Cow economics

[cowman]

Pastures are getting to the point where soon they will be done. What are the costs of feeding cows through until June of 2003? If it costs $160/ton(opptomistic?) and a dry cow needs in the neighborhood of 35 lbs. a day in straw and hay how much will that cost? Say Sept.1st to June 1st. $764!
Now I know the cow market is not good and that cow will take a real beating. And if it rains next year it will cost a lot to buy her back.
But you won't have to pay much tax on her due to the deferral thing. You won't have all the other costs like salt/mineral, heating waterers,vet expense, fuel and machinery repairs. And you won't be freezing your butt off or sitting up all night with cows calving.
And if you have to pay big bucks next year to buy her back you should have the difference in your pocket from all the money you saved not feeding her.
In reality, at this time, it makes no sense to have any cow around. It does not make any sense feeding cows $160/ton feed for 75% of the year. Especially when she is returning you a calf worth $600!
I sold my yearlings last week and while it wasn't pretty it wasn't quite as bad as I expected. Some of the steers made close to a $1000 and heifers averaged around $840. It seems their is still a fair market for big yearlings. Also sold one four year old cow who had a bad habit of jumping fences. She weighed 1620 and brought 50.25= $814 which I didn't think was all that bad. They tend to be awfully tough on smaller British cows, skinny ones or old cows.

[pandiana]

As many have eluded to in previous threads, many cattlemen continue to keep cows for reasons besides economics. Even in a so-called good year, its tough to make money. But cows are not 'widgets'. Some farmers have spent a lifetime building their herds, carefully selecting the genetics they want. More than this, many have strong attachments to some of their cows. I see my tough old cattlemen neighbor get teary-eyed when the reality of selling his cows hits home.

Clearly, you are right in that for those buying feed, keeping that cow will put you in the red. Whether she will ever pay you back is also questionable. It could take 2 or more years to recover pastures and grain prices may stay strong. Calf prices will have to be strong indeed to make it pay.

For those farmers approaching retirement, I suspect this will push them into disbursing. But what happens to those forced to sell and have many productive years ahead but not enough energy or resources to start over from scratch? I know quite a few in this position.

[pandiana]

Your figures work out the same as mine, but if that cow loses her calf in the spring then you're lost all your winter feed costs. I read, there are signs of another dry year next year as well. We went to siminars and courses. They said build for the cycle. We now have 400 cow/calf pairs which we are forced to sell as we are grasing our hay land and have no winter feed. Who needs to defer taxes? There is such a huge loss, there won't be any tax to defer anyway.

[cowman]

Without a doubt this is a disaster that we will never recover from. If one third of the cattle go I suspect one third of the cattle farmers will go. Not to mention the grain farmer in the drought areas. Last year was not a good year for them despite rising grain prices. If you don't get any grain it doesn't matter if the price is $10/bu. If there is no crop(a reality in the drought belt)how many grain farmers are going to be forced to quit? Those big green tractors and combines probably aren't paid for! I read one commentary that it could take up to 5 years to rebuild the cow herd. Who is going to rebuild? We are mostly old men and women.
This just isn't about cattlemen and grain farmers but about every small town that relies on agriculture to make it go. How many bulk dealers, fertilizer dealers, feed companys,machinery dealers, repair shops are going to have to go? How many people are going to have to flee to the large cities?
Make no mistake about it, this wreck is going to have a very major impact in Alberta and Saskatchewan. Not only in lost assets but in our whole attitude. A lot of people are going to throw up their hands and say why should I even try! And for many it will be very tough. But the majority will move on. They will find something else to do. And for some, looking back many years down the road, it will be the best thing that ever happened to them!

[cowman]

cowan Try these figures in your calculator. It was suggested that we could take our 400 cows to winter feed up north. They will charge $4.00 per day per head to winter them.
400 cows x $4.00 pd x 200 feeding days(we had 225 this year)= $320,000 for winter feed alone. Then comes the grass. The cost in our area was between $45 - $60 per unit. Take 400 units (which is 100% calf crop haha) x $45.00 x 5 months= 90,000. Total feed cost $410,000.00 Then what about the vet bill and all other related cow/calf costs.
OR
A fellow from a nearby Hutterite Colony was here last night and said the Colony up north was offered $200.00 per bale of hay (1400 lbs)
400cows x 35lbs per day=14000lbs or 10 bales per day x $200.00 x 200 feeding days = $400,000.00 for winter feed only. And how much is the calf going to be worth ??
The drought assistance we will receive is around $9700.00. Although it is a nice gester, at todays feed costs, it certainly won't even put a dent in the feed bill.
Sawdust is probably going to have a price tag attatched to it too !!!

[cowman]

I was in paying my taxes and was talking to a little girl who works there. She said she went to a hay auction and round bales(1000 lbs.) sold for $160 and small squares up to $12! She'd bought 10 bred heifers last fall for $1300 each. Wintered them at her dads at cost $200. Calves born in April and she lost three to scours,birth etc. Rented a little bit of pasture($35/month) and bought a yearling bull for $2800. Sold the heifers and bull last week. Got $760/hfr. and $790 for the bull! Still has the little calves, feeding them $7 square bales and a little bit of feed pellets. She's just a kid fresh out of school and borrowed the money from the bank. She's sure glad she has a secure job!!
Much as we might hate to see it this cow business just doesn't make any sense. We might somehow be able to justify it if we could see some light at the end of the tunnel, but I don't really see it. I have a freind who has a feedlot and he says hold on and hang in there because when this thing turns around cattle will be worth a fortune! Maybe, but I can't see prices going up very much no matter how short the supply. The general public will just not pay. They'll either go to more chicken or pork or else in will come the imports.

[grassfarmer]

Sorry to disagree with all you folks on my first appearance in this discussion site, but I feel the cattle industry has a great future in Alberta. I moved here from the UK in 2000 for the opportunities that exist in Alberta and still feel that to be the case.Yes, it looks horrendous just now, but all is not lost - feed is scarce and dear but can be bought - I reckon under $450 a head will winter my cows. Lets try and lift our heads from the gloom and doom and look at cutting some costs out of our production systems to survive until better times come round as they surely will.

[cowman]

grassfarmer: could you please tell us how you are going to do this? I think for many cattlemen right now it is not a question anymore of feeding the cows through the winter but keeping them alive until they can wean the calf! My municipality is going to let the cows out on the roads! When it gets that bad there is only one solution and that is the wholesale slaughter of the cow herd. I fear that when the final rush to unload comes there will not be the capacity to get them all killed(we are pretty well maxxed out right now) and we could hear horror stories of starving cattle this winter. There is a beef plant in Red Deer Alberta that has been sitting idle for the last ten years or so that is capable of killing 700 cows per day in one 8 hour shift. Running two shifts they could kill 1400/day although I doubt they would have enough cooler space. I still don't think the government realizes just how desperate the situation is becoming. We need to get these cows killed and pretty damned quick!

[grassfarmer]

I'm a bit luckier than many Cowman - here at Rimbey we are a little bit greener than most so with tight management I hope to keep cows grazing until Mid October - then onto Alfalfa hay @ $175 a tonne,greenfeed @ $160 and nearer calving good quality pellets at $250.With careful rationing and little wastage this should come in at an average of $1.86 a day or under $450 for 8 months - this is the basic feed cost of course - not salt,minerals,
bedding, machinery or labour costs etc - but will still be way under the $4 a day someone else mentioned.
Longer term for the industry I maybe see things kind of different from many of you as an outsider looking at things with fresh eyes.Some of the inefficiencies I see are too many 16-1700lb cows around, a lot of land in West Central Alberta in poor shape (drought aside) - land which could grow 3 ton hay crops growing half that due to low fertility.Deep black soil that could grow potatoes struggling to feed a hungry cow due to over grazing/poor grazing management.
Inneficiency of feed haulage - if you can't get 1600lb plus into a round bale get a custom big square baler in - these 900-1100lb bales are not cost effective.Fuel wastage - trucks that do 12 mile to the gallon and are kept running while visiting with neighbours - I'm used to $1.90 a litre fuel which makes you more fuel efficient!!
This drought is obviously serious and I feel truly sorry for those less fortunate than I am but we musn't talk the whole industry into liquidation as that surely isn't the answer.

[pandiana]

I can't help but wonder, grassfarmer, why if we live in the same neighborhood, you seem so much better off.

Yes, with the 2" of rain we have had in this past month, pasture deterioration had slowed, but not before many areas grazed were severely overgrazed and burnt up. Many in my area did not count on eight months of feeding due to cold wet spring and hence had run out of feed already in May resulting in turning out cows with grass barely started. I was fortunate and fed until June 16th to preserve what grass I could and with rotational grazing my pastures have held up under the circumstances. Nonetheless, this feed cost me dearly. For many, pasture has been very hard to find and pasture rents have nearly doubled in the past five years.

We have had minimal growth on crops, hay or pasture since spring when the bulk of our feed is produced around the equinox. Yes, if it continues to drizzle, we will no doubt get some pasture regrowth, maybe keep us through September if we are very, very lucky and possibly some second cut. Grain is anybody's guess.

Much of the first cut has been taken off with yields ranging from 25-75% of last year. Already, last year we were in trouble with the first cut of hay drastically reduced because of lack of rain and any bales standing around were whisked off to other drought ares incuding the US.

Last year saw my feed bill increase by over 1/3rd and this year it will increase again by at least this much. Many neighbors have already sold cattle because pastures have run out. Rimbey Auction has handled close to 2000 head for the past weeks when at this time 300 would be a good day. Hopefully, cattle prices may recover but many have already taken a hit.

You are fortunate if you have been able to line up feed, I have friends who have been on the phone every day with feelers out looking for feed everywhere from BC to ON. Those farms with a good land base that can produce more feed than they require are in reasonably good shape I think, but anyone that produced just enough to cover their needs or has had to buy feed normally is in trouble.

I agree that we sould should try to look at economics but it is complicated. For example,I wonder how many cattlemen have tractors with front end loaders that can handle 1600lb plus bales. Larger tractors=more input cost, more fuel and more expensive upkeep.

[cowman]

Grassfarmer: Without a doubt a lot of the things you say are true but then you are in an area that is a lot better than the one I am in. I was out at Medicine Lake on the weekend and it looks like the garden of Eden compared to here. Also you had a fairly decent year last year while we were in a major drought. The hay and crops that were heavily fertilized around here are the worst and this is on good black loam not grey wooded peat moss! Badly burnt up.
You say 1600-1700 lb. cows are very inefficient. What would you say was an effecient weight? How much should those calves weigh in the fall? Ever tried calving out those tiny cows bred to a big exotic bull? I spent this morning at the mart and the big charX calves brought not only the most overall money but the most money per pound. Now those babies never came off no 1200 lb. British cow! I also noted the British type cows weighing down in that 1200 lb. range were 4 to 5 cents less than the big char and simmental cows.$500 versus $800! So which is more efficient? Do you think we are all idiots who just love big cows? Or maybe it could be we've been at this awhile and know what kind of cow actually pays the bills?
Got to agree with you that the fuel milage on modern trucks are a scandal, but what should we do? A Toyota just doesn't seem to get the job done when towing a 20 foot gooseneck full of cattle!
I'm happy it's working out for you. Lord knows we need some new blood and ideas in the cattle business.

[grassfarmer]

Cow efficiency has been researched widely in N. America and all that I've seen points to the 1100-1300lb cow being the most efficient converter of forage into beef. Too many people in my opinion still feel the top $ in the sale ring equals the top profit - and it impresses the neighbours. I certainly wouldn't consider cull cow value important when breeding replacement heifers - unless of course bigger cows mean you are selling culls more often ?
We were sucessfully in the cow business for many generations in the Old Country and we consistently weaned 650lb calves at 210 days with no creep off cows that averaged 1250lbs. Modern cattle genetics allow us to do this and here in Alberta you have some world leaders in cattle and cattle genetics. I am impressed with the number of operations here selecting for low birth weight, high performing calves and with today's cattle industry science you can safely take Charolais calves out of smaller cows if you buy the right bulls.
I am intrigued that quite a few farmers here seem to be trying to downsize their cows by using small breed (angus or hereford) bulls on Charolais or Simmental cows presumably to breed smaller heifers - how efficient a herd does this make? can big cows produce the heavyweight calves to a small bull ?

[grassfarmer]

grassfarmer: Could you detail a little more as to how you come to your calculations. How much forage are you feeding, to what size of cow. How many lbs per day does she need. Are you feeding any roughage as a filler and at what price ? Is 1.86 for feed cost only. what is your cost to actual feed it, and do you charge yourself yardage to cover infrastructure maintanence.Would like anybodies input on this subject.

[cowman]

An efficient cow has little to do with her weight. The 1600 lb. cow raising the 800 lb. calf is as good or better than her 1200 lb. counterpart raising a 600 lb. calf. Right at this moment we are caught up in a high feed price situation. No cow is making anyone any money. The one good thing about this is it has focused the feedlots back onto the most efficient gainers(the big exotic cross calf) and got us off this black fad! I'm not knocking the Angus breed although I believe they've had a little help from Maines and Simmental.
This is a highly personal thing. Some people like big cattle and some like small ones. Either one can work.
Personally I prefer a cow at least 1400 lb. mature weight. I've always found they work for me. And some of those big tan whitefaced cows have been the best ones I've ever owned.
The bull business favors big calves. Try selling that 1000 lb. yearling. He might have a low birthrate but no one wants him. The other side of the low birthrate bull who grows up to be a big bull is rare indeed. In a lot of cases it is the work of a creative pencil rather than a true fact.
Every cow comes to the end of her life. Now all things being equal/say both were as "efficient"(by that I mean net profit) then you'd better believe that extra $300 means a lot! Over 25% of the average income on a cattle farm comes from the culls. So it's not too hard to figure out...you need to pay that much less for that little hfr. than the big quality hfr.
Once again I reiterate there is no right way or wrong way! Everyone raises cattle for different reasons. Back in the early eighties I got a charlais bull and the results were outstanding. I told my dad he should throw a Char in with his cows(purebred horned herefords) and he could make a lot more money! His reply"Where the hell did you ever get the idea I care about making more money?" Didn't make sense to me at all but then I wasn't looking at it from his perspective! Enjoyed what he had and money wasn't a big priority.
You sound like you are really on the ball and right up on things. And that is a good thing. And maybe you see your neighbor doing something you think could be improved on. But remember he might have a completely different slant on why he's doing this! And that is his right!

[grassfarmer]

Cowman - I agree entirely that we each have the right to make our own choices with regard to breed and size of cow and how we manage them, that's what makes agriculture such a diverse and interesting business. By communicating and discussing with each other we can share different perspectives and hopefully all learn something new and beneficial. I just don't happen to feel big cows are the option for me.
By your examples a 1200lb cow has to grow her calf at 2.5lbs a day from an 80lb BW to wean a 600lb calf at 210 days whereas a 1600lb cow has to grow her calf at 3.3lb a day from a 100lb BW to wean an 800lb calf at the same age. Even without a severe drought I doubt that you could grow the 800lb calf at that rate in this climate as regularily as you could the smaller one - they just need too much forage to do it.To say that "all things being equal" through their lifetime a big cull cow is worth more than a small one is a false argument. I would argue that a smaller cow will winter easier, will fatten up quicker in the summer, breed back quicker and thereby be more productive throughout a longer working life - owing you less in cull value. As they say "Size DOES matter !"

Palexand: The figures I was using to work out feed requirements were as follows: To feed 1200lb March/April calving cows entering the winter in good condition.
Mid October to Mid February (120 days) @ 8lbs very good alfalfa and 13lbs good greenfeed - total $1.55/ day
Mid February to Mid June (120 days) @15lbs alfalfa, 8lbs greenfeed and 4lbs high quality pellets - total $2.17/ day
Averaged out to $1.86 per day over 240 days. It doesn't include salt or minerals or yardage as the original thread quoting $700 feed cost didn't either. These are only rough estimates to get an idea of tonnage needed and will be finalised once we get feed analysis done and see how many days more grazing we can extract. It will be next summer before we know the final cost of feeding cows through this winter but these are the figures that are steering me towards buying feed rather than selling cows - maybe different figures apply to your operation.