MURFREESBORO, Tenn. — To say the bovine business in Tennessee and Kentucky is good right now is a bit of an understatement considering many producers are looking at all-time price highs in the cattle markets.

The two neighbors are becoming reckoning states in the eyes of the business as a whole. Kentucky ranks eighth nationally in cattle production, No. 1 east of the Mississippi, while Tennessee is No. 2, ranked ninth nationally. If combining the states, the industry here would be second only to Texas when it comes to cattle numbers.

That doesn’t mean there’s a cow in every field; in fact, total numbers have decreased over the last year or two. But more informed farmers and better animals are having an impact.

Charles Hord, executive vice president of the Tennessee Cattlemen’s Assoc., said there is much optimism in the cattle business these days and feels, barring anything unforeseen, the market and prices will stay strong down the road.

“The cow-calf guys, they are really kind of in the driver’s seat just because the numbers are so low and the feedlots need cattle to fill their lots and run them efficiently, and packers need beef, so it’s really been a good time this year,” he said.

The rule of supply and demand is ringing true throughout the industry. In a statement from the National Cattlemen’s Beef Assoc. (NCBA), the agency noted production should remain profitable as supplies are tight because of global demand.

Tight supplies of cattle and beef will be compounded by continued growth in export markets, with expanded access into Japan and continued increases in the volume and value of beef being sold into export channels, according to CattleFax CEO Randy Blach.

But cattle producers are also taking advantage of niche markets here, such as grass-fed product, for instance. Hord said while grass-fed operations are still a small sector of the business, it is something producers see as an opportunity. He also pointed out that farmers are still learning more about their animals, ultimately creating a better product.

Both Kentucky and Tennessee have organizations and universities that continually supply information to farmers to help in that educational process. “The Center for Profitable Agriculture is a partnership between Tennessee Farm Bureau and the University of Tennessee extension, and they are doing research and analysis of the grass-fed market from the genetics and the way (the animals) need to be fed, the way they need to be marketed and what the realistic profit margins are,” Hord said.

“So, we’re learning as we go, but there has been a real focus here. We are all a little bit smarter than we used to be in terms of how we need to manage our operations.”

Incentive programs have helped, as well. Both states have programs funded by tobacco Master Settlement Agreement funds, as ag leaders and legislators saw the need to reinvest portions of that money back into the industry to address a change in the agricultural environment.

The cattle industries in Kentucky and Tennessee have benefited from those investments. Hord said Tennessee has made those investments through a funding process similar to Kentucky’s Agricultural Development Fund.

“Down here we call it the Tennessee Agriculture Enhancement Program. Kentucky started out maybe a year or two ahead of us, and we modeled a lot of our programs after what Kentucky was doing,” he said. “We created programs using tobacco funds.

“I think we have $21 million in the budget this year and that’s money directly paid to farmers as they try to either transition from tobacco into a new industry, or for some that were already in those industries to get a little more efficient and profitable.”

The effort has no doubt helped the cattle business become the No. 1 ag industry in Tennessee, with 2010 totals reaching $545 million.

Hord’s counterpart in Kentucky said the news is equally good. Dave Maples, executive vice president of the Kentucky Cattlemen’s Assoc., said current cattle prices are the highest he has ever seen. “The good thing is, the price is up and we export more; the tough thing is we just don’t have enough cattle out there,” he said.

Maples said one would think all this is a signal for producers to up their game, but he is still seeing many row crops. Of course grain prices are high, too, and he said he doesn’t know whether cattle numbers will come up here very fast or not.

The mood be cautiously optimistic, according to Maples, who said the “rug had been pulled out” before and with these high prices, if something drastic were to happen it could hurt many people fast. “Let’s hope something like that doesn’t happen, but it’s really good right now,” he said.

Kentucky, like Tennessee, has benefited from tobacco settlement funds and the programs they have started. Another new program is called MAG 60 (Management And Genetics 60-day post-weaning).

According to information from the University of Kentucky (UK) College of Agriculture, “the Kentucky Beef Network (KBN) will partner with beef producers to synchronize estrus in their beef females for timed insemination. Females will be time-inseminated to reduce the labor costs associated with A.I. (artificial insemination).

 Producers will A.I. their females to a small, select group of sires that are proven in their ability to sire productive, profitable calves.

“The sires used will be selected by a committee that consists of UK beef extension specialists, representatives of the semen supply companies, KBN and producers. The same sires will be used for the entire project (three breeding seasons). Steers sired by A.I. will be managed according to CPH health requirements and will be backgrounded for a minimum of 60 days post-weaning. The calves will be age and source verified and will be subjected to ultrasound to determine potential carcass merit.”

The result of the program will be to market feeder steers that are age, source and genetically verified for superior performance – and better animals could help these good times stick around a lot longer.