David Cantley Cattle

Orangeburg County beef cattle grower David Cantley has seen the ups and downs of the cattle industry over time. He says 2018 was an up year.

High input costs took a bite out of relatively stable beef prices in 2018, making for a challenging year for the cattle farmer.

Craig Whisenhunt, co-owner of the Orangeburg Stockyard, said beef prices currently are "not where they need to be."

"Everyone has a little sour taste in their mouth," Whisenhunt said, noting beef farmers are dealing with an annual occurrence: lower prices in the fall and winter. "It is about supply and demand."

Cattle prices generally have struggled to move higher as beef supplies have been increasing.

Whisenhunt says he believes general lower prices and demand can be partly blamed on tariffs.

Earlier this year, Canada implemented a 10 percent tariff on some U.S. beef products after the U.S. moved ahead with tariffs on imports of Canadian steel and aluminum.

Across the globe, China also raised its 12 percent import tariff on U.S. beef to 37 percent on July 6.

U.S. beef exports to China in August were down from the prior month and represented 0.47 percent of August U.S. beef exports. Monthly beef exports to China have decreased 47.5 percent since the pretariff May peak.

But President Donald Trump's renegotiation of the North American Free Trade Agreement and creation of a new United States-Mexico-Canada agreement has given beef producers new hopes for greater markets.

According to the South Carolina Department of Agriculture Market Report in early October, medium and large high-quality feeder steers sold for an average of $114.50 per cwt for an 830-pound steer and $173 (per cwt) for a 295-pound steer in late September.

Last year, medium and large high-quality feeder steers sold for $116 per cwt for a 805-pound steer and $166 (per cwt) for a 288-pound steer in early October.

In early October, SCDAMR reported there was an average offering of average to plain quality cattle with active buyer participation. The SCDAMR says there was light demand for cattle with excessive hair and early maturing cattle.

Lower prices and an aging populace have meant a lot of farmers getting out of the cattle business, Whisenhunt said.

"We sold out of a lot of herds this year," he said. "In the last three years, it has been pretty bad of people getting out."

One reason for the exodus is rising input costs.

"Input is awful," Whisenhunt said. "As a whole, we are getting the same prices for corn, beef, hogs ... as 30 years ago. Everything seems to out of balance compared to the raw product."

Experts do believe cattle prices may increase over the next couple of months due to tighter supplies and high consumer demand.

"I wish we could go back to the origin of beef," Whisenhunt said, noting a few years ago it was mandatory to put a beef's origin on the label. It was a time when beef prices were good. "But they claim that was unconstitutional and that they did not have to do that and that it was not fair."

Whisenhunt said while the American label can be placed on products, it is not required to place labels on foreign-raised beef.

"I think that hurt us on the American side because the housewife if she is given a choice, she will choose American beef," he said.

Orangeburg County beef cattle grower David Cantley has been raising cattle for two decades.

This year he has about 30 cow/calf pairs that are all pasture-raised on hay and grass.

He has seen the ups and downs of the cattle industry over this time period, but for Cantley, 2018 was an up year.

"We have been very fortunate with the weather," Cantley said. "There was good weather for hay production and for pasture conditions. That is what we need. That is what a cow producer has got to have and this is grass."

A beef producer also needs to see good prices.

Cantley said prices this year have been fair.

"Prices are profitable," he said. "I sold calves back in September. They were bringing in an average of $1.20 to $1.30 a pound."

While Cantley saw relatively decent prices, he said the talk about tariffs does not overly concern him due to the small size of his herd.

"That is out of my control and I don't worry about it," Cantley said.

One trend locally among cattle growers is a greater focus on beef quality and healthier beef.

"People are paying more attention to what they put in their cattle with hormones and antibiotics," he said. "There is a trend toward more natural beef like more grass fed and organic. It is a niche."

Like many sectors, the cattle industry in Orangeburg County has decreased in size. There are estimated to be about two dozen cattle farmers in the county.

Recently, the U.S. Department of Agriculture recalled 6.5 million pounds of beef over potential salmonella contamination.

So far the department’s investigation has found 120 patients from 22 states with illnesses linked to eating the contaminated beef since August. There have been no deaths reported.

South Carolina has not reported any illnesses related to the beef recall.

Leader in livestock

Orangeburg County remains the state leader in livestock production.

The county, according to the 2012 U.S. Department of Agriculture Census, ranks ninth in the number of cattle and calves, eighth in the number of poultry and eggs, and third in broilers behind Lexington and Oconee counties.

Orangeburg County had about $10.7 million in sales in milk from cows in 2012, ranking the county second in the state.

Orangeburg County was second --behind only Newberry County -- in 2013 for milk production at 53.5 million pounds, according to the South Carolina Dairy Association.

Swine's place at the Orangeburg County table continues to remain small as integration has kept farmers from entering the business.

Dairy

Norway dairy farmer Allen Riddle, a fourth-generation dairyman, milks about 800 to 900 cows on 1,300 acres.

He works on the farm with his son, Josh.

Mother Nature blessed the Riddles with "an abundance of feed" for the cows due to adequate rainfall. 

But Riddle says 2018 was not as friendly as 2017.

"The price of milk was quite low," he said. "It was projected to go up in July and August, but when we got into this tariff stuff ... it really hurt us bad."

"Mexico is our biggest customer for exporting cheese and butter," Riddle said. "They started getting it in Europe. It cost us $2 per hundred pounds."

Currently, milk prices are at about $16 per hundredweight (cwt) or at prices seen 20 years ago. A hundredweight (cwt) is roughly equal to 100 pounds.

"It has gone up and down, but this is the fourth year we have been in a down cycle," Riddle said. "It is a little tough this year."

While milk prices are low, Riddle says nothing else is.

"Right now I am buying a lot of rye grass seeds," he said. "Twenty years ago, it was $20 to $25 a bag. Today, it is $38 a bag. We are paying almost 50 percent more for seed on the same milk prices."

Last year, milk prices hovered around $20 per cwt. Two years ago, prices were around $17 per cwt and fell to $13 cwt earlier in 2016. The last time prices fell below $12 was in 2009.

Four years ago, prices reached near-record highs, averaging about $28 to $29 per hundredweight.

Milk prices tend to be higher in the early fall after a hot summer reduces milk production. Production increases over the winter and the spring when prices tend to drop.

Currently, the American market is flooded with milk, resulting in low milk prices.

Consumers have been eating more cheese and yogurt in recent years, keeping many farms afloat, but sales of milk as a beverage have been declining for decades.

Riddle is hoping the new trade deal -- United States-Mexico-Canada Agreement -- could help lift dairy farmers out of the slump.

"The dairy companies work for years to build a market and now these other countries think we are not a reliable supplier," Riddle said. "There is a lot of milk in the world. Europe has a lot of milk and they have taken advantage of the tariff situation. They have been selling cheese and powder in Mexico."

"We might get that market back, but we might not be able to," Riddle said.

Under the deal, Canada would open more of its dairy market to trade and drop its quota and pricing system for some milk powders and proteins – a move that could benefit the American dairy industry as it seeks export markets.

But it only opens up about 3.6 percent of Canada’s market for dairy, poultry and eggs to the U.S., and that’s not much for American farmers.

In the short run, the trade deal isn’t likely to raise the price U.S. farmers receive for their milk – which in some cases has been below their cost of production.

Industry experts say the prices farmers receive for their milk should improve some in coming months due to market forces rather than the trade deal,which could take years to fully implement.

Due to recent price movements, forecasts have been raised for most dairy products and prices to be received by dairy farmers.

Milk prices are expected to increase heading into next year from the $16.40-range to $16.75 and $17.75, according to the USDA market outlook.

Due to lower expected feed prices and higher milk price forecasts, the 2019 milk production forecast has been raised to 221.0 billion pounds, 0.1 billion higher than last month’s forecast.

With higher expected imports of butterfat products and cheese, import forecasts have been raised for both 2018 and 2019.

According to the 2012 census, countywide there are 11 dairy farmers operating with an average herd size of 300 cows.

The county's dairy industry has fallen from about 48 dairy herds in the mid-1980s.

Poultry

Orangeburg County poultry farmer David Funchess, who operates the farm with his son David Jr., has six chicken houses and on average has about 19,300 chickens per house. The farm houses 9-1/2-pound birds for about 63 days.

Like many Orangeburg County poultry farmers, Funchess contracts with Pilgrim's Pride. Pilgrim's provides the bird, feed and veterinary services, while the growers provide the labor, housing, litter and utilities.

Pilgrim's is the largest provider of birds from Orangeburg to the coast.

2018 was a year that continued trends seen the last few years: increasing input costs.

A recent cost has come in the form of the replacement of house water systems with new Ziggity Systems high-flow water nipples that help provide the chickens with more water.

"They helped pay a little bit on the price but they did not give us anything on the installation fee for putting them in," Funchess said.

Funchess said there is another request to make the inside walls of the chicken houses solid in order to improve air flow.

"We are talking about $17,000 to $18,000 per house," Funchess said. At six houses, the cost would be $108,000.

Funchess said while incentive money has been allocated to help with this cost, he says there is only so much a grower can spend.

"Our base price is pretty much the same," he said.

Then there is the cost of heating and cooling the houses.

No matter the outdoor temperature, the birds need to be kept at 93 degrees at least during the first week of their growth.

Funchess says he understands the Orangeburg Department of Public Utilities is planning to install natural gas lines down U.S. 178 all the way to Bethel Forest Road. DPU officials say the project is on the table and is an interest of the utility's.

He says he would love to tap into it.

"Oh Lord, I tell you what it (propane) is high," Funchess said. "I spend close to $15,000 on propane a year."

Funchess says he knows farmers using natural gas and they have seen their costs "cut considerably."

Funchess says he knows there are a number of chicken houses in the area that would be glad to tap into natural gas.

The positive is that chicken-replacement levels have been fairly consistent on the farm the last few years as chicken demand continues to be high, surpassing beef and pork. The demand is causing chicken prices to rise.

In order to keep up with the demand, about five flocks of chickens annually come through his farm. Between every seven to 14 days, a new flock comes.

The birds are raised primarily for their breast meat and used in the school lunch market.

Despite the input challenges, Funchess, who also grows row crops, says overall the chicken industry does provide more stability than farming row crops.

"It is something you can count on," he said.

The poultry industry in the state did see a victory in 2018.

A bill signed by Gov. Henry McMaster helped to lessen the state Department of Health and Environmental Control's ability to require greater distances between a chicken farm and a person’s property.

The limit is now 1,000 feet for homes and up to 400 feet for undeveloped lots, but DHEC could have set more stringent provisions. Under the new law, they cannot.

The bill also lessens a resident’s ability to protest nearby poultry farms. The threshold to protest was two miles. Now it is one mile.

Funchess is becoming a rare breed in Orangeburg County as the number of poultry farmers in the county has dwindled over the years.

Like other agricultural sectors, the county's poultry industry is comprised primarily of farmers contracting with large companies to grow chickens.

Swine

The U.S. pork industry has seen an increase in supply in 2018, according to the USDA. The increases in pork production have largely been consumed either domestically or in foreign markets.

More pork on the market this year has driven pork prices lower, likely inducing consumers — both domestic and foreign — to demand larger quantities of pork.

Locally, prices for feeder pigs at the close of September were $25 to $50 per head under 100 pounds. Last year, prices for feeder pigs locally were $7.50 to $30 per head under 100 pounds.

Texas-based Cactus Feeders, which purchased Orangeburg Foods in 2015, is the only significant swine operation locally.

Swine Graphics Enterprises, a division of Cactus Feeders, breeds, gestates and weans pigs and then transports them to be grown and then sold to packers.

The company also provides farmers with feed and hogs.

Locally, there are about a dozen hog producers in the county, and expectations are the industry will remain stable due to prohibitive entry costs.

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Contact the writer: gzaleski@timesanddemocrat.com or 803-533-5551. Check out Zaleski on Twitter at @ZaleskiTD.

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Staff Writer

Gene Zaleski is a reporter/staff writer with The Times and Democrat.

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