Allowable US Imports

[kpb]

BFW, You're right on the mark again. Some of the cattlemen here don't understand that they don't have a God-given right to operate their business. Like any other business they have to be able to turn a profit if they want to survive.
Here's what it is--if you want to stay in the cattle business and make a living off it without an outside job, than learn what it takes to stick around. Get bigger, get better, get more efficient. Instead of talking about how your trying to make money with real small herds by meeting a niche need which may or may not exist, grow your herds or keep your calves to finish or buy some calves to background or a thousand other strategies. If you want to survive in this business you've got to get bigger and run more cows and calves. That's the bottom line and that's no different than any other business these days. If you want to work outside the ranch, that's fine, but don't expect anyone else to support your cattle habit and don't go asking for any more government funds.
The days of a herd of 100 cows supporting a family are long gone. Try 300 cows at least or maybe 600 or 800 backgrounded calves. One good rancher can handle these numbers and that's what an economic unit is. Why should we be any different than your neighbourhood hardware store? You either got to go big or go home.

[kato]

Just one problem with that. Sooner or later there's only one player left in the game. Haven't we seen that enough already?

It may seem that the bigger boys can pay you more for your cattle, and you should be selling to them. But are they really giving you more?

You start figuring out the real costs of shipping out of province, and the price you are bid gets a little smaller than you may think. An overnight stand and a 10 hour truck ride will contribute enough shrink to knock a couple of cents off right off the bat. Then there's the cost of trucking, and the stress on the cattle.

It's easy to say that the big mega plants are the way to go if you live near one, but not all of us do. At least here in Manitoba, I think that factors like shrink, and hidden costs will work in our favour to make the long truck ride to Alberta a bit less attractive.

We've got two plants proposed within an hour of us, and we intend to support them.

[greybeard]

Great thread! No doubt if you want to be in commodity production, you better strive to be among the low cost producers. They set the price. If you are happy to be average, it’s only a matter of time and you will be looking for another way to make a living.
This isn’t something new. It’s always been that way. The settlers came to this country because they could get MORE land. They wanted to be bigger.
Packers are commodity producers too. The same rules apply. Efficiency is king.
That said, I still see examples of producer involvement in commodity-based business that are very successful. But only the well run will survive.
The 300 cow number changes with the margin available per animal. Most of us have never divided our expenses on a per cow basis. The feedlots do it on every turn. That’s why the got so big.

[rkaiser]

Where is everyone getting the notion that Canadian Plants will need to source cattle cheaper than the multinationals to survive. The whole business world has it in their heads these days that the only way to receive more profit is to cut expenses.

kpb talks of his turn at profits by being able to buy cattle at "the right price". What is that about except for lowering expense. Only problem with that logic is that in the big picture, someone had to suffer a loss. Cargil and Tyson have been so proud about legally taking insane profits this last year; but it has all been at producer, or taxpayers expense. Yes we have all taken our dole money kpb, and we would have to be really dumb not to. Even though some of us are attempting to change things we feel would be beneficial to all producers, we are looking after things at home as well.

You can drive into Calgary or Okotoks Alberta tommorrow morning and by beef raised and owned by 3 of the most active 4 members of Beef Initiative Group, and the fourth has a very active farm gate market going.

Even though I personally do not agree with some of the stands that ABP/CCA make, I appreciate the fact that these people are also making an effort to change the way things are done to benefit the producers of this country.

Sure kpb, let's all stay at home and get bigger, and let someone else set the rules. Cargil and Tyson have people hired just for that, and guess what those rules are. Profit at any cost, cut expenses to make more profit, buy cheaper cattle, buy MORE cheaper cattle. Give me a break!

[cowman]

300 cows...one man? Sure seems like one hell of a lot of work to me! Hope you boys don't burn out too easily?
If a person is old enough to remember, this is just what happened in the hog industry? The number of sows needed to make some money just kept rising. Mechanization and more expensive barns solved that for awhile but in the end the hog farmer had to start hiring labor...and that was most of their downfall! Because while you may just find being a slave on the farm just peachy, most people aren't really into working 24/7 in a dirty job for low pay. How many hog farmers are left?
Also I would suggest you should try to do all this expansion with as little debt as possible and get it paid off as soon as you can? Of course this will probably mean doing without a lot of the good things in life...but fear not you will die rich and your kids can have a ball pissing it away!
But I will agree that, that is the way it is going...get big or get out. Has been for quite awhile.
Now the jury is still out on whether buying yearlings was a good thing or not(but I will agree it looks pretty smart). I guess we'll see if that border actually does open this year and just how that will affect markets? It still is a gamble and like any good gambler you shouldn't be playing if you can't afford to lose.

[pandiana]

BFW do you believe that in order for a Canadian plant to survive it must pay less for cattle?

While in Canada Cargill, Tyson etc are all working with the same dollars. Undoubtedly, their advantage is economies of scale and deep pockets spread out over diversified enterprises. However, big is not a guarantee of success as witnessed by Enron, Black, even Trump as well as many airlines worldwide. All can fail. Swift, as well as other US packers are struggling because they have been unable to keep their plants running at capacity, hence, their support of re-opening the border to live cattle.

[pandiana]

The cost of getting bigger will vary depending on where an operator is located. In your area cowman, or in rkaisers getting bigger and acquiring more land would be a very costy venture. Land in this area is usually sold to cattlemen from other areas that want to expand their holdings and add pasture land, or in some cases, people have sold operations in central AB. and relocated further north.
I have a neighbour with a 450 cow herd and a feedlot of about 1000. He runs the whole thing with the help of his teenaged son, who is going to be heading off to college in September. The fellow very seldom takes any kind of holiday, his wife works full time off the farm and they both seem to be aging real fast !!!! Working at an off farm job isn't an option with a large operation, where those with even a 100 cowherd seem to be able to manage to earn a few off farm dollars in the slower time of the year on the farm.

[cowman]

Well I don't like to discourage a young man in his pursuit of wealth and I also think the time to work like a slave is when you are young, because over the years you will find you are less and less keen on keeping your nose to the grindstone! Somehow our whole society is kind of screwed up? When you could really enjoy having money...you don't have any... and by the time you have some you are too damned old to really enjoy it!
My own son just bought 320 more acres and intends on doubling his herd over the next couple of years. I am now officially "cow-less" as I signed the last ones I owned over to him yesterday. I still own about thirty heifer calves but part of the deal is he has to take care of them!
He seems to think he can handle 200 cows with few problems...and perhaps he is right? He moved the calving dates back to April instead of January, which is probably a good thing, as he is not very good at getting up at 2 AM!
Now I guess with even 200 cows he isn't really viable but he does have some off farm oil/gas income and I made it very clear that I expect him to hold up his end of that deal. I don't intend to work harder so he can go play cowboy!
I am still relatively young(turn 50 in April) and I intend to take some time to smell the roses!

[BFW]

Pandiana, I was only questioning why anyone would take less for their cattle in order to sell to a producer owned local plant as was indicated earlier in this thread. These plants will have to compete to survive and being only niche players is not an option given the scope of our industry. Your examples of large companies failing only supports the reasons why these initiatives will have to be rock solid if they are to survive.

[pandiana]

For the most part, BFW, I agree. Any plant must be competitive to compete in a normally functioning market. However, it is debatable whether our market could be described as functional. I would contend that any commodiity which generates only an average of 20% of total livestock income net farm cash receipts in a 'normal' year,i.e no drought or BSE,(Alberta Ag. Statistics 2001 census) cannot be considered functional. Drought and BSE have added further levels of dysfunction. In a 'free enterprise' system, according to kpb, this 5 billion dollar industry would be allowed to fail as it has not been profitable for the average primary producer for several years. Nonetheless, other sectors of the industry have been able to make a profit to a greater or lesser degree depending on the circumstances.

I have to question the logic of getting bigger in order to become profitable. On strictly economic terms there is no doubt that there is a point where profitability is maximized by economies of scale. Nonetheless, this appears to be a constantly moving target as for every increase in expense we would need more cows. The average cow herd in Alberta has gone from 60 to 166 in the past 8 years. 233 cows would appear to be a good number according to Ab Ag economists. But is increasing cow herds sustainable. I agree with cowman in that I have to question how well 300 cows can be looked after by one person? What about lifestyle? Environmental concerns such as ground water contamination, water, disease?

Getting back to the original debate, if farms must raise 300 cows to be profitable, we must sell the beef. If we have learned anything from this wreck, we must know that we cannot count on the US as our only market. We will be forever vulnerable to irrational trade disputes if as an exporter we rely on a single market. If we process our own, we gain control. Even if we operated at a loss for a time in order to establish markets it would be no different than large corporations undercutting prices to starve out competitors. Instead of governments doling our relief, if this money went towards building infrastructure this would work to restore functionality to our markets.

[BFW]

Pandiana, I don't think anyone is suggesting that we increase the overall size of the cow herd in this country. What I see being proposed here is the cow herd being rationalized or in other words fewer, better managed and well financed operations producing a similar amount of calves to what is being produced now. In my opinion this is long overdue.

[Horse]

I figure a 300 cow operation would take app $1 mill to capatalize . If you have a mill would you put it in to rasing cows? If you dont can you pay the interest on that size mortage with a 300 cow herd?
The way I figure it out is after a resonable yr you may have $10 thou left for your own personal living exp.
Sure seems like a lot of work and wory for little return. And I would like to see the fellow in a few yrs that is doing all that himself, doubt if there will be much left of him.

[grassfarmer]

Horse, You must know of some cheap land, or lease land, in Alberta if you could stock 300 cows for $1 million - it takes way more than that in Central Alberta.

On the 300 cow issue I'm coming at it from a different background. I have always hated systems where the animal's welfare takes second place to time constraints but I'm starting to think it may be possible to run more cows than we are currently. To me the prairie climate really suits low work cattle systems. Being able to winter cows out on the land in big lots, feed with bale processors etc is easy work compared to running cows in a wet European climate for example. If we are prepared to calve on grass(May/June)and get the feeding and herd management right to minimise or eliminate calving or scour problems - there would be little work involved maintaining cows.(why do so many love to calve when it's 40C below?)I know I can feed 125 cows and youngstock, about 250 head in total in under 3 hours am with a half hour chores pm. When the tractor is running anyway it wouldn't take long to feed a couple more fields of 80 cows. To us crazy Europeans that's not a lot of work to put in physically although management time must be added to that. I find the more management I do the less physical work is needed. In summer it takes me less time rather than more -even with an intensive grazing system. I feel I could easily handle 250 cows if I had the landbase - it's not the way I'm going at present because I feel we should be adding value to our current output rather than adding numbers to a commodity enterprise that has it's profitability sucked out by people further up the chain.
It's often said that Canada can't compete because of our high winter feed bills - but at least you don't need to keep beef cows inside on a dairy type slurry/cubicle set ups that cost a fortune like many in Europe do.
I think there certainly may be opportunities for professional cow men to run large herds - maybe 5-600 cows with two men which would allow weekends off once in a while. There certainly appears to me to be an awful lot of amateurs running cows on grain farms, part-time farms,oil patch tax sink farms - maybe that is why there is so little enthusiasm for making any changes to our industry - so many are not involved enough in the beef business to care?

[grassfarmer]

Just to be clear I meant ranchers "love to calve cows when it's 40 below" not cows. Cows are a lot smarter than that if you give them a chance!

[kpb]

Well, I think anyone who wants to stay in this business is going to have to run at least 300 pairs (likely more) or at least 600 to 800 yearlings (backgrounded). And fellas I can tell you it can easily be done.
I have run 450 cows with just myself and my wife at one time--did it for a few years with no problems at all. Of course that means it's a full time job but it still means we can take some time off in the summer with no problem. If you cattlemen want to be paid for being full-time stockmen and stockwomen then you ought to be able to work full time.
Now my wife and I (three small kids) run just 250 cows with 600 yearlings. Just ourselves. The feeding chores every day take about 2 and a half hours. Repairs and assorted problems might take another couple of hours some days. Calving is in the spring when the weather is warm and most cows do it by themselves. In the summer the whole kit and kaboodle are on pasture--does this whole thing sound like a whole ton of work to anyone--does it even sound like a real job?
You guys who can't bring yourselves to handle more than 100 or 200 cows are only kidding yourselves--if you want a full-time wage then work a full-time job--get more animals, feed more longer and you'll get paid for your efforts. Otherwise you're just hobby farmers and I don't think the government should be paying hobby farmers anything.
rp kaiser, I fully support anyone who wants to get into politics or wants to change the overall view of the industry. But it's not me--I want to be around when this is all through and I want to continue to earn good dollars along the way. As BFW has said the way to do that is to become more efficient and smarter and bigger.
I built this ranch from the ground up and I intend on it lasting. If anyone who is reading this thinks they can make a decent living while putting in an hour a day taking care of 100 cows, then go for it. But don't tell me that one good cowboy can't look after a bunch more cows than that and still have lots of time left over.