Would you?

[cowman]

If you had the chance to get your investment back on your cattle would you walk? I was talking to this guy in the auction mart who was selling his herd and he said that over the last couple of years he had come to really hate the business. A business that he totally loved a few years before that! I think he averaged about $550 dollars on 60 cows.
He thought he could probably tear up most of the pasture and plant grain on it. The little bit that he couldn't would be rented out to some horse people.
Is this the way a lot of small cow/calf outfits are going to go? How many are just hanging in there until the prices go up a bit? What will the industry look like in the future? Especially if we get a 7 year ban on cows? Will we see a bunch of big cow herds take over? In the 1000-1500 head range?

[raymondb]

I believe that the cattle business will change quickly like the grain growing business is changing today. The only cattle producers left will have large herds with many employees. These large producers will be incorporated and will be listed on the stock exchange. No matter how you run your numbers, the only way to make a dollar is to be very large. This is exactly what is happening to the grain producer today.

[rookie]

Would someone quit? Then what would happen? What about all the towns that rely on the farms and ranches for there contributions to the local economies? If enough producers did so, what would the impact be from the chain reaction that might follow. I mean, I personally am no high roller by todays standards perhaps, but I dump a 100 k into the economy. If I quit, I sure wouldn't stick around because I need to find a better future. Small town Alberta simply wouldn't cut it. And working for some other big outfit doesn't appeal either.
So my question is, if the cattle business takes a bit of a negative turn for a long time, realistically, what might happen? Will the evolutionary curve of agriculture make a somewhat premature spike?

[gmj]

Why do you have to be big to be successful? My accountant told me his most successful farmer has 800 ac and consistantly turns a profit. No he does not need a 400 hp tractor or a super B grain truck to haul his grain. Lots of farmers around here get sucked into keeping up with their neighbor instead of maximizing the returns with what they have.
What is wrong with getting out of business if you don't make any money at it?
There is a very large farmer not to farr away from here, would you believe he doesn't even own a combine! His tractors are not even close to brand new. He only grows crops that make him money! He stores less than 25% of his production. Most of it is sold off the combine. The marketting process begins at least 12 months before he even combines.
I know I mostly talked about grain farms but you have to look at your operation as a business(unless you do it as a hobby) wether you run 500 ac or 10,000 ac, wether you have 50 cows or 1500 cows. Find your weaknesses and your strengths. Be honest with yourself about your weaknesses and there is nothing wrong with getting out of the business.

[15444]

well said gmj! I know from my thoughts on the cattle industry that it is going to be the small guys that are going to make it. I run fifty cows with my father. There is a neighbour that runs 500 cows, 7 miles away. What will make our operation more successful in the future is that we know everything about our animals. Both of us run commercial cowherds, but we know everything from pedigrees, to weaning and yearling weights, birth weights, feeds, exposure dates...and on and on it goes.

Our neighbour doesn't even tag his calves! He calves them out, watches for diseases (which he treats with pneu-darts, cause the cattle are too spooky)..and then sells them in the fall or feeds them hay over the winter.
Alot of these calves seem to be inbred and carry dwarfism genes.

The future of this industry is going to be cut-throat. I believe that those producers without precise records and poor management are going to be forced to leave the industry due to lack of buyer demand for those calves who don't have the quality standards on them.

Throwing two bulls into a cowherd in the hopes that everything gets bred just won't cut it anymore.

[grassfarmer]

I agree with both the above posts, beef has a good future.In my opinion the industry will not move to all 1000-1500 cow units as cows are not as easily managed as feedlots. Sure one guy can feed a huge number of cows with a bale processor all winter and it won't take him all day but calving out cattle in these large groups is not too smart. If you hit severe scours with even 200 calves in a lot it would soon wipe out any efficiency savings you have. Family farms will always have the advantage of people with a real passion and dedication to the work. Employees are rarely that committed and don't tend to pay as much attention to detail as the owner operator does. Quality operations are the way ahead - big or small can both have a future but there are plenty amateurs around who will be forced out by simple economics.

[kato]

There's another thing about the small guys that we found out first hand in the last price crash back in 95. The small guys can bail themselves out with an off farm job. We did it. With two off farm jobs, and working seven days a week. That and a little creative accounting.

If you have 3 or 4 loans, and the payments are reasonable, you have to work like a dog, but it can be done. If you owe a couple of million, forget it.

We came out of the last crisis in the best shape we'd ever been in. And a lot wiser. We'll all get through this one too.

[kato]

Oh yea...about the cashing in thing...if we were offered big money for the cow herd, we'd probably take it.

Then we'd turn around and buy more cows. What can I say?

[bombay_43]

We run a 200 head cow/calf operation, and plant around 1000 acres grain and oil seeds each year. This is a first generation farm and our children are not standing in line to take over our jobs! They all have excellent income working 40 hour weeks.

Quite frankly, taking off farm income jobs, is not an option for us. I get very angry when someone suggests that this is a viable option to save our farm! How about an oil field worker being told to take "off oil-field" work to subsidize his income when the price on a barrel of oil falls?

If the price on cows goes up again, you better bet that there will be a huge decision to be made at our house! One more case of BSE, say in Nova Scotia, could cripple our industry once more, and force our net worth to once again plummet.

I certainly hope all the "part time" farmers can sustain our agriculture because unlike others, if we quit, we will not go back to it. 25 years, is a long time to invest all your time and energy just to be told to "go get a job"!

We have never taken jobs from the work place, maybe the workplace shouldn't take our jobs! The government tends to listen too much, to too many, who do not rely on farming as a sole income, but rather use it as a wonderful tax shelter!

[15444]

I agree bombay. The government has always listened to the part-time farmer who quickly gets frustrated when the price of cattle drops and he can't use that money to pay for some of the loans on toys he has aquired or use it for tax purposes. They rarely (if ever) listen to the farmers who have half-fallen over fences, 30 year old machinery and old barns and other buildings collapsing in their yards due to age. But this is yet another fact of life. Politicians don't like to do photo ops on farms like those described above. They like the ones that have pretty red barns and the whole shebang, even if the farm is 1/2 a million in debt.

[raymondb]

As soon as we start supplementing our farms with off farm income we become focused on our own personal well being and then tend not to make strictly farming business decisions. Most of us farm because we enjoy this way of life. The oil worker probably does not enjoy his job but enjoys his pay cheque. I know this as I did spend many years in the patch before I went farming full time. No money now but sure am having alot of fun. Tough making ends meet but still determined that this sure beats the oil patch politics.

[gmj]

When we got married my wife asked me if she needed to keep her job that she had at the time. I told her in no uncertain terms that if our farm can't provide for our family, then we will quit farming. I also don't care very much for part-time farmers who take on a job just so they can pay big rent for grain land. I also believe part-time farmers don't spend enough time to market their production properly and they are at times the first ones asking for some type of orderly marketing regulation. To me orderly marketing means if I have something to sell and there is someone who buys and the price is right, then I sell, if the price is not right then I don't sell. I do know my production costs of everything I produce and if the price out there is below my costs I WILL NOT sell. There are alot of times were we make very little profit but in the last 20years we have never been on the brinck of extinction.
Know your costs and do seperate your WANTS from your NEEDS.

[raymondb]

Right on GMJ. Know your cost of production-that also includes your cost of capital and your expected return on investment. I also concentrate on what I can do to lower my input costs. I know what price I need for my products to break even and what I need to make a dollar. I also try to use the value of my properties today rather than the price I paid for them. The numbers are interesting and they all say I have to get larger all the time to show continued growth and keep up with inflation and maximizing the use of my capital.

[cowman]

I agree that you need to know your cost of production including capital cost valued at todays markets. Lets see: Land $2500/acre- need 4 acres for each cow = $10,000! at 5%(GIC) = $500
I guess I'd better quit before I even start adding up the feed, vet costs, bedding, machinery, taxes,labour etc.!
Have to move to Saskatchewan I guess?

[kato]

I may have given the impression we are part time farmers. Not so. As soon as the cattle came back up again, one job was dropped. I kept my job, but just with the intention of getting the finances in order, and since May 20, have been glad I did. If not for this paycheck, it would have been a much nastier summer. It helped get us into a position where we don't have to fear losing the whole works, like back in 95.

We run 180 cows, with no grain land at all. We buy and background a couple of hundred calves each year. We have worked almost 30 years to build this up from nothing, which is supposed to be impossible, and are not about to let one or two bad years blow it out the window. If it means going to town for work for a while, so be it.

It's sad that a person has to turn to off farm work. It would be nice to be able to afford to have high principles about living strictly off the income from the cattle, but in our area, very few do. In our neighbourhood, I can only think of a very few women who are not working in town. On the other hand, I can think of even fewer who are what you would call true "hobby" farmers. We are too far from a large city for that sort of thing.
Everyone here is just trying to survive any way they can.