What is "normal" now

[cakadu]

In several of the more recent posts since the border was ordered to be open, there have been references to "normal". Exactly what is normal now? Certainly it has changed in the past couple of years. Seems to me that we have the opportunity to create a new normal, preferably one that goes in favor of the Canadian producer.

What are some of your thoughts?

[cowman]

I suspect "normal" is we now go back to making $50/calf...just like how Cam Ostercamp described the situation pre BSE?
The good news is a lot of guys realized, through neccessity, that they can run these darned cows a whole lot leaner and meaner than they ever thought possible?
I believe guys like grassfarmer, probably have the right idea? Let the cows do most of the work and get rid of all that expensive iron and other costly inputs! I like to play the devils advocate with him but that doesn't mean I haven't been taking notes!
I even like his ideas about marketing and producing a grass type product...although I think that is a little further down the road.

[kato]

I think we've become in a lot of ways like our parents generation that lived through the Depression. We're a lot tougher, leaner, and smarter than before. Our eyes have been opened, and even though we are more cynical than before, I think we're also a lot smarter. When times are good, we all tend to just slide along our merry ways. Get hit like we have these last two years, and it is going to affect us all in one way or another.

Hopefully we will remember all this, and learn from it. I know the last couple of years have nudged us personally into doing things smarter around our operation.

The new 'normal' should include a lot less dependency on an American market. The nonsense coming from the Montana governor is just another reminder that we haven't finished with trade issues yet.

[farmers_son]

"The new 'normal' should include a lot less dependency on an American market."

The problem was not the American market. The problem was our lack of packing capacity in this country and our dependency on shipping live cattle across international borders. The U.S. remains the largest beef importer in the world and the number one beef market.

The Montana Governor is pointing out to us that the politics say send beef to the Americans instead of live cattle. If they keep hitting us over the head long enough maybe we will get the message. It is not up to Canadians to keep those packing plants in the U.S. Northwest supplied with cattle.

[grassfarmer]

Much as I like developing my low cost system Cowman I realise it is only buying time not providing a long term solution. It can keep me ahead of the pack as long as the majority of producers are prepared to run higher cost systems with lots of shiny metal. As kbp has pointed out this is much the same as entering a niche market - once more people get into the new way of production the processors that buy our product will pay us even less for our goods. We cannot "efficiency" our way out of this problem because the price fixers (packers and retailers) in the beef industry base their bids on cost of production plus just enough per head margion to keep producers farming. To regain any kind of security in agriculture we need to get paid on a "fair trade" basis not a production cost plus or minus a small margin depending on whether the Government is prepred to subsidise the shortfall or not at any given time.
"The new normal" for our induustry to me is same s#$@, different day.

[kpb]

grassfarmer, your comments and observations are correct. I hate to be the voice of doom always around here but I like to deal with what is real rather than what I would like to happen. I think that the era of the full-time rancher will end in the next few years, much as it has for the full-time hog farmer.

Already I note that most people on this board are not, in fact, full-time cattle ranchers. And while I have nothing against people who support their ranch with off-farm jobs or income--in fact I admire them since it is not something I would want to do--it's hard to take advice from those who's sole source of income does not come from the ranch. Kind of like the difference between being a pig and an egg-laying chicken. The chicken is concerned about meat eating but the pig is, shall we say, committed. Grassfarmer, you and I and the other full-timers around here are the pigs.

I've seen Century farms stop farming in the last while because they were in the hog business. And I frankly fear the same for the cattle industry. I think we're heading for an industry of part-time producers who are not really committed to making a profit and a living from the ranch. I don't know yet if that's good or bad but I think that that is the way it's going to go.


kpb

[cowman]

kpb: I believe the cattle industry is headed the same way as the hog business. At one time building a hog barn was your ticket to prosperity? Now where have all those hog farmers gone?
The fact is the small time hog farmer has pretty well dissappeared?
The same thing is happening to cattle? Soon the only ones left will be part timers? Now that "partimer" might be someone like Doc Seaman who runs thousands of cattle or it might be the guy with a quarter section who has 40 cows and works at a high paying job? Or it could be wealthy people who made their money elsewhere and want to play farmer, fulltime?
Anyway its all good, as the beef business is still open to everybody, and they can spend their nickel however they want? Unfortunately you need some pretty deep pockets to play this game anymore?
For quite a long time the system has been moving people off the land and getting them into the cities. That trend won't change?
For the people still involved in agriculture the day will come when you are basically forced out with a very good compensation package? You won't be starving or living out of a cardboard box or anything like that! I find it very sad however. A way of life is coming to an end. The first indication of this was when the next generation left in droves? Now we are basically a generation of old people waiting for the end? Count the young guys actually trying to farm? They are either rich foreigners or riding on Daddys coat tail to get the money?
It isn't to hard to figure out? $50 profit/calf is a fools game? You'd need 800 cows to net $40,000? I'm sorry but $40,000 just doesn't cut it anymore?

[grassfarmer]

I think we are maybe too quick sometimes to use other peoples figures - case in point $50 a calf profit. Obviously each producer has their own set of circumstances and costs but I think for many the potential should be a lot better than $50.
The model I am working on has extended grazing as it's lynch pin. On this land here where we don't normally drought my goal is to graze to Christmas and be back onto banked grass by the first week of April. So we feed conserved feed for around 100 days. We will buy in all feed in future. The cash costs per cow would be say $100 feed, $25 salt/minerals, $15 medication and vaccines, $30 fertiliser, giving a total of $170.
Add to that the costs of running an 11 year old tractor, silage wagon and bale processor for winter feeding plus minimal electric power, minimal corral cleaning and repairs (we only really use them for backgrounding calves)
At this point you can add as many other overheads as you want but in my situation they are very small.
I am hoping that we can achieve a weaning day value on our calves of $650 (after deducting selling costs) based on 550lb x $1.25
I'm thinking in my situation that a production cost of under $300 per calf is achievable on an average year - leaving rather more than the $50 quoted above.
Fire away folks - shoot my plan to shreds!

[cowman]

Nope! Grassfarmer you have a good plan. Maybe the only kind that will work, in my opinion!
The fact is these darned cows have to start paying their way in a more efficient manner...and that means taking care of themselves?
I know how my greatgrandfather ran them, out in the potholes and cleaning up the chaff/straw stacks. Calve with nature and a whole lot of tough love!
I would actually say you pretty well have it right.
The boys little experiment with controlled grazing seems to be pencilling out fairly well, although I still am not too keen on those darned electric fences! The pasture water system sure seems to work fairly well.

[grassfarmer]

I've had some fun with my pasture pipeline this year Cowman - it is mainly surface pipe with a section near home shallow buried. I drain it in the fall by disconnecting the supply and taking all the caps off along the line to allow water to run out - I've never bothered blowing it out with an airline I just wait for it to thaw in Spring. Last fall I made the mistake of leaving some of the caps off over winter and it seems a mouse thought it was a good shelter. I've been getting lumps of mouse hair blocking the filters on the hudson valves on the troughs periodically. You usually find out when about 200 head are standing round bawling for water!
My electric fences are usually problem free but this week I've had trouble with three warring charolais bulls who have twice wrecked a back fence - breaking the plastic posts and the polywire. They seem to like to push the outcast of the day back into the last field. Like any system there are trials and tribulations.

[cowman]

We had one problem where a coyote decided to chew the pipe, but he only did it once! Intend to bury the line before winter so that won't happen again.The line has to pass through a low spot and we put a coupler there so hopefully will be able to just drain by gravity.
Moving cattle hasn't been a problem as they wait by the gates when they think it is time to move. Open the gate and they are all through in a minute.

[farmers_son]

Grassfarmer: The model you are working on has extended grazing as its lynch pin. Without being flippant, lynch may be the operative word. We always need to be careful we do not hang ourselves with numbers.

Assuming you can sell weaned calves for $650 you will be able to increase your profits by outsourcing your cows winter feed which is what you indicate if it allows you to keep more cows. In fact you will be able to increase your profits further by increasing your cow numbers even more and shortening your grazing season instead of increasing it. Using your numbers you are making $350 per calf, the more cows you have the more money you make. In fact you may consider dry lotting your cows and feed them year round, you can do that for less than $650 per year. After all, what is another $100 or $200 feed when you making that kind of money.

I would question if you are making $350 per cow or you soon would take over the entire Alberta cattle industry. If you were really making $350 per cow and you reinvested that money back in cows assuming $1225 for bred cows every 3.5 years you could double your cow herd. There are about 1.7 million beef cows in Alberta. If you could double your cow herd every 3.5 years for 75 years you would own every cow in the province. Well done.

Just having fun with your numbers. Thanks for putting up your costs etc. Cows eat every day whether they graze or eat baled feed. If you see a cost difference between feeding bales and grazing conserved grass it may be just that the marketplace is undervaluing grass. It is all feed.

[grassfarmer]

Farmers_son, A point that it very important to me but maybe wasn't reflected in the post was what I would call the "sustainability balance". There is a natural level at which the landbase I have can be maintained at the climax stage of vegetation and carry a certain number of cows without leaving myself susceptable to feed shortages in a year of poor growth. I've yet to find this number as the land is in a state of rapid recovery at the moment and the production is rising dramatically. My best guess at the moment would be that we will max out at about 2.5 acres of clear pasture land to support a cow on this system.
I'm not interested in drylotting cows or feeding extra months in the year because on paper it costs X cents/day less - it is an unnatural and unsustainable system of production. I suspect that despite the assurances of feed specialists who would claim to balance perfect rations for you there would be a dramatic decline in herd fertility, health,longevity and productivity.
I'm not a big supporter of throwing random numbers about for cost of production - my original post was cautioning Cowman's use of someone elses figures of $50 per calf profitability. I think they are used to falsly benchmark the potential profitability of a system which then blinkers producers against seeing any other system. A typical case in my mind of getting tangled up with numbers is the cost of grazing a cow which is often put at $30 a month because that is what custom grazing costs. It doesn't cost $30 a month to graze a cow on land that is bought and paid for as many producers land is - yet numbers guys will jump on that and say "oh but you must charge $30 per cow per month because that is what your grass was worth and you could have rented it out to someone else"
I prefer to run a personal business management model using my figures and the cash costs incurred in production. When all is said and done at the end of the year I have a profit or loss figure that I can assess if I'm happy with my returns in relation to the work and money I have invested in agriculture. At this point I can decide instead to custom graze other peoples cows or make other changes to my system - it's a more holistic way of management than isolating individual production costs.
You can relax, I have no plans to take over the Alberta cowherd but I am ambitious and see a future in low cost beef production in this part of the Province. Profitability will come with more intensive management and use of the land rather than playing the 200, 400, 800 cow herd expansion game. Expansion to huge numbers on an ever increasing landbase leads you into the bigger numbers / smaller margins game which doesn't attract me at all. We need a new system, one built from the ground up to shut out as much profit taking as possible by oil companies (fuel and fertiliser inputs), bankers, machinery dealers, chemical and seed companies and beyond the farmgate the processors and retailers of food products. I think we must get back to a grass based system which utilises (free)sunlight, water and soil nutrients in a sustainable manner.

[cowman]

grassfarmer: Of course one set of costs does not fit all. But consider what you said about bought and paid for land?
In the big picture that land really does need to pay you some sort of return? And quite frankly it does need to pay you, at the very least, what you could get by renting it? If it would pay you in intersest what it was worth...we would probably be estatic!
Now on a personal note, I don't care. What the hell would I do with all that extra money...LOL? After all I am just a "hobby farmer" using the farm for a tax break!
Maybe I am an idiot or something but it really bugs me that ANY asset I own is struggling to pay its way...especially the one I truly love?
And no, unfortunately I won't be quitting and selling my land...no matter what the experts say! I was bred and born a prairie boy and I know what king of hardships my ancestors went through to get me, and mine, here today! I suspect(don't know) that my decendents just may be around for a few more years! The cycle of life.

[grassfarmer]

Cowman I'm not saying I don't want or expect a return from my investment in land. When I stated "When all is said and done at the end of the year I have a profit or loss figure that I can assess if I'm happy with my returns in relation to the work and money I have invested in agriculture." the investment that I have made to purchase land is included in that equation.
Each person needs to be happy with the return on their investment in land - In general of course land appreciates over time and if this is cashed in at some point very often a producer gets a handsome return on his land investment. On the other hand multi-generational farms don't get created or continued by selling the land base.
Ideally a farm can produce enough income to sustain the producer through good and bad years and at the same time appreciate longterm through an increase in land value. That's my way of thinking anyway and that's why I concentrate on the land itself as it is the generator of all wealth. Too many producers seem to see the land as a bland sterile piece of dirt on which they make money by managing herds of cows or driving about in a million dollars worth Case/JD equipment regardless of nature and it's cycles.