competition?

[cowman]

I have this old neighbor I help out. He has a few cows that he keeps for whatever reason. These cows are grossly overfat as he just overfeeds them big time. Now there is no way these cows make this man one red cent....in fact they are "pets" and cost him more than they make him.
My question is: How can anyone compete with this man? South American? Australian? New Zealander? Answer: They can't....nor can you or I!!! As long as there are people like this in the cow/calf business it will never be a viable business. And I would submit to you that about 80% of the cow/calf business in Alberta is NOT viable!!!!Do the math sometime???

[wilagro]

Cowman...I think your 80% figure is a bit out. I also don't get your point on the competing part. Is this man selling a better product? Do his calves look better than others offered to the marketplace? If his costs are higher than yours then how is he competing? I raise a dozen or so cows and I don't see how this is meaningful competition with my neighbour up the road who has over 200 cows. The big boys would only be too happy to see the little guy get out of the way so that they can have it all.

[cowman]

What I'm saying is it doesn't matter what he gets for his calves. If he loses $200 per cow it doesn't matter. This is the problem with the cow/calf business. Too many people raising calves at a loss. This sort of thing doesn't happen with pigs or chickens or dairy.
I am not one of the "big" guys. I have owned up to 200 cows but am now at 150. Anymore that makes me a very little guy! I realized I am not one of the "viable" producers therefore I am dispersing this fall. And in reality the only really "viable" producers in Alberta are the guys way up north on cheap land or the ones using cheap pasture(usually government land).
If people took the time to sit down and figure out what they are actually getting paid in cow/calf they would probably be shocked? MacDonalds would probably be a better option? My Dutch neighbor showed me a study done on agricultural profitability. Guess which sector was the least profitable? You guessed it...Cow/calf!...with grain farming not far behind!

[dalek]

The average cow-calf herd in Ontario now is 22 pairs. There are so many hobby farmers with 10 cows who don't care how much it costs them as long as they're having fun that there isn't much room for somebody doing it for a living without a LARGE number of cows, and even then they're pretty much at the mercy of the hobby market

[bbattist]

I am in the Maritimes and the average herd is probally less than the 22 mentioned.I don't think that a lot of cow/calf guys here would think of themselves as hobbists but forced into the situation where they had to get off farm jobs to make ends meet and then they became inefficient at home because they can't put the proper amount of time into there operation so it becomes stagnant.They have some land that may have been in the family since long and don't want see this way of life being lost.they have the hope that somehow things are going to change and they can get ahead enough that someday that they will be able to come back to the farm fulltime. I don't think that you will have to worry about the small guy affecting the market for too much longer as this is probally the last generation that is going to bother with the cows and the average age of the current guys must be over 50.As far as us in the maritimes skuing the market,don't worry we are pretty small potatoes compared to rest of the country.

[cowman]

I remember back in the 70s when Eugene Waylon was Ag minister. At that time Canada was actually a net importer of beef. He tried to get a marketing board set up for beef. He was unsuccessful as it wasn't in the interest of the big food corporations. I've often wondered what would have happened if he had been successful. When they brought in the national milk marketing boards it pretty well got rid of the little hobby dairy. I think it was good for the dairy industry,as a whole, in the long run. Same thing with chickens although that whole situation gets a little bizarre at times.
When the western provinces started to abandon the "grain economy" they moved into livestock production. So today we have to export more hogs and cattle and a lot less wheat. The federal government encouraged this shift, with the thought that they wouldn't have to subsidize the meat industry like the grain. Which works just fine until the U.S. gets sick of taking all our cheap meat.

[rookie]

I am a little confused cowman, I read a thread you posted on April 9 called "selling the cows" . So how many cows do you feel it would take to compete ?

[cowman]

I think it all comes down to what it costs you to produce a calf. And whether you include your land prices in that cost. For example land worth $200/acre only needs a return of say 10% or $20. But land at $2000/acre needs $200 return.
Now we all know how much it cost to feed a cow this winter. Put a realistic price on your feed. The fact of the matter is a cow is going to struggle to pay the bills this year. Probably to break even would be lucky.
But this is a drought year. It is also approaching the top of the cycle. One maybe two more "good" years and then back into the tank.
I believe, and this is only my personal belief, that you need a stable cow herd of 250 bred cows/year to be viable in Alberta. You can do it with a lot less but I'm talking about a fairly decent income. And I suspect I'm low. I think 250 is about all one person can take care of, and you'd better be a very hard worker(and have lots of energetic kids!)
I guess my point isn't whether a person can survive or not but about why would you want to? I bought the milk cows calf before I was old enough to go to school and have owned cattle ever since. And I still intend to feed and grass some steers. As far as I'm concerned cow/calf doesn't pay enough for the work involved. I just got sick of working for nothing. Maybe if enough guys like me quit it will open the way for someone else.

[farmerboy]

I think cowman is probably right,a bigger herd costs less to maintain than a smaller herd.However, it is a vicious circle.As a herd is growing,one needs good or newer equipment,perhaps bigger then before to get the job done.So how does one pay for that, get more cows? Where I live,land is still relatively cheap or cheap grazing is available plus we don't have a lot of options,when it comes to growing crops,because we live so far north.Cow/calf operations are a good alternative,and we can utilize the byproducts from growing grass seed,as a lot is being grown here.Cow herds up here have been growing in the past,and I would estimate that the average herd is around 150 head.I know a lot of ranches with 200 to 250 cows.
Some have around 500 to 600 head,some even as high as 1000 head.

[cakadu]

Studies have shown that as you get bigger, you use your inputs LESS efficiently so there comes a point in time when economies of scale start working against you. Fixed costs remain the same, but you're right, you need to get bigger equipment or find more time to do the job and it does become a viscious cycle.

It's a little like comparing apples to organes when you compare dairy or chicken to beef or grain. Both beef and grain are exported and the only way dairy or chicken is exported is if there is over quota domestically, which incidentally is why the US and New Zealand keep bringing up unfair subsidies on milk, but that is another discussion!

Supply managed industries only work domestically and if we were to produce beef solely for the domestic market, we would see a lot more of the 22 pair farms because we wouldn't need all those animals in those huge feeding operations.

It's only competition for you if he's selling into the same market as you and if he's just selling them to the auction, then I guess he takes his chances like everyone else.

[cowman]

linda: Getting bigger does lower your per unit cost, but yes there is the diminishing return thing. Probably if you are up to 150 cows adding another 100 is possible with the same equipment(providing you weren't already at the breaking point).
The really limiting factor is labor. You can only do so much and then you need hired help.
Over the years I have had employees in my lease business and usually it is a real pain. I have found that sub-contracting out some work is a lot easier. I do have one permanent old employee who is more like family than hired help. Another example- A few years ago I had a guy working for me cutting hay. Well he pretty well trashed the haybine! So now if I find I have no time for cutting or baling or picking up hay, I just hire a private contractor. He does a good job and it's all his equipment. Actually I haven't had to do this the last two years as my son is home now and he does most of the work.

[mbfarmer]

We have just done what cowman is talking about. Last fall we had 150 cow, leased an additional 116 cows during the winter. So we calved out 260. Equipment wise we did not have to upgrade a thing. Labor wise...it does not take long to put out another 3 to 4 bales a day. The critical point I can see is crossing that line where you need to hire someone to get the work done. Not may people will stay around for just part time work. Inorder to keep someone good...you have to pay good. Does that mean having to get bigger again in order to support the hired hand. Where does it stop??? However with the bigger herds, there are advantages. Bigger groups when selling...which the buyers like, less commissions per head when selling at the auction mart.

[cowman]

Another problem to getting bigger is usually you have to calve later. Which is okay if you can feed your calves out or live with a smaller return/cow. It is pretty difficult to calve in Jan./Feb. if you have large numbers and no help. I think last year the bigger calves really paid off. For about ten years the industry had stopped paying a premium for those big crossbred calves, but it sure turned around last year! After years of buyers telling us we had to go to a smaller(angus type)animal that would fit in a box! Now that we've bred our cattle down to the point where they are all small suddenly they want those big cross breds again! What they really want is an excuse to screw us!