Allowable US Imports

[kpb]

grassfarmer, rest assured that not every farmer that has oil patch income is running a sink farm ! Many of these farmers have a wife that is running the farm, and the income brought in from the oil patch helps keep the bills paid and the kids in clothes and gets them educated. In my area there are a lot of farms like that. With the current restrictions on the amount of farm losses farmers with off farm income can deduct it hardly seems like there are many sink farms, as you call them left.
Oil patch dollars built many farms in the resource areas of the province, many people worked twice as hard to do it too. I can remember neighbours that worked all day at their oil patch job, and half the night and every available weekend on their farm. Some of them are in their 60's now and are still farming in a fairly big way. The one thing that they managed to do by working in the 'patch' was to get established without an overwhelming debt. Other farmers in this area and others have sons that want to buy into the family farm and have taken jobs in the oil industry to help them get a grub stake to do so.

[kato]

I think keeping the costs down is the answer in the long run.

I bet someone with a smaller efficient herd and lower costs can balance a ledger book just as well as a bigger operation. There comes a point where you get stretched too far, and no matter how good your intentions are, day to day management will get harder.

We've got close to two hundred cows now, and that's big enough. We keep our costs down pretty well, and up until the BSE hit, we were doing quite nicely. With no intention of getting bigger.

There's only so much of us to go around, and from now on the emphasis is on managing what we've got even better.

Maybe that will include marketing finished beef through the new plant in Neepawa that's supposed to be up and running next year.

[grassfarmer]

Kpb, I agree efficiencies can still be made on most farms but that in itself is not the solution. The numbers game hasn't worked for feedlots over the last 20 years if you believe the figures you see published, it hasn't worked for dairy producers in non quota countries either. Maybe Canada needed a shake up of it's beef industry - I know the UK certainly got all shook up post BSE and many,many people no longer farm, it's a leaner industry. Instead of increasing production per farm by buying or renting more land to run huger numbers of cattle I would argue we need more intensity of production on the acres we have. Imagine growing 50% more grass on the land you have compared to buying land which the low returns of beef production can't pay for. As for being more efficient - we could be, bigger - we could be, SMARTER is the one we need to be and thus far we are not succeeding as an industry.
I applaud rpkaiser for being proactive in our industries struggles - it just needs a lot more people to follow that lead. As he said you can sit at home and farm for long hours on a big scale but that in itself will not guarantee you longterm success - even though it may feel like it because you are outdoing your neighbours just now. Once the Corporations knock out the weakest in society they will turn on the survivors and pick them off to - it's the way they operate.
Kato, I agree keeping costs down is important and the easiest thing for a producer to control you can't overlook the importance of having a big enough business to generate turnover. I know guys with 60-70 cows that sold 50 calves last fall - bringing $450 each gave them their paycheck for the year -$22,000 after deductions - before paying any farm expenses. That scale of operation can't provide a living no matter how low your costs are.

[kpb]

kato, If stockmen and stockwomen want to have small herds and try to make a living off them, good for them, but the bald economic facts show that you have to have a minimum herd size to make a good living. Or you have to work off the farm, which is also ok by me but shouldn't, in my opinion, entitle you to support payments.
Consider please, that if a rancher has 200 calves, there will normally be 180 calves at weaning time (90 per cent bred and make it over the summer). If half are heifers, you can likely count on, say, $500 per head times 180 equals $90,000 gross income.
The Dept. of Ag. figures say it takes about $250 to over-winter a cow and another $100 for pasture and trucking. And there's vet bills, drugs, yardage, etc. But let's be generous and say you can keep that cow, calve her out and pasture her for $350. If you say all expenses are $350 times 200 cows then your expenses are $70,000.
But then you have to buy some bred heifers to keep your herd size up or hold back heifers in the fall, feed them in the winter and breed them. And you gotta get a bull every year or so to replace the one that got lame. So instead of a net of $20,000 ($90,000 minus $70,000) you actually got a net of, maybe, $15,000. I can't make a living off that and sure can't raise a family.
And, remember, that's using a cow figure of expenses, all-in, of $350 per cow and a rate to weaning of 90 per cent of all cows that meet a bull--both of these numbers may be optimistic.
kato, your numbers are undoubtably better than these--your posts are always interesting and educational--i'm just using these numbers to show how, generally, a 200-head operation, by itself, cannot make it now and will face increasing pressure in the future.
There are lots of fixed costs in this business and that is why a larger operation can make better money. I also know that adding yearlings can help make more money because you can run a lot of animals and because you are moving more animals, more quickly and own an appreciating asset rather than one that is depreciating (a mother cow).
And, yes, cowman, there's a certain gamble involved as there is with cow-calf, but any business has some risk and you can eliminate a lot of the yearling risk by holding them to finish. As the oldtimers say "Buy them as little as you can and sell them as big as you can" to make money most times.

[kpb]

grassfarmer, I always enjoy your posts and read your last one right after posting mine. I think we agree that you need a minimum size to survive in this business and I definitely agree that you should use intensive systems to max out the use of your land before buying more.
Would you please give me your thoughts about what direction you think the average cattleman should go in his own operation in order to prosper if not to get bigger? I'm not talking about curtailing the big packers, government help, building our own plants, etc. All of that stuff may or may not happen but this stuff is not something I can make a business plan with.
grassfarmer, you may be right that even the big guys will eventually be eaten up but the bigger you are the longer you'll last. And as for the feedlots, I know a few big feedlot guys and, believe me, they'll be around a whole lot longer than the guy with 100 cows trying to stick it out.

[rkaiser]

Go kpb go. I'm heading the other way.

Calving about 220, wintering 40 coming 2 year old bulls, 50 coming year, and 80 heifers. The rest are in a custom lot. Add in the extra work involved with a purbred herd, and my wife and I are maxed out. I have had three minor injuries due to rushing around in the last two years, luckily they were minor.
Your spread sheet is practical kbp, but every person is still an individual. Off farm income, passed on land, equipment, cattle, etc.

We all have to decide how much is enough, and no one has the right to set a number as a standard to be a good, or viable cattleman/cattlewoman.

Some of the best cattleman I know would not even come close to your minumum number kbp.

[cowman]

It really is all about money and time and everyone has to decide how much of each he wants? One size doesn't fit all!
The problem with getting bigger is you need to committ more time and obviously money. I would suggest that most land prices are too high to justify trying to pay for it with cattle?...at least in a good part of Alberta?
Personally I've never really liked the idea of a lot of debt. Seems to me the bank ends up making the lions share of the profit. I wonder how many operations are going to go under because of a high debt load that wasn't really a major problem until this wreck happened? We saw the same thing happen in hogs a few years back? Times were good and producers built barns and expanded...only to go broke when the market crashed!
Perhaps I am totally wrong but I do believe it is better to be cautious if you want to survive in the long term. Rapid expansion, based on debt, can make you lots of money real fast or it can break you just as fast! I guess everyone has to decide how much risk they are willing to take?

[greybeard]

kpb ,your posts reflect the conclusions I have come to. I don't like it but the numbers don't lie. If you think you can live on less then you'll wake up like cowman some morning and say this isn't worth doing any more. People soon get tired of working for nothing. Grassfarmers example of the $22000 gross is not unusual.
Commodities don't keep up with the consumer price index. You have to produce more for less or look for other income..
Page 4 of this newsletter has an article that makes a long story short. http://www.gardinerangus.com/pdfs/GAR_nsSpring03.pdf
You will have to cut and paste it as I don't know how to link it.

[grassfarmer]

kpb, Not wishing to speak for anyone else in the industry I'll tell you how I would plan to remain in business.
Your calf price of $500 is substantially below the long-term average of calves sold in the fall I would guess? At the same time it could be said your $350 cost of keeping a cow and paying ALL her costs is low too so I'll work with your figures.
Basing my example on a 100 (purebred) cow herd rearing 90 calves I would plan to sell 5 breeding bulls, steer 40. Keep 12 stock heifers sell 25 for breeding and 8 as fatteners. Assuming bull calves at $1000, 25 breeding heifer calves @$750 and 8 feeder heifers @$500 brings $28,000. The difference I would make is turning the remaining 40 steers into grass fed beef to direct market as quarters and halves. At a net of @$1300 a head this enterprise would add $52,000 to bring a total of $80,000. Take from that your $35,000 figure and you are left with $45,000 - more than twice what you reckon could be made off a 200 cow herd. The beauty of this system is you don't need to buy the bigger landbase, double your herd, add processing plants or any other high cost items - it seems the perfect diversification to me.
Before everybody shouts me down for doing something radicle or impossible it's only my opinion, and my choice. It will take a lot of work, management and marketing to succeed at this but I believe it is possible. I agree that ranchers that rear and dump calves on the auction system once a year have little hope of gaining a sufficient return in future.
The key is understanding that we cannot succeed in the longterm as commodity producers due to the David and Goliath situation N. American agriculture faces with the transnational corporations in control of both markets and politicians.

[kpb]

grassfarmer, thanks very much for replying in detail to my question. I have no experience with purebred herds--we run a commercial operation and backgrounding here so your answers are most informative to me.I am particularly interested in your figures for steers that you market as cut-up beef. Do you market this beef yourself? How is grass-finished beef accepted? Is it a big job to market this and do you simply use word of mouth or do you advertise or market in any other way? Do you handle the slaughtering, etc. and market only the finished product or do the customers handle the slaughter themselves? Also, how long does it take to finish a steer on grass and do you need to feed any grain?
thanks in advance for your time in answering these questions.

kpb