Those Poor Dairy Guys

[greybeard]

If the dairy guys did the right thing ,why are all of the small dairy guys "cashing in the chips"? It looks to me like the 40 head "family farm" will be soon gone, if not gone already. Thats what makes quota worth so much. If you can make a living on 40, why not go to 200? The same economics of scale still apply.
I don't know anything about the chicken buisness as there isn't any barns around here anymore. I think the small "family farms" cashed out to the corprate operators 10 or 15 years ago. They went out with the cream cans.
Bez, I'm sure you have a different view of "quota" as it makes the world turn east of the river there.

[dalek]

The 40 cow herds are disappearing because they're hard for the next generation to take over. Not big enough to support two while the transition takes place (barely enough work for one person full-time in a lot of cases) but the father wants to do less work and have the kid there for chores all the time, and not many off-farm employers will go for a schedule that lets you do chores every 12 hours.

[kpb]

Bez and Cowman, I agree completely with your comments regarding quotes but I'm afraid the chances of a quota system for the beef producers is next to zero. I have been suggesting a quota system for our industry though many different threads on this forum with very little support.
In my humble opinion most cattlemen are just too darn stubborn and proud to get out of their own way.
If we really want a sustainable, producer-owned industry, it's quite simple---run it like the dairy guys where we contol production and own the processing facilities. Like I said in a previous post, ask the government to support a cull of excess cows through a subsidy then leave us to supply the domestic market. It would be cheaper to the government in the long run than all these crazy programs.
That's it fellows--it's a way to get ourselves a decent living for a long time to come and a way for us to get off this boom-bust treadmill and all work together for a solid indistry future. But my bet, Bez, is that there will be a lot of people taking shots and not too many supporting a quota system. All I can say is that it makes me laugh to watch everybody moaning and complaining and organizing rallys to get more government support for our industry and crying the blues about the producer not getting a decent price for the product or being used by the packers AND at the same time not wanting a quota system because it's anti free enterprise.
You guys are going to have to make up your minds sometime--if you want free enterprise than you're going to have to swallow it when the packers get as much money as they can out of you or when you have to take low prices because there's a glut of calves on the market. Can't have it both ways--capitalism cuts both ways.

[Bez]

kpb

Hear! Hear!

Bez

[cowman]

The fact is any kind of quota system isn't ever going to happen in beef. Whether so-called voluntary or government sponsored? The new trade rules would make it impossible? If you tried to match supply to demand in would come the imports!
Of course the dairies are getting larger and the smaller ones are packing it in? Is there any industry in North America where that isn't happening...especially in agriculture? But don't forget that small dairy farmer is walking away with a pretty decent check in his pocket? Not sure what quota is worth but a couple of years ago a dairy farmer neighbor told me his quota was worth $9 million and he milks around 300 cows, so I would assume quota is worth in that $30,000 per cow range? If that is the case then that small 40 cow dairy farmer has quota worth $1.2 million? If that is correct then I would definitely say yes, the dairy farmers got it right?

[Bez]

cowman

Quota is roughly $27K per animal / kilo of production

I am sure if my estimate is off there will be someone here who can provide a definitive answer.

Bez

[dalek]

Ontario $28251 per kg in December, I think Quebec was $28150. That's per kg of fat per day, roughly one cow but it varies a lot. For example I know farms averaging 45 kg of milk a day at 4% fat which would need 1.8 kg of quota per cow.

[cowman]

So I have a question?
Say the price of feed goes up in a given year? Does the price of milk change to reflect that added cost? Or in the case of feed being cheap...does the milk price go down?
I have to say that I believe supply management always made sense to me. Matching the supply to the demand always seems more sensible than just over producing so you can lose more money.

[cowman]

I heard somewhere that there is a huge glut of powdered skim milk in this country, and due to regulations it cannot be sent to countries that can use it, which makes absolutely no sense to me !!

[cakadu]

The way I understand it cowman, there are pricing formulas that are reveiwed at least yearly and in this past year they have made 2 attempts at increasing the price due to the BSE crisis, this last one being successful. The pricing formula is zealously guarded and you could probably get the cell phone number for the Pope much easier than the average joe could get the dairy pricing formula. I know the consumer rep saw it once in 16 years and she has never seen it again.

When feed costs go down, they don't make an application to lower the milk pricing formula - it is basically like anything else - once the price is up it rarely, if ever, goes down. That is precisely why their margins are essentially set and why the supply managed groups are the only ones to consistently have positive margins. They may not be big margins, but they are still present.