ABP Strategic Plan

[BFW]

rkaiser, I have to question your statement that "feeder prices are only better than they were, but still not good enough to operate a profitable business." I would like you to qualify that statement. Here you have practically the highest prices on record being received for feeders in the US (and access to that market), feed grain prices the lowest in recent memory and hordes of over eager buyers ready to fight over every lot of good calves that come into the ring! I expect that most people selling calves are just damn tickled with the prices that calves are bringing and you have the gall to say that it isn't enough! If you can't make a living selling calves at these prices in this environment you had better ask yourself why not or consider a career change.

[cowman]

Randy: Yep I have...still do! If we don't get our cow herd back to some reasonable numbers, how can we ever expect decent prices?
Now if those cows go to Africa or down in a pit doesn't really matter because it has the same result...less calves on the market?
It is very obvious the US farmer/rancher doesn't want our cattle or beef...and who can blame them? I suspect trade harassment will now be the norm from here on in? So why not get the numbers in line with the domestic market and lobby the government to keep out the imports?
Who makes all the money on exports? Is it you and I or is it the packers and feedlots? Prices are pretty high in the US right now and there are a lot of fat cattle crossing the border supposedly getting the American price? I do realize the feedlots have added costs due to American trade harassment.
I'm not sure if the feeder price is sufficient? We were getting more for calves in 2000 than today. However what was a pickup worth in 2000? What was gas or deisel worth? What was a steak worth in a restaurant? So I guess we definitely have taken a step backwards?

[farmers_son]

Cattleman2: Lack of competition is the cause of the market distortion, why U.S. cattlemen get $200 or more for the same animal than an Alberta producer receives. There are a number of reasons for that lack of competition but the end result is we do not receive a fair price for a fat animal in Alberta.

Boxed beef moves both north and south every day. While there is a basis between U.S. and Canada live cattle prices there is essentially no basis between U.S. and Canadian boxed beef prices, basically a level playing field for the most part. In fact even before the Lakeside strike the price of nearly every cut of beef in Canada was higher than in the United States. We have been conditioned to accept a basis for live cattle however I think there is no sound reason for a basis to exist other than lack of competition for live cattle within this country.

Cowman: Numbers of animals are not the issue. We could dump half of our herd in a pit and the packers would still not pay us a fair price for our live cattle. The packers do not pay us a fair price because they do not have to. There is not sufficient competition within our market to force the packers to bid up for our live cattle and until such time as something changes in our market to create that competition nothing will change even if a spacecraft came along and beamed up every other cow. Look at it this way, there is not so many cows or calves in this country as to drive down the wholesale price of beef. The wholesale price of beef is right up there with the U.S. price. It is not a supply problem, it is a problem of non functioning markets caused by a lack of competition.

[rkaiser]

BFW - I think your sentiments are coming from your own (feeder) prospective. Calf prices must be scaring the hell out of you. Even though the last two years, and especially the last year have been profitable from a feeder (margin) standpoint, who wants to pay a buck thiry for six weight calves with a fat market hovering in the 85 cent range.

By the way BFW, I opened the gate to a man's land who feeds a bunch of calves for you each year and let in a herd of hairy black beasts yesterday. Same mix wagon dropping feed for your calves and my cows.

As far as calf prices for the cow calf producer - I will say again that these prices are not enough. Comparing our industry to the oilfield and what a man can earn there, we are still a lemonade stand next to Hooters. We all need a better price for what we do BFW, and I hope like hell you can weather this calf price hike and not blame it on the cow calf guy if it doesn't work.

Send me an email, and we can talk about how we're going to keep our custom feeder on his toes.

rpkaiser@telusplanet.net

[cowman]

farmers son: There is not enough competition to bid up our cattle? Or is the supply so bloated that the packers don't have to bid up our cattle?
Add a bunch of trade barriers that were imposed by the USDA and suddenly our large numbers of cattle become a problem? Unfortunately it looks like the USA intends to continue to throw up roadblocks to live cattle trade and live cattle trade was what drove the expansion of the Canadian cowherd?
If the Canadian cowherd shrank back to a domestically sustainable level I believe you would see some competition? Cargill and Tyson are in the business of competing and to make a buck they need to keep the line full. Not much incentive to pay you for your steers when the guy down the road will sell for less? But what if your steers were the only game in town?
If this basis of $200 or whatever was eliminated, I assume the basis on feeder calves would disappear also? Maybe besides a better fat market we would have a massive movement of feeder cattle into the US? The whole problem here is the continued USDA trade barriers that continue to give the packers and also the feeders an advantage. Personally I don't care if my calves are fed in southern Alberta or Iowa...whichever will make me the most money!

[cowman]

randy: Out of curiosity, how much does it cost to custom feed a cow per day?

[farmers_son]

Rather than see the Canadian cowherd shrink back to a domestically sustainable level I think producers would be better served if Canadian packing plant capacity increased to serve available domestic supplies.

Cargill and Tyson are in the business of creating value for their shareholders, not to compete with one another. Competition serves to drive profit out of any business. Therefore it is not a stretch to understand that Cargill and Tyson would seek to limit competition in any way possible. One way, and it is only one of many ways to limit competition's effect on the bottom line, is to cooperate to reduce the costs of their major input; namely live cattle.

I would point out that if large supplies of cattle were an issue in this country and we had a functioning market for live cattle we would see corresponding reductions in the wholesale price of beef. Such is not the case. Granted the USDA trade barriers are part of the problem. However that ignores the larger problem of Canada’s continuing lack of domestic packing plant capacity and any kind of alternative in this country for producers being forced to sell their live cattle to Cargill and Tyson for artificially low prices. If we could create competition in this country for live cattle it would drive up live prices. We may not be able to eliminate all the basis between Canada and the U.S. but even if the basis could be cut in half it would create a new profitability in our industry that is badly needed.

[rkaiser]

Cowman - It probably costs a lot less than what I am paying, especially with my little black hairy beasts. $1.50 per day is what I pay. The bonus for me this year was an open gate rather than one of those trucks we're talking about on the other thread.

Making a move this year back to our little paradise North West of Ponoka, thus the custom feeding. Will be a good year to do some math however, as we set up our new place and decide whether buying equipment etc. is worth while.