the overall picture of Amarillo's commodities-based local economy.
As far as cattle feeders go, Close says there is a light at the end of the tunnel. The factors that hurt the industry before should start working in the favor of feeders in the next few months.
In the meantime, feeders would like us all to eat more beef.
