Understanding the Mexican Cattle Industry
For the last several years there has been an increase in the number of cattle coming into the United States from Mexico. The Noble Research Institute and many of you have purchased some of these cattle as stockers or feeders. Why have Mexican cattle been attractive to United States cattlemen? There could be several answers to this question. However, I think the two most popular answers are that Mexican calves are generally thin and healthy.
When U.S. cattlemen have access to Mexican calves they can accumulate large numbers of light-weight calves much quicker because of their health. Unfortunately though, there have been many times when U.S. cattlemen have been unable to purchase these calves. Why has this been the case? In early May, 1996, the four Agricultural Economists at the Noble Research Institute, Fred Schmedt, Mark Skiles, Steve Swigert and myself along with Derrell Peel of Oklahoma State University went to Mexico to learn about their cattle industry. Space in this newsletter will not allow a full disclosure of our findings, but I would like to share some of the highlights with you.
The state of Chihuahua (chee wa wa), which lies just south of New Mexico and part of Texas, is the largest cattle producing state in Mexico. Chihuahua is the origin of most of the cattle that come across the border into the United States. Many of these cattle cross at Santa Teresa, New Mexico, just west of El Paso, Texas. When cattle arrive at the crossing they are unloaded off the trucks and immediately weighed.
Generally the next day the cattle are individually inspected, dipped and walked across to the United States side and weighed a second time. The weight on the U.S. side is the pay weight for the cattle. It is generally accepted that the U.S. weight cannot be above 103 percent of the initial weight on the Mexican side or cattle from Chihuahua. Cattle from origins further south can exceed 103 percent. The cattle can be traded for on either side of the border at any time. All negotiations are by private treaty.
In May, cattle were only crossing once a week due to low numbers. We learned later in the week why there were so few cattle crossing. There has been a four-year drought across much of the cattle producing area of Mexico that export cattle to the U.S. Pasture conditions are critical.
There are two main reasons why export numbers were increasing each year through 1995. One was the prolonged drought. The drought forced liquidation of all the calves including replacement heifers. The state of Chihuahua liquidated half its cow herd in 1995. The second reason was that cattle prices were higher in the U.S. Their cow numbers are now very low, plus estimated conception rates are also very low. According to information presented to us at the Cattlemen's Union, the average conception rate in the state of Chihuahua during the period from 1990-1994 was 55 percent.
They estimate the 1995 average conception rate across Chihuahua to be 35 percent. Very quickly you realize the numbers of cattle coming from Mexico into the U.S. the next few years will be low. They no longer have the factory to produce calves and the factory they do have is producing at a very low level. In addition to low numbers of cows, cattle prices in May were higher in Chihuahua than they were in the U.S. In fact, packer cows and bulls were being imported into Mexico for slaughter.
We hope to expand this article to include more highlights of our trip as well as more explanation of the Mexican cattle industry as we viewed it. To receive a copy of the forthcoming article, contact us at 580/223-5810.