Seller's remorse?

[kato]

There is an interesting discussion on a local social
media site between grain farmers about what
strategies they are going to use to get through the
current downturn in grain prices. I actually read
that one was considering getting back into cows!

I don't know about other places, but around here
the past few years have been a great big
spending party at the dealerships and real estate
agents, with the general attitude that it's never
going to come to an end.

We live in interesting times.

[smcgrath76]

Interesting indeed. Nothing like getting
out at the bottom to get in at the top,
although bred cows are trading equal to
or even less than calves at the moment.
It is going to take quite a few folks
getting in to match the ones getting out.
The other thing around here is that a lot
of my neighbours are gone south this
winter, and some sold cows simply for
that reason. Strange days.

[perfecho]

Heading south later this week....and could do so with less guilt if I didn't have cows, but.....for now I am hooked.
Calves are at a great price compared to where we were, but really? It takes quite a number to profit what you can in other industries, to get a tire fixed, to take a machine into a dealer to get fixed? (And often they don't know what they are doing)
But, they can only get better, right? ;-)

[grassfarmer]

The thing that staggers me is the current situation
when you can buy a good bred cow for $100 or less
premium over a cull cow. How can that be when
calves in simple terms are the dearest they have ever
been?
Where are the US buyers for the bred cows when they
are paying $2000 plus for them down there? Or is the
importation process too onerous?

[smcgrath76]

GF - we are the same market you know...
Bred heifers are less than they were one
year ago, and heifer calves are pretty
well worth more as slaughter animals
than as breds. I had an interesting
chat with our vet last week. He
probably represents as many cows as any
vet in western Canada and he said when
he came to town just over a decade ago
his practice was over 70% large animal
and now it is down around 30. He
doesn't see that shift slowing down.

[perfecho]

We shall be testing the old adage...
"Best cure for low prices is low prices..."
It really hasn't worked for the last 11 years.

[15444]

The only way these ex-cow guys are going back in is if they are younger (under 50) and can source the extra labor. No 60 year old is going to get back into cows. Feeders/stockers - maybe, but not cows.

I look around a 2 mile radius of this operation and see full-time cattle guys at the ages of 77, 75, 68, 66 and 56. The youngest of those is getting out of it this year. How long for the rest?

[kato]

The changes in agriculture since we started have been staggering. We would never have thought when we began that we would see things change as much as they had for the previous generation, but in hindsight, I think they have.

My parents' generation went from no electricity, using horses and threshing machines to having all the utilities, tractors and combines.

We have gone from a world of mixed farms that relied on that blend of enterprises to get them by during downturns or weather disasters, to a world of specialized farms that are more at the mercy of the market place. When we got married, we had five grain elevators within 8 miles of us. Now the neighbours have all had to buy semi trailer trucks to haul their grain forty miles, and are still paying the rail freight as if the elevator was right next door. Who's the winner here? Not the farmer. It also seems that no one can grow a crop any more without running a sprayer over it multiple times. That can't be good either.

The debt levels are amazing on some of these bigger operations, and they are quickly becoming "too big to fail". It's all fine and dandy when things go well, but when they go wrong, they go really really wrong. You can't go get a job in town and bail yourself out any more.

What would happen to the big grain farmers if we had a two or three year drought for example? We had it in the 70's & early 80's. There's no reason it can't happen again. What if we had a really wet fall and fusarium ran amok in the grain crops? There are not many cattle left to use that grain any more.

We all know how many years agstability lasts before the margins evaporate. And to make it even more interesting, the rules have been changed to limit payouts since we cattle people had our own disaster.

I for one will be happy to sit on the sidelines on our little old cattle enterprise and let the neighbours play the game.

[smcgrath76]

This is a good thread...
I think part of the issue that rose with
diversified farms was that while one
commodity was high, another was always
low. A good risk management strategy
and a poor get rich quick strategy. The
other issue is the issue of age and
labour and I think another part of it is
that the same group of guys that built
the industry (50 to 85 years old) are
still communicating and those who have
sold are finding out there can be a good
life beyond cows. Unfortunately they
are spreading this message to their
peers.

[kato]

Is there even such as thing as a good get rich quick strategy? The very nature of agriculture doesn't lend itself well, IMHO. There are so many ways things can go wrong.

So far the only get rich quick schemes seem to have been when someone hit the entrance and exit timing just right. How often does that happen? It takes a lot of luck.

If you stay in it long enough, things have a way of averaging out. This is a hard lesson that I think is going to have to be learned by anyone who comes into this farming life with aspirations of cashing in fast and hitting easy street. It's not as easy as it looks.

Most often it's the long haul that will pay off, and the best timing to get a good return on is the retirement timing. Not quick by any means. I think there are a lot of cattle producers who have delayed their own retirement waiting for today's prices, which will help explain the exodus.

[15444]

I am actually surprised to see that more of the older producers (over 65) haven't left in bigger droves, based on current prices.

All I can figure is that they are milking the current rise for all it is worth, meaning that when the fall eventually comes, the rush to the exits will be fast and furious.

[perfecho]

The reason older producers haven't left is the point of this discussion; the next calf will make more than the cow if you exited. Many, I would think are hoping/banking that eventually the "factory" will be worth more, and then it is time to exit.
Although we had cows earlier, I entered the "dream" and bought purebred cows in 1999, at $1800 a cow. Just before that a neighbor had sold his herd of commercial cows, farm auction, at $1600. My thoughts were that I only paid a premium of $200, if the PB part wasn't my game, and was comfortable with the price.
Today, although we do get paid well for the purebreds, the commercial end has to be healthy to make the whole industry viable. And at $1000 to $1200/cow...and a good cow...it is not, and I believe that is why some haven't exited.

[dluther]

This is good reading, as for me 68yrs it is I'm to old to work at pumping gas. My son and I work together [don't always agree] but that makes it interesting. I worked with my dad and as I got older it was surprizing what he new. I could have sold in 2001 for big money but my dad did not sell because I wanted to farm so I could not sell on my son. We did mix farming until CONEXUS CREDIT UNION DECIDED THEY COULD DO BETTER in 2009. He has got a start in purebreds and I agree PERF we hope the commercial side keeps strong. Getting back to why am i'm still in the cattle business is I am fortunate I have good health and enjoy it most of the time [not cold weather but it always warms up].We still have our calves[going Monday]Prices look good and greed is a bad thing. I hope to stay around for a few more years so I can get back to where I was before B.S.E. , health is good don't enjoy traveling so I might as well work. HOPE THE MARKET STAYS FOR A FEW YEARS and DREAM BIG. Dave

[burnt]

Kato, this thread is simply epic.

I don't think I have ever read a thread that does more to explain why we do what we do and why the people of this land have a steady supply of very affordable food.

It shows that we are either too committed, too old, too deep in debt or in my case, just too dumb to quit! LOL!

In any case, we know that the good times are just around the corner.

Right?

Right?

[kato]

We dropped in at the local auction mart yesterday and liked what we saw. If anything, the calves were a bit higher than before the Christmas break. A 91 cent dollar doesn't hurt, that's for sure. I sure hope good times are returning. I think the guys who bought those expensive calves yesterday are hoping as well.

But, being someone who's seen it all go off the rails before, I'll let you know if the good times have returned when I deposit a big cheque for a change. It's been a long long time coming, and I'll believe it when I see it.

Hope for the best, and prepare for the worst. Do that and you can muddle through just about anything. LOL