How' the fall run doing?

[smcgrath76]

A couple of points here Cattleman. Unfortunately the cycle does not follow a perfect clock (like the one in SK that never changes).
This time around the cycle has seen the period of high prices last a bit longer than expected. This could partly be attributed to drought across mahjor cattle producing areas of the US. This has slowed the typical expansion we would see (not enough grass for more cows) and held prices up. Canada has expanded their herd as well, but for a rather obvious and different reason. It has been pretty hard to get rid of a damn cow for a couple of years. The contraction in Canada may in part be due to rationalizing the size of the cowherd post-BSE.
We should be heading into the downward price slide, but perhaps not as quickly as most expected.
CS Wilson's adage also has the flip side where if you think it is too expensive to buy, then you better be selling.
The other factor that I believe extends the cycle (beyond the biology of the cow) is that in low price years, many producers sell more heifers to help cash flow their operations.
To this I would add that lenders understand a lot about money, but precious little about economics.

[smcgrath76]

Sorry for the double thread.
Further to this, the rising Canadian $ has lowered the Cdn fed price relative to the US, thus signalling contraction of our Cdn cowherd is due. If our $ had remained at the same $.65 level of a few years ago, I expect you would see a lot more cows in the country.

[Willowcreek]

Canuck "its strange you would use such a high tech solution on your northern border when it seems most of your illegal immigration is down south"

Canuck- Haven't you heard? These Predators and High Flyers have sensors to detect any beef product--so that after our elections change control of Congress, R-CALF will again be able to close the border....But this time those Predators with missiles wil guarantee no diseased beef gets south..LOL

Yep- they changed the whole mission of Malmstrom AFB- all the Tankers and fighters gone- now its the Border Patrol/Immigration spy planes and Predators...Putting in new satellite stations every 100 miles or so along the hi-line...
Maybe GW doesn't think the his North American Union takeover of Canada is happening fast enough and he's planning to invade...LOL

They did keep the Malmstrom nuke missiles......

[kpb]

grassfarmer, I agree with your second last post. I also get tired of guys saying they have to have a second job to make ranching work. I havent had an outside job nor has my wife and we're still around. In fact, as I said a while back, 2005 was the most profitable year we've ever had in ranching, mainly because of the cheap grass calves around in the spring.

And I also agree with your comments about land value. I'm not sure how the cost of grazing, etc. should be costed out on land that has been paid for so I just don't worry about it. I mean the land has a value in Alberta that is unrelated to whether or not cattle are on it so really what I think is that all ranchers in this province are both cattlemen and land investors. I'm comfortable with this assumption.

I also hear what you are saying about revenues minus expenses equalling the real bottom line and everything else being, in effect, theoretical. That also is how I do view things in real life. Still it sometimes gives me pause when I realize how much the land that my cows are grazing is actually worth and what I could get putting that money in income trusts. lol.

kpb

[greybeard]

Western Beef Development Center at Lanigan has an ongoing study of production costs with 22 producers reporting in 2005. The top 25% low cost producers had costs averaging $452 / cow. That left them with a total margin of $252 on an average herd size of 382 cows. By no means oilfield money, but not chump change if you love your work.
You might consider signing on, as they can always use more expertise.

[poorboy]

I think it is good to work out your costs and profits two ways.

In the first you take your income and expenses like grassfarmer does and any interest payments and land taxes and see what you have at the end of the year. If you have enough that you can comfortably live and exist, then those are you costs and be happy with them. Hopefully the increase in value of your owned land will provide for some retirement income as well.

The flip side is you should consider how much money you would make like cowman does if you were quit farming. If you could get a $/day for all your acres for grass rental and you don't have to do anything but pay the taxes and if you could sell your cows and calves for $x, put it in a GIC or the bank and draw interest on it, you should do the math.

For example, if you could get $200/hd from custom gazing, less $5 tax, nets $195/hd and you get $1000/hd @5% interest is $50/hd. In this example you could get $245/hd paid to you each year by selling your cow herd and doing NOTHING.

A lot of people are doing the calculations and realizing that they are only making a few dollars more than this and it taking a financial risk and a lot of labor to get it. For some people is just makes sense to rent it out or retire.

[whiteface]

Rimbey is not quite as expensive as Innisfail although not too far behind, however, at the risk of reguergitating poorboys thread, the land around here is "worth" a dollar a day to rent irregardless of whether or not someone chooses to put cows, horses, pigs, llamas, whatever on it and also irregardless of whether or not you have it paid for, mortgaged to the teeth or given to you and feeel like pissing it away. One must consider the VALUE of the land not so much what they have INVESTED into it or lack thereof (some people pay way too much money just to have a mountain view whereas their neighbors place is boggy and worth considerably less) when getting a true analysis of what these cows cost. My point exactly when I said all mine are pets simply because they can in no way compete with cattle being raised on much cheaper land beit Rimbey (don't take it personally grassfarmer just makieng a point) or Nova Scotia (neither you Nova Scotians, again, just makeing a point...land in Alberta is no longer priced condusive to raising cattle). Many operations can make it work if they do some mickey mouse math (all their land given to them and they work for free in central alberta) or if they go to the moon like CS Wilson or Willowcreek and live where nobody else wants to so thier costs are way down. Just my opinion. The land is the cost factor that will eliminate many producers not the cows and not the government. Have a good day all!

[grassfarmer]

The only way land will eliminate people from the cattle industry is if they paid too much for it. To imply that land is worth a $ a day whether it is grazed or not is nonsense relative to a grazing cattle operation. It is supply and demand and it is obvious that this country is full of tired old men who wish to rent out their pastures to someone else. The prices will fall - it is inevitable. I am going to look at some underseeded oat silage regrowth today that I might use for fattening my cows in a month or so. I will be paying 50 cents a day or less for it or I can't afford to have my cows crapping fertility on someone elses land. The guy may have heard pasture rents for a $ a day but it's nearly November, he has surplus forage and doesn't have a way to use it. If he gets a few hundred bucks for it that's cash in his hand for no work. He won't be fretting because he is losing money not charging a $ a day. Same with the guys growing hay and silage to sell - most is done below the cost of production but they aren't all selling up and moving to town - just as well or it would crash the property price pretty quick.

[Cattleman]

smcgrath, all those reason you gave that say what has altered the cattle cycle is pretty well the reason I don't bank on it the cattle cycle too much. If I am looking at expanding or possibly cutting back for markets, I have a lot of factors to look at, not just beef cow number trends

[whiteface]

I agree totally in theory grassfarmer, unfortunatly when it comes to the reality of actually looking for pasture to rent and what does it take to talk people into giving it up around here I sure haven't found anyone willing to do for less than than what has been previously stated. Whether these "oil guys" have too much money or simply feel it's worth that for their headache of haveing someone else's problems infringe on their life or they will simply just drive their toys on their land and take nothing in the way of "extra cash." These guys who can afford this land don't need the cash or the headaches. All the power to anyone able to find cheaper forage. I haven't. Frankly, I too, would be one of the ones who said, X number of dollars for your mutts to graze my land or I don't need the headache either. You can accuse me of haveing "too much money" if you want but if I didn't have the money and was desperate for the cash the first thing to go would be this sweet little farm that cost a fortune to buy and maintain and if I needed to get "free" money from renting it out I feel I would need to seriously consider why I needed the extra cash so much in the first place. I would and have already asked myself what needs to be cut fast to stop the bottomless pit of cash outflow. The land is what I have come back to time and time again as the great cash vacume. Really not out to offend anyone and I do appreciate everyone's observations. These are just mine and have a good day all!

[kpb]

grassfarmer, I agree with whiteface in this one. I do not believe you will be able to find decent grass in central Alberta on a sustainable basis for less than a dollar a day. I believe you are mistaken when you say prices will drop because of supply demand forces. The fact is that those forces are not in play here.

As Whiteface said, the farmers who are renting their summer grass will not do it for less than a buck a day. I wouldn't either because it is simply not worth the hassle of having a renter on the place. I don't believe you will ever see the land for less than that and you will be waiting for a long, long time for land rent to decline below that. Most guys, like myself, would rather see the land idle than just get a pittance for it.

I also agree with Whiteface that it is land values that will force people out of the cattle business. In fact I have already seen it with many of my neighbours who have given up cattle, sold most of the land, and are having a very nice life on a piece of land with a couple of cows. It is not, as you said, that these people paid too much for their land-rather the opposite, they made a wise investment when land prices were low and are now selling out and retiring now that land prices are high. They are, in a sense, being forced out of cattle, by the high current land prices and the new owners are certainly not cattlemen.

Grassfarmer, like any businessman, you have to examine your return on assets. If you bought your land for $200,000 and it is now worth on the market $800,000 and you are earning $40,000 a year from your cows that may have been a 20% return on capital when you invested in the land but it is now just a 5% return. Now you can quibble about the figures and tell me how you are renting cheap land and grazing your cows all winter if you want but the fact is, as poor boy said quite well, that you are earning a 5% return on your investment (land) and you could do that without the work by putting your money in the bank.

The future of ranching, as always, lies with the operation being based far from expensive land, with cheap cows on lots of cheap land and with cheap feed. It's always been that way and always will be. CS Wilson has it right I think.


kpb

[grassfarmer]

I do not agree that the opportunities are not, or will not be available to run cows cheaper. We talk about land ownership in this thread but I for one do not intend to buy any more land. I have enough capital tied up in land, the opportunities here now, and in the future, will be in accessing rental land either for grazing or growing feed on. Where you may say that you wouldn't rent your land out for less than $1 a day what about the guys growing hay for sale or grain for silage? I know for a fact that the feed I am buying this winter was delivered to me for less than the cost of production. I know others are prepared to take a loss because they are not prepared to do the work required to run cattle any longer. It is a supply and demand situation - if you have a quarter of weed infested grain land that you need to sell for silage and there are no competing feedlots within economic hauling distances you must discount it to sell it. Fair enough this might be different in an extreme drought year but as cattle numbers decline we will build a better buffer against this. Look at the age profile of those in Canadian agriculture plus the amount of land in central Alberta bought by hobby people or acreage owners and it is clear there is a lot more land here than people looking to actively work it either in crop or grass. This is certainly even more the case as you get away from the geographically small highway two corridor. This is why I came to Canada, you have a vast under utilised landbase.

[kpb]

grassfarmer, I agree that there will always be waste or ruined crops that the astute cattleman can use. That's always been the case, expensive land or not.

But what I am saying is that people I know will not rent their land out to grazers for the summer unless they get a buck a day. If they can't get that they'll either arrange to have it cut for hay or else just leave it. The reason is that a lot of people have been burned by bad renters, cattle are a huge pain for a lot of owners (fencing, etc) and most of these guys would rather have the land sit idle then get just a little for it. And I can tell you that this situation will get worse, not better, as more acreage guys move in because they, for sure, do not want a herd of cows on their land when they can easily cut it for hay.

I think hay prices will continue to stay cheap and pasture prices will continue to stay expensive. It is, in fact, cheaper to buy the hay in and feed it during the summer than rent the grass for the pair. A lot of the guys who are selling hay don't worry about the price but they sure don't want any cows on their 80 acres.

It really isn't a case of supply and demand fixing the price in central Alberta. It is really all about what a wealthy retired farmer who doesn't care about return wants on his land and, also, what a rich city guy wants on his acreage. And I am sure that neither wants a herd of someone else's--or their own--cows. And that situation is going to get worse, not better. I think you'll find yourself paying more and more for summer rent, not less, as more acreage people move in who do not need your money and do not want your cows.

In terms of Canada's land base, you are right but you surely aren't referring to all parts of our country. I mean you wouldn't want to run cows in Cochrane or Airdrie now but people did once upon a time. Yes this is a big country so why not move where you can have a good sized ranch, put some dough in the bank and not have to rely on the largesse of some acreage owner to graze your cows? There's a whole lot of that kind of land in Canada and it sure works for cows a lot better than trying to make it work where both you and I are trying to right now.

Just my thoughts, grassfarmer, I live in the corridor too and it bothers me lots when I see what's going on around me. But at some point both of us are going to have to stop trying to fit round pegs into square holes.

kpb

[grassfarmer]

Fair enough kpb we aren't miles apart in this argument. I have never paid to summer graze my cows on someone elses land during the summer and don't intend to. Best place for them is at home on intensively managed pastures with all their winter feed,and possibly some opportunity fall grazing bought in. All we are saying is that guys aren't prepared to take a "poor" price for renting out summer pasture but they will do it happily through their hay and grain crops.

There are opportunities for skilled grazers though - I wouldn't offer to pay a $ a day but I might look at a quarter, calculate a price that would pencil under my management and offer a $ sum to the owner - 95% of them wouldn't realise I was getting a better deal than them. Further opportunities may arise from renters that are prepared to offer the landowner good conservation and habitat practises. This applies to non- farmer landowners particularily, as I'm sure you have read in Stockman grassfarmer.

I've already done the "move to cheaper land and put some dough in the bank deal" when I came to Canada - I would heartily recommend it to anyone thinking about it.

[rkaiser]

Grassfarmer says - "There are opportunities for skilled grazers though - I wouldn't offer to pay a $ a day but I might look at a quarter, calculate a price that would pencil under my management and offer a $ sum to the owner."

Did just that this summer grassfarmer, and despite a horribly dry mid summer we brought our cost down well under $1.00 per day. Don't have a final figure yet as we are now taking off some of the froze down regrowth that came back with our great August rains. Used the 1/4 in conjuntion with our own intensive 1/2 section with cattle moving about every 5 or six days. P.S. no chemical fertiliser used.

Yes KPB and Mr. Wilson, 2005 was not a bad year except for maybe the cull cow thing - but does that mean, Mr. Wilson, that we should all simply shut up and accept everthing? Hard to blame anyone for not standing up at an ABP meeting or challenging the SSGA and the CCA when some of the people who could possibly be helped by those challenges consistently call you a whiner.