As I sit in my office on April 15, 2025, Tax Day, I can’t help but sit back and ponder about what the rest of this year will be like. After reviewing several stories written about Texas agriculture including land prices, cattle inventory in the pastures, feedlot placements and number of head marketed coming out the feed yard, I would have to say we are in pretty a good position to once again make a profit this year in the cattle business.

First of all, it’s certainly no secret that our cow numbers are at a record low.  Continuing drought conditions, loss of potential grazing property due to urban development, lack of motivation and an increasing older set of producers has created the present situation we are now in. Let’s tell the truth. Unless you had the fever to be in the cattle business for the last 25 years, there really wasn’t much reason to do so. For most property owners to believe they could make a profit was just a joke. In fact, a large percentage of property owners only did so because of tax advantages associated with agriculture.

Let’s look at land usage and prices.  According to an article written by Emmy Powell in the Texas Farm Bureau’s Texas Agriculture Daily, in the last 25 years, Texas agricultural lands have changed dramatically. Due to rapid changes in the economic situation in the state, Texas is now home to eight of the top 15 fastest growing cities in the U.S.  From 1997 to 2022, the Texas population increased 55% from 19 million to 30 million residents. Of this population increase, 88% occurred within the states top 25 highest growth counties. This continuous population growth has caused land values to increase by 505% in the last 25 years. These increasing land values have, of course, created incentives for landowners to sell or possibly subdivide their land by removing it from agricultural production forever.

Now let’s talk cows. The beef cow inventory has declined since its peak in 1975 at 45.7 million head. It appears that since the record peak the cattle inventory has slowly but surely declined when comparing herd size cycles. For example, the current cycle that we are in estimates the U.S. cow herd at 27.9 million head. But like so much in modern agriculture, the cattle business has been able to produce more pounds of beef in past years because of better production, genetics and feeding trends. We’ve been able to produce more with less.

I think 2025 will definitely be a very profitable year for cow/calf producers and the following is why. The Texas Farm Bureau recently had a short story about the March 2025 Cattle on Feed Report and the possibility that the herd expansion possibly has begun. USDA is estimating there is a little over 11.5 million head of cattle in U.S. feedlots on March 1. This number is down about 2% from last year. The feedlot placements came in at 1.55 million head, down 18% from last year. So, does this mean that the expansion has begun or is this a sign that more cull cows were packed last year than we thought, and those calves of course were not produced? Remember, in the last two years, packer prices for bulls and cull cows have been incredible. The next question is, if producers have started to retain replacement heifers, will these only replace the cull cows sold the past two or three years? If that’s the case, then producers will still need to produce a lot more replacement heifers just catch up with the lost inventories from 5-6 years ago.

What does this all mean?  As I’ve said in the past, I think we are in for some very rewarding times regarding beef prices. My biggest fear this year is drought, and I hope most of you insured your property with PRF insurance. That, along with the price of your calves, should provide you with enough income to purchase extra feed and hay so you can retain the herd until conditions change for the better.