Will Ranchers Be Holding Back More Heifers in 2010 - Herb Lock, FarmSense Marketing

[shaney]

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[shaney]

Here is the poll that didn't work the first time (I hope!!)

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<a href="http://polldaddy.com/poll/3743237/">In 2010 do you think the cow herd will......</a><span style="font-size:9px;"><a href="http://polldaddy.com/features-surveys/">Market Research</a></span>
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[grassfarmer]

I think one point is highlighted in Shaun's introduction when he states "Even though some studies are showing a positive net margin per cow why is the industry continuing to shrink?" Once you listen to the audio you will see that these studies come out of the US where cow/calf producers have only had 2 loss years out of the past 10. Would it be fair to say its almost the reverse situation in Canada - 2 profit years out of the last 10?
Truth is in Canada we have very poor data on beef sector profitability in general. With no data how can conclusions be drawn - how can the "experts" tell us where prices or cattle numbers are going?

I think Herb made a couple of worthwhile observations - $50 margins cannot sustain a cow/calf sector. My answer to that is we need to get several hundred dollars margin per animal - and that is possible without raising beef price at retail level. We just need a fairer share of the proceeds and until somebody addresses that I don't see how progress can be made.

Herb commented that land ownership is cost prohibitive to young producers and the old guys own most of the land. I think that's quite false as land ownership is not necessary - there have likely never been more opportunities for interested cow/calf producers to run cows without owning the land between understocked community pastures and pastures lying idle due to the herd sell off. The problem as he hints at is not a shortage of cows but of producers. In my area there are very few cow/calf herds with a person under 40 involved in them. 40 - not under 30 or under 20. Other than the Hutterites I don't see the youngsters coming along that you would say will definitely follow their parents into agriculture. That is a serious problem and one that affects many sectors of agriculture in many developed countries.

My own view on heifer retention and overall herd size is that it will settle in about domestic supply levels long term. The "production for export" model failed miserably because the production chain reward distributions were flawed from the start. The Tysons, Cargills of the world made their money out of Canadian cow men but ultimately their greed cost them this source of revenue. They can move to less developed regions of the world and do it over again but their time is limited - unsustainable food production never wins out in the long run and it is the biggest threat to our civilization.

[ProFarmer]

The cow herd is going to shrink a lot more than most realize. Nobody is going in, everybody else is getting older. We are going to liquidate a third while the going is good. What is next hoofinmouth, trade barriers, stupid goverment policies or just more work for little reward.O yeh there is going to be the odd guy buying but only if he can get them cheap enough to make a profit down the short term road. Manitoba government has done nothing but gave lipservice to the cattle producers of this province. MCPA is totally powerless.

[grassfarmer]

I should counter the negativity of my earlier post by highlighting the difference if you step through the door to the non-commodity side. I am on track to market $100,000 of meat direct to consumers this year and am already turning away customers whom I can't supply. I consistently bank $400 per animal above commodity fed cattle price after paying the processing and delivery fees and the consumer is still buying it for less money than at the store. Best part is the demographic of these consumers - nearly all young parents, eager to seek out beef they deem to be safer, higher quality and reasonably priced.
For anyone young and ambitious the potential is huge - some of the younger folks that can blog and twitter would be able to tap directly into this stream of consumers far better than a technically challenged oldie like me.
Funny how everyone in the "industry" dismisses this as minor, a "niche" market and something that will never support the number of cattle and producers we have in Canada. Newsflash guys - the current commodity system clearly can't support the number of cattle or producers either so why not consider an alternative that might just actually might work? We don't need big numbers of cattle we need big cattle profitability numbers.

[kato]

The MCPA is powerless only because they've found that if they criticize the government, the next time they want to speak with the government, they can't get the time of day. There is no political will in Manitoba to support agriculture. New football stadiums? Sure, they're important. Fast bus lanes that cost millions of dollars a mile? Bargain. Food? Not their problem.

However, I have to commend Jay Fox for all the public pressure he's been putting out there to make them address the flooding. He's done a super job, and should be recognized for it.

This is a tough province to be a livestock producer in. It shouldn't be that way, but it is.

[smcgrath76]

Without completing the survey...
The herd will continue to shrink, and
the pace will increase. We are working
on an expansion as the opportunity is
better than it has ever been in our area
for many years. This is because we have
some equity, some young blood, an
improving method of production, and a
wee bit of cash. The toughest nut we
have to crack going forward is the
marketing challenge (see GF comments).
We have been working on and lost money
on the problem over the last several
years.
Conventional thought being the prevalent
model, I don't see more young producers
coming to the table, since the
traditional model relies on large debt
loads, tremendous amounts of labour on a
per cow basis, small or negative ROI,
and hoping real estate values increase
over time. I believe it is called
living poor and dying rich...

[grassfarmer]

Marketing is easy Sean, once you realise that when you pay others to do the work for you you are back to being a margin player. Do it yourself and you get the full return that your efforts deserve.

[Sawbones]

Good post Shawn
I believe even with a 30% retention, we will just be replacing our old cow herd

[per]

I retained and bred for 30% just to replace the cows I had to cull last year to avoid buying expensive hay. I have been offered some more grazing acres this fall but don't quite know what to graze them with (yet). Although I used to think so and will be rewarded in net worth, expansion doesn't need to be on deeded acres.

[ProFarmer]

With the loss of the PMU industry in this area and the large cow herd reduction ,hay land and pastureland is being taken out at an alarming rate. Once we get the gophers controlled we will be on the way to achieving the 15 million tonnes of canola for the canola council of canada. Hay cannot be sold because of lack of cows, and pasture is going unused by the 1000s of acres in the area alone.No young farmers going into cattle period...

[kato]

I took a drive to Winnipeg this week. For the first forty miles, I saw two fields with straw bales in them. One belonged to a practicing vet with a hobby herd. One belonged to a farm auctioneer with potato land. The only cows I saw belonged to these two guys, one herd of grassers belonging to a cattle buyer, one belonging to a CFIA inspector, and one belonging to a farm equipment mechanic, and some grassers belonging to a farm equipment salesman. That's in FORTY miles. I knew all of these people, and I also knew the probably twenty plus others who used to be along that road, and now are gone.

They're not coming back.

In the next sixty miles, I saw two cow herds and no straw bales. These were in the first twenty miles of this stretch, and the forty miles after that had no cows and no straw.

Not good.