Tennessee livestock auction markets. Last year, Halls Stockyard closed after the bankruptcy of a major cattle buyer, Eastern Livestock, left it strapped for cash. But last month, the market reopened its doors under new management. As it turns out, the current beef cattle market is just too good to ignore. Retail prices are climbing, too, with beef costing about 10 percent more in February than it did the year before, according to Tammy McKinley, extension specialist at the University of Tennessee.

But major shifts in the market don't mean farmers will be quick to expand their herds.

The cost of raising beef cattle is rising along with the price of beef, thanks to higher prices for fuel, grain and fertilizer.

And raising a steer from calf to hamburger doesn't happen overnight. But, she added, "It takes a while. In East Tennessee, most farmers raise feeder cattle, typically to month-old steers sold at market for shipment to western feedlots, where they are fattened for slaughter.

Currently ninth in the nation in number of beef cattle, Tennessee's cattle inventory dropped 2 percent in , bringing numbers to their lowest since , according to the U. Department of Agriculture's National Agricultural Statistics Service.

Prior to the recent surge in prices, beef cattle were selling at record lows and drought swept across the country, leading many farmers to exit the business or reduce their herds, McKinley said. Recent higher prices only have exacerbated the supply problem, with farmers taking advantage of the spike to cull their herds and, in some cases, cash out all together.

Even as the supply has dwindled, demand has risen over the past couple of years, with overseas demand for beef rising as the recession has driven down the value of the dollar, she said. While demand "just hasn't been as great in the U. The international demand for beef has helped cushion price impacts on U.

Still, buyers already suffering from the lagging recession are feeling the pinch.

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And retailers also are feeling the pinch as they are forced to pass on some of the cost increases while trying to absorb as much of the increases as they can. Glynn Jenkins, director of communications and public relations for the Kroger Co.

The combination of severe weather, high demand for food raw materials and commodities like wheat and corn, and a growing world economy outside the U.

Jenkins acknowledged that cattle farmers are paying more for livestock, grazing land, fertilizers, feed and processing systems and added that the cost of fuel used in machinery and trucks is rising. While we don't have control over inflation, we have several ways to help our customers save money by shopping at our stores," he said. Among the savings tools he said Kroger engages in are corporate brand items including private selections and store brands that increase value, direct mail coupons and advertising for themed promotions.

Kroger recognizes how difficult it is for families are to make ends meet in this challenging economy, and are making every effort to help," Jenkins said. At Halls Stockyard, the farmers running its weekly sales say the supply situation won't be resolved anytime soon. Jeff McClanahan, who farms a acre ranch in Sweetwater and is a partner in the Halls Stockyard venture, has been among those to reduce his herds in recent years as low prices and the increasing cost of doing business forced his hand.

But building a herd back is expensive and represents a long-term commitment that becomes something of a gamble for beef producers, according to McClanahan and partner DeArmond and Jim Reed, who lives and farms in New Market. Heifers must either be bought or reared and kept from auction long enough to bear calves, which must then be nursed and grazed - a three- to five-year process before a producer sees any cash in his pocket.

It will probably take a couple years of consistently high prices for those able to build up their herds to do so, according to the producers.

The rising cost of beef production doesn't help with that decision, as fuel and fertilizer costs have risen along with the price of grains. McClanahan and DeArmond, both backgrounders, said they've seen the cost of prepping calves for the feedlot double, in large part because of the rising cost of feed.

Even though we've got high cattle prices, the economy's impacting us as far as people being able to get into the business and the input side of things. That is keeping producers from expanding their herds.

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In addition to the cost of entry, other economic concerns also are holding farmers back, she said. Farm loans are harder to obtain because of the banking crisis, and unemployment remains high, further limiting farmers' ability to take on additional financial risk.

Many cattle farmers aren't in it for the long-term regardless of how high prices climb. The majority of local producers are retired, many are elderly, and most don't have family members ready to take over the reins. For example, McClanahan's son, taking in the uncertainties of life on his father's ranch, decided to go to veterinary school. In response, the stockyard is launching programs to get youngsters interested in agriculture, working with local 4-H clubs to expose kids to the cattle business.

I would say that we still have the opportunity though," she said. We're still going to be producing beef. Sweetwater as reported by the Tennessee Daily Composite Market Report and the U. Department of Agriculture-Tennessee Department ofAgriculture Market News.

Halls Stockyard reopens as beef becomes big ticket item

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