Allowable US Imports

[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.

[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.