Are cow - calf producers making money ?

[DaneG]

In the first or even second generation livestock operations there is the expense of land ,livestock ,machinery and living if anyone believes they can make payments on all of them they better have a really good off farm income.
I’ve been at it for 30+yrs and my newest tractor is 1978 but I keep them well maintained and I own them all and parts are as or more readily available than for the new ones. I do run newer haying equipment.
As far as having equity in the end hopefully the land and livestock will add up quite nicely.
I have never paid myself a wage maybe that is wrong but I just figured if everyone is decently fed a good roof over their heads and all the bills paid and some recreation time I couldn’t see use in over thinking the finances.

[The Don]

I see things differently.
Just getting by and supporting the farm with off farm income is not a good business plan. You may have made it to retirement but there will be no next generation taking over the operation. If they do they are taking a huge risk.
Backgrounders , feed lots and the packers make money on a margin. Calculate your costs, add a profit margin, lock in a price and you can make money (I know its not as easy as that). The Cow - calf operator is not so lucky. When feed costs for backgrounders and feeders go up they take the cost increase out of the Cow - calf operators wallet.
Considering the up front costs and continued investment the cow - calf sector should (needs to) pay a lot more than it is. We are selling cattle at the same price we got 20 years ago.
This is not sustainable.
There has been a steady drop in the number of cow -calf operators. I wonder if there is there a special number that once the number of Cow - calf producers drops below it then the "Canadian Cattle Industry" will start to think about a change.
We must be getting close...

[GDR]

I agree there isn't enough return to cow calf producers but the answer isnt sending subsidy cheques in the mail. A marketing board/ quota system may work but not too many ranchers would like that idea. Only other way to fix this is more packer competition. You are right that they will suppress calf prices until there aren't any calves left to buy, not sure they have a long term strategy on the books. Just too many places in the world where you can raise cattle cheaper. Also dont think the feedlots dont get squeezed too, that is a feast or famine business.

Really I would like to see a day where the majority of the herd was finished on the farm they were born on. With more of a regional packer situation. Would solve a lot of the environmental, health (antibiotic use), industrial farming image etc. Again not sure that is a common view from most farmers and ranchers.

[Blaithin]

If you look at the UK, they don’t really have large scale finishing operations like feedlots. Mainly it’s farmers finishing a couple hundred head. The problem they run into is they finish them on whatever - potatoes, ad lib grain, carrots - and struggle with providing a consistent finished product. Meanwhile feedlots pump out all the same quality, consistently.

Then you look to the States where they seem to have an extreme shortage of butchers. Like, waiting for two years to get an animal in for slaughter, kind of shortage.

In Canada, we’re kind of in the middle. We have the ability and knowledge to pump out good, consistent quality even if individual farmers finished a few hundred head instead of feedlots doing thousands. While we don’t have enough small time butchers, we aren’t at extreme shortage levels of America.

There’s been some recent tweaks to legislation in Alberta which has opened up slaughtering a bit more. I’m not a butcher and can’t say I’ve ever really talked to one to for sure know their trials, but I can hazard a guess at some. Primarily I think there needs to be more changes in regulations and changes in the cost of following those regulations to help the small and mid level processors get a foot in the door. This could promote more people becoming butchers. (I’ve also heard we’re short on CFIA inspectors which would also need changed)

If these areas were addressed I think it would be a natural course of seeing more farmers finish some of their animals.

In today’s political and cultural focus is climate change and food miles, these types of changes only make sense in my mind. However too many are stuck on the rhetoric of less ruminants or in the payment scheme of big processors.

I really dislike those infographics that say 90% or whatever the number is, of Canadian farms are family owned. It’s misleading. I want to see the percent of Canadian cattle farms and finishers that are under 1000 head. I want to see the number of Canadian cattle farms that can take their product from start to finish in under 3 steps. Like farm - processing. Not farm - auction - feedlot - processing. Or more at times.

They say the average herd size in Canada is what, 63 head? So why is everything catering to the productions that manage massive numbers? There needs to be a realignment so that there is more accessible processing for the average instead of the minority.

[The Don]

Thanks for your comments.
I like the idea of more local processors but that is years away. There was a group in Manitoba that tried to bring a plant from Prasco Washington to the province (shortly after the BSE fiasco). I had put in the up front money they requested(as did many others) but interest in the project faded away. They returned the deposits but I was disappointed it would have been a good thing to have now.
There needs to be immediate action / change. There needs to be a floor price or a price based on the cost of production. A real cost of production, not one that the creative accountants that are providing the current information I have seen. The top of the industry is making lots of money, the cow - calf operators are losing lots.
In Manitoba they didn't give the drought assistance money directly to the producer (on a per animal basis). They think the only bill the producer has is for feed. That tractor repair bill doesn't matter / count.
I'm currently feeding bales that I could have sold for $150.00 knowing that I will only see a quarter of that as a return when I sell my cattle this fall. In this zero sum game they will win I will lose. There is no cooperation and no trickle down economics.
It takes 3 to 5 years to recover from a loss year if there is a reasonable profit margin going forward. I do not see a profit margin going forward. I will not be buying much for feed this year it is better to sell off cattle to suit the feed available. At current and dropping cattle prices that adds to the burden going forward.
I find it uncomfortable being in this bent over position all the time!