feedlots

[charliep]

I spent some time with valuechain on Friday night and he had an influence on me. So I have to ask the question why Manitoba wouldn't build slaughter facilities? Assuming the border opens for slaughter ready cattle, isn't there a choice of moving animals south to South Dakota/Nebraska versus Brooks?

[cowman]

Johnnyboy: I do understand why the cow/calf sector isn't getting a $1 for their calves. I do realize the money just isn't there. But consider also that in reality $1 will not pay the bills and give the cow guy a sustainable profit. Do you really think the cow/calf guy was rich with calves even at $1.40? So while you feedlot boys might think it is necessary to get that calf down to 80 cents(and it might be necessary) realize that down the road there just won't be enough calves to keep your pens full. Everyone needs to make a buck to make this business work! Now you can bring in US calves and buy cheap subsidized US corn when the farmers refuse to grow a crop that returns them nothing(barley), but if that is the future why bother feeding in Canada at all? Why not just do everything in the US?
What are the costs to wean a calf? Winter feed and bedding about $230? Pasture about $120. Breeding cost about $25? Vet costs about $20? Salt and mineral about $15? Fence/corrals/waters about $20. Cow depreciation about $85? Death loss about $15? Running the tractor/truck about $75? Interest on cow/feed/machinery $40? Maybe a bit of wages to yourself? Say $50? Selling costs? checkoff/insurance/brand inspection/commission/trucking? Say $25?
Now we are up to $720 without any profit! Or for a 600 lb. calf about $1.20! Considering the heifer calves routinelly sell for 10-12 cents less we need in that $1.26 range for a steer calf to break even!
I realize many people figure they can do this a lot cheaper by various methods and by not counting their home produced pasture and feed, but the fact is they could sell that pasture and feed at those prices, so that is the cost.
These guys who are selling 800 lb. feeders into that 80 cent market are taking a bath...make no mistake! More of a bath than the feedlot?
And I haven't even mentioned the absolute disaster of a return on land! That one would make any business person shudder!

[pandiana]

I applaud you, cowman, for telling it like it is.

[rsomer]

charliep: We were one of those who retained our weaned calves last fall and now have 750 weight plus backgrounded calves.
Normally they would be sold this week. We do not have the spare grass to keep our calves as grassers so eventually they must be sold. When they must be sold is the million dollar question. The concern is not the cost of feeding the calf rather what the prices are going to do and how to cash flow the operation without the calf cheque that we are used to receiving in March.
The price of feeder calves is better than it was a month ago. Certainly there is hope that the border will open sooner rather than later but when figuring out when that happens is where the profit is and where the risk is because it might not. I have to decide how much risk I can stand if I want to try and capture the higher calves prices that will be there if the border opens.
If I had a better CAIS margin for 2004 I could just let the calves go at today’s prices and wait for my CAIS cheque which I might not see until late 2005, early 2006. CAIS only protects you from 4 bad years out of five and that is my situation, I think there are a lot of people like that. In 2004 the olympic average is going to drop my one good year leaving me out of the safety net picture so I am left at the mercy of the marketplace. We will be assessing when to sell our calves week by week, but they are not selling this week.
If there is a dry spring we could be looking at a wreck as I believe the market needs a lot of these calves to go out on grass, grass that may or may not be there. How many replacements we can keep may end up being influenced by cash flow as much as anything, the bills need to get paid. That is the one thing I can see for sure, cash flow is going to be super tight no matter what decision is made. My loss will be someone else’s gain.

[johnboy555]

cowman........you say cowcalf man taking more of a bath then the feedlots......By your figures of 800 lbs. at 80 cents equals 640 dollars. and your costs are 720........you just lost 80 dollars per head...........I am talking about feedlots losing 500, what do u call that(a shower) perhaps.

Just read the threads at who whine the most.........i have never seen a bigger bunch of whinners then the cowboys. The feedlot guys have been pretty quite.

[bombay_43]

Maybe the feedlot boys who are so quiet, aren't whinning, because they picked up the government money to cover their loses????

Are you really so nieve as to believe that it really is sunny on the other side of YOUR fence?

Bottom line is, cow/calf or feedlot owners, can not keep operating at losses! No business can!!!

Do you feel like this is a "divide and conquer" situation?

Let's point more fingers at each other, while we are all going broke, and we will forget looking in the right direction!

[carebear300]

Knowing that I am going to get into nothing but trouble again I will raise a few points to add to the discussion. There is no possible way that the cattle industry can survive unless the prices received by every segment increase. Even before BSE the profitability of the cattle industry all revolved around the subsidization of production of feed grains in Europe and U.S.A. this artifically depressed the price of feed grains world wide to facilitate finishing of livestock. The grain produccers in this country have been struggling for years because of these subsidies. Now without these feed grain subsidisies the price of beef would have to be double to produce a profit. Now I have some cows to utilize waste land and grain production is my main enterprise so am double hit with the latest shumozzle. Wish I could twitch my nose of make everything good for everybody but just foresee nothing but tough sledding for all segments of agriculture in the next few years. Sorry wish I could be more optomistic. My dad had a theory the worse things got the closer you were to a turn around, sure hope he was right!!!!

[rsomer]

Just a comment, the $720 cowman quoted was the cost of raising a 600 weaned calf without factoring in anything for a return on investment. To get that 600 pound calf to 800 pounds would cost an estimated $157. See http://www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/nfs6897?opendocument
This would suggest the owner of that 800 pound calf has a total cost of $877. If that calf was sold today it would bring about $0.77 per pound for $616 per head. A loss of at least $261 per head. On top of that the cow calf operator has lost value in his/herd due to BSE and has had to absorb a 57% drop in the value of his cull cows. All this with no assistance for the cow calf sector from government.
I have not seen any feedlot numbers that illustrate that sectors losses.

[grassfarmer]

carebear300, your quote "There is no possible way that the cattle industry can survive unless the prices received by every segment increase."
I take it you meant just the cow/calf and feedlot sector when you said the cattle industry? If you meant the entire production chain from cow/calf through to retailers I would beg to differ.
There is plenty money in the entire beef chain for us all to make a living BUT our problems at the moment stem from the packer/retailer end of the chain removing all the profit. We must address this theft of value by the multi-national corporations or we will be slaves to them forever.

[kato]

Don't forget that the wise feedlots who had the sense to go out over the last month or so, have picked up a bunch of 50 cent calves to help their averages.

If we had have done that, just run out and bought a couple of hundred seven weights at 50 cents, and turned around and sold them today, we could have fixed all the losses we incurred over the winter on our own...in less that a month!

We didn't do it, but I bet some people did. As a matter of fact I know some who did. These are the ones with deep pockets, and they will be quiet about it too.

Even in a wreck, there is money to be made for those with the nerve to stick their necks out.