Here's for all you irresponsible cowbows

[grassfarmer]

kpb, Not in any way disputing your business predictions about buying heifer calves in the last few weeks but if the prospects are so good why was the early Fall calf run so poor? Nothing has materially changed with regard to a border opening or new slaughter capacity coming on line.
It reminds me of the slump last February which everyone likes to point out was a foolish time to sell and a great time to buy - but it was only this because there were virtually no buyers hence the depressed prices.
Do the majority of buyers use herd mentality in their thinking and then be wise after the event while a few go against the grain and beat the system?

[cowman]

rusty: Well I guess I'd better shut up then because I have no desire to become a packer or a retailer.
But answering your other question about how my son might survive in the beef business...that is a good question.
How do you raise beef, at a profit, on very expensive land? Well actually you don't!
But still you have the land and you've got to do something with it, right? So I guess I might look at cattle as fairly cheap maintenance equipment...to maintain the land while the value of that land continues to rise! Also lets face it...there are some fairly decent tax breaks? And besides I like living here and having the freedom to do just about whatever I want. I do not make the majority of my income from farming or cattle, nor does my son. That is a personal choice that I made as a young man and I've never regretted it and I believe I have the best of both worlds.
My son has decided to keep the cattle, in fact he intends to expand, since he recently bought some more land. For myself personally, I have no more desire to own any cattle but I still enjoy seeing them out in the pastures! I really don't do very much with the cows anymore.

[rusty1]

Sorry cowman - I guess i guess I have one more questtion.
How much more do you your calves would bring if we had another packer at the table to buy your calves?
I'm going to answer for you (put words in your mouth) hope you can forgive me!

Lets assume your calves were to fetch another $.005 per pound.
I'm being real generous :-(
So assuming your calves slaughter at 1350 lbs.
And assuming you sell 100 head. My adding machine says that you will bring home an additional $675, simply because some of us were stuborn enough and get another packer on the market.

The question then is how much of your oil revenue would you have to invest to earn $675 per year interest?

I'm sure your savings account is making you 5% at the bank.

Then according to my calcualtor you can afford a $13,500 investment in the packing plant.

Your welcome.

[farmers_son]

I note the references to "Shut Up". Really we need to be talking. Talking to each other and to government. It is time the various players, the people with the proposed packing plants get together with government to map out a strategy on how to move forward. We have a number of conflicting views on how best to move forward with some co-op plants just starting as well as large producers investing their own money in proposed private owned plants with small to medium operators looking to government so they can participate in the value added opportunities that are out there.

I would suggest that rather than each of us approach government individually with our individual proposals that we consider the strength there is in numbers, get together with government and each other, find common ground, find a common strategy and make something happen. I read nothing in these threads that suggests the various new proposed packing plants consider each other to be the competition. Why not form an alliance and get honest to goodness results. Sooner rather than later would be good. Definitely there is going to be more packing capacity built in Alberta and Canada, the question is how can producers participate in the value added industry.

I also note the references to investment, feeders being a better investment than packing plants and cowman wondering how you raise beef on expensive land. The fact of the matter is there is lots of money in the food business, we just have not been getting our share. Commodity food producers need to capture opportunities to add value to their production. The days when the individual can be successfull by doing more, raise more feeders, more cows, get bigger are coming to an end. There will no longer be enough contribution in basic commodity production to support agriculture in the coming years, certainly within the next generation.

We are at a turning point. We can choose to participate in the value added market or we can choose to remain unchanged. I believe the future for those producers who do not change will be much the same as for those producers who continued to farm with horses when the successful farmers invested in tractors. I believe producers and government are struggling with how best to see the needed changes happen but there is general agreement on the need for the change to happen. Our future depends on it, we cannot go back to doing things as we did.

I do not think the problem is whether or not producers should be investing in producer packing plants. I think the problem is this is not something we can do as individuals. If each of us could invest in a packing plant that was economical with just our own production, similar to buying a tractor after WWII, most of us would do it. The problem is we can’t do this by ourselves. Now we are going to have to learn to participate in something bigger than ourselves and work together with other producers to create a profitable future for our individual operations. Therein lies the challenge.

But I believe there are examples out there of farmers successfully working together to improve their lot. It is about creating a future for our kids and we need to do it.

[gwf]

RUSTY: I’ve heard your analogy from other members of your group. What happens if the $.005 is a negative number? Would your calculator then suggest that you shouldn’t invest anything? The 5% from the bank is fairly safe and probably won’t have debt and loan guarantees attached to it. I am not raining on your parade and I do wish your group the greatest success, but there has to be better reasons for investing than your example.

FARMER_SON: There is no doubt that if we are going to find a solution to the problems facing the livestock industry, we have to work together. Most producers thought they had the means and the leadership to do just that …. in the ABP. We all know where that has led us. You can’t get any closer to the government than the ABP.

[cakadu]

I just have one question - which bank would pay you 5% on your invested money? Seems to me you'd have to have an awful lot to invest to get that rate, when many accounts are sitting at 2% or lower.

I have to agree with farmers son on working together, which I've maintained from the outset of talks about more packing capacity. Get one going that works, tweek it where you need to and set it up in other areas. From what I can gather, everyone is chasing those same elusive (or almost non-existant) dollars, which dilutes the pool you have to draw from.

Show everyone that people in agriculture can work together for the common good. That in and of itself would be a monumental step forward.

[rusty1]

farmers son - one of the bottom planks in our proposal is to encourage people to come together so we don't complete with one another etc. We motivated a meeting of such last May in Red Deer.
We have talked to every group that we have been able to find out about, which includes quite a list from BC to MB.
However, and as one might expect we all want to be independent and puch our own project.
I think that once we all learn how really difficult this will be to accomplish on our own will we be willing to explore a collective working relationship with one another.
If we don't get through that phase quickly it will be our demise, as the foreign interest in our opportunity is growing and seriously being examined by major players.

gwf - the cash market price to you is already at a -$$, a colective effort can make it plus. And my point was that even if a producers stands by on the side lines and gets the benefit of a third buyer on the market that producers gererate he will probably still get at least a $0.005 benefit.

If you scrool up about 17 posts from here I think you'll some significant reasons for participating, if those aren't enough then........

I'd love to have a list of your reasons.

Infact I asked some of our industry leaders if anyone in the last 18 months had done a "SWOT" anayalisis and developed a Strategic Plan. The response was "hadn't heard of such being done". No wonder we wander from piller to post.

[grassfarmer]

"When the classic cowboy is hit over the head by nature, by misfortune or by an overwhelming force from an unequal source, he will wipe his brow, tighten his buckle and tough it out on his own. He will not organise his fellow cowboys to withstand or outsmart the next blow together.
Entrepreneurs choosing Alberta as the place to do business are very much attracted to this politically and socially deep-rooted individualism. It is called the Alberta Advantage - the perfect climate for capital to extract the wealth produced by nature and labour"
A quote by Jan Slomp, regional organiser of the National Farmers Union (Alberta), winter 2003.
How true - as we say "in union is strength."

[BigMuddyrancher]

Strange, a couple of weeks ago I suggested that BIG C join forces with the Manitoba group bring that Washington plant to Dauphin and was lambasted for even thinking that. I have said that with all these diferent ideas it was to bad that some couldn't join forces and work to build a larger more viable sized plants but it seemed that everybody had their own ideas and weren't going to give up any control in order to succeed. i hope egos can be put aside and some of these groups can work together and have the greatest success.
ABP and SSGA have been critized for not supporting one group or another, it is not up to those orgs. to pick winners and losers it is their mandate to lobby for the right political climate for them to succeed.

[cowman]

The Alberta government has also been critisized for not being more "active" in supporting the various schemes to build producer owned packing plants? Is that a bad thing or are they being fiscally responsible to the Alberta taxpayer?
Do we really want the provincial government back in the business of owning a bunch of white elephants? Have any banks come out with a recommendation on any of these plants, other than a report they are "extremely high risk"?
I would suggest that if any individual wants to put their money into a risky adventure then that is their right, but our governments should not be putting taxpayer money into schemes that have little chance of success?
I believe when this whole BSE thing is over with we will have a fundamentally different industry. For one thing I think a lot of small cow herds will be gone. I suspect there is a whole bunch of people who are just waiting to go if they can get a decent price for their cows? Also a lot who will have dug themselves into such a deep hole financially that they will have to quit?
And as in every other branch of agriculture it will be"get big or get out"...so where we used to have 10 or so small guys raising 1000 head of cows, we'll now have one guy with 1000 cows.

[farmers_son]

I agree our beef industry will be different after BSE. And you may be right we could have fewer smaller producers but all indications are that the Canadian beef herd will be larger post BSE than before. I would also suggest that primary cattle production will be considerably less profitable after BSE than before. And that is precisely why the status quo won’t work. Producers will be forced to look for ways to increase their profitability. There simply won’t be enough money in selling weaned calves to make a go of it as each sector further up the value chain passes their costs on down to the cow calf producer while maintaining their margins for themselves. Some producers will quit but others will seek solutions and the obvious solution is to keep ownership of that product as long as possible thereby accumulating the profits margins that will continue to be there down the line.

If the banks consider packing plants to be extremely high risk I wonder what they consider primary agriculture? Quite a bit of risk there too. There will be risks but there will be profits and risk can be managed. I am not aware of any producer packing plant proposal that suggested the government own the plants. I don’t think that will happen, I don’t think that should happen and I don’t think that will happen in any other province. The government is involved right now in that they are providing support to the planned expansion of the major plants. And certainly government, federally and provincially have been involved in the BSE crisis to the tune of Billions of dollars in ad hoc producer assistance. Which is more fiscally responsible, continue to dole out billions in subsidies or help producers participate more fully in their own food industry so they can find free market solutions to the problem of chronically low primary agricultural commodity prices?

Cowman, you say the government should not put money into plants that have little chance of success. You would probably also say that government should not have assisted producers struggle through BSE, that they have little chance of success either. But letting agriculture collapse is really not an option. Alberta needs agriculture and Canada needs agriculture. It seems harshly unfair that farmer/ranchers be denied the opportunity to slaughter and market their own beef product while being forced to sell live cattle to multinational players who capture all the profits for themselves.

[farmers_son]

I agree that it is not fiscally responsible for our Provincial government to fund slaughter plants with tax dollars. I feel that where the government can help is with feasibility studies expertise to assist in the development of business plans etc. A slaughter plant is a business where shareholders will either make money or lose it. Producers have several options at this point to invest in slaughter plants that already have done a lot of homework and have excellent business plans in place. I guess that I am of the opinion that the individuals that stand to gain the most are the ones that should take the leap of faith and put their money into these facilities. I realize that producers don't have a lot of ready cash these days, but if they are in the cattle business for the long haul they have to weigh their options as to what is the best way to add to their bottom line in the future.
We seem to go in waves as far as enthusiasm goes in the cattle industry. When Bush was here for a visit we were all on a high thinking that the border opening was just around the corner, but as the end of our year rapidly approaches and we see what our bottom line was for '04', I think we need to focus on what steps we can take to stay viable without the border open, and either get on the band wagon to get slaughter capacity built or weigh our options, which may include getting out of the business, getting an off farm job or just folding our tent and walking away, and for some, I am sure that is a reality .