Being a low cost producer

[cowman]

Can't remember when I read an article by a guy who didn't bother weaning his calves. Just ran them with the cows all winter!
He seemed to think this was the best way to do it even though he sounded almost embarassed to admit it.
Now there are several ways to keep costs down and hopefully not do a lot of extra work? Cswilsons suggestion about using horses would definitely cut costs but might be impractical for us horse illiterate types? I think you would have to like horses?
I think there is a cost saving by extending the grazing season but I suspect that might not be the most profitable on very expensive land?
I believe it is always a balancing act to keep production up and costs down...and how well you do it affects whether you will survive or not?
There are many schemes to cut costs out there and there are many schemes to increase production/profits?
Marketing seems to be one way that people can gain an advantage? But at what cost? Time is a cost too. I am often amazed at how much time, money and extra effort goes into marketing purebred livestock? I wonder if in the long run the extra actually gets a decent return? After all every calf isn't a bull? I wonder what kind of percentage of the male calf crop has to be sold as a bull to recover the added costs?
In the old days you usually figured about 10% of the calf crop were good enough to be bulls in a purebred herd. Of course then the costs weren't as high as today. Registration fees, advertizing costs, bull sale costs were low...not like today! And frankly prices(adjusted to inflation) were quite a bit higher!
How many calves from a purebred herd need to make it as bulls for that herd to actually make a profit. It seems on some of these bigger outfits everything is basically eligible? Now is that because todays genetics are more predictable or is it because the owner is a better salesman and feeder?

[smcgrath76]

As I have probably stated here before We have two goals at home.
1. reduce costs
2. increase value
Number 1 is a lot easier to do. If you are strictly selling a commodity product, there is not a lot of room to add value (by definition and design the lowest cost wins).
Adding value is where I feel promotion steps in. A lot of operations invest a lot in promotion and have to generate a return. In terms of a commercial operation, I think that some of what we call "good management" results in the same thing. Selling steers instead of bulls or stags. CCIA tags. Healthy cattle. Uniform lots. Thanking your buyers.
All of these are little things that don't cost a lot, but do add value. Some you even have to do, so you might as well do it right. Over time the result is "reputation cattle" and a premium.
Some seedstock guys must spend a fortune on advertising, and I am not sure how they measure if it pays or not. If the purebred business is like most others, then a significant investment in promotion is a must. As far as collecting, using performance data, EPDs, etc. I think that is becoming a cost of doing business. If you don't do it, then your potential market is somewhat limited. I think that the registration papers carry less value all the time, but the performance data is becoming more valuable.

[cowman]

Not sure if increasing value as you suggest still works but it would depend on the market you are selling into? The highest prices I saw this fall at the calf auctions were presort calves? Quality cattle always sell well and with the proper sort I do believe pre sort sales are a very economic way to realize a good price in our commodity driven market? The old days when the farmer feeder paid a premium for what he considered "reputation" cattle are largely coming to an end? Just my opinion.

[smcgrath76]

Auction market volumes have been declining over the last 20 or so years. I think this will continue. When calves are sourced directly, or through satelitte for example, I think that doing things right makes quite a difference.
I think presorts work well for the seller as long as the guys in the yard know how to sort.

[ALLFARMER]

Selling by satilite makes sence to me:

1)eliminate auction commission 2)Less shrink & less injuried cattle
3)eliminate some trucking costs
4)don't have to worry about the mart giving your cattle away

Working smarter not harder.

[cowman]

Well the satelite sales are an auction too? And yes they are attractive?
I guess if I was really into it anymore I might consider it but the fact is selling at the presort is easy and quick? Haul them in, go in the next day and pick up the check. Don't get screwed on the tail enders or calves that don't quite fit the bunch.
Selling privately is probably good if you know what you are doing? Again takes time and effort?
As I get older and busier I start to value my time more and more. There are only so many hours in the day. And quite frankly it is hard to keep interested in something that isn't making you a lot of money...sorry if that offends anyone but the fact is just about any agricultural venture is pretty slim pickings. And after all these years it gets boring!
I find I enjoy other things a lot more. Really enjoy building things...think if I was of the idle rich class I would like to be an inventor full time! Unfortunately I am forced to toil away like a peasant. Such is life.

[kato]

The quickest way to being a low cost producer is something you don't hear a lot of emphasis put on. It's simply the fact that if you can sell more calves in relationship to the size of your cow herd, the costs are spread over those extra calves, and become lower on a per calf basis.

We hear all the gurus preaching trendy things like calving later on grass because it's more natural, and having your cows rustle more for themselves in the winter, but these tactics are not quite as simple as we are sometimes led to believe. People think that if they do these things, they can slack off on their management. This is not true! Management is every bit as important with a later system as it is with early calving.

Sure, it's true you have less calving and health problems by moving to later calving, but the flip side of that is that when you do have problems, they are much bigger problems. You would be surprised how many times we've had calls at the vet clinic from guys who have a cow calving out in the bush, and they can't catch her, (aka c-section while tied to a tree!) or they have a hundred cows out on a pasture, and have an outbreak of pneumonia or coccidiosis in their calves, and no way to catch and treat them. Winter calves get navel infections, but summer calves can get maggots! Winter calves get pneumonia and scours, but so do summer calves.

How many of us have time in the middle of haying to go to the pasture and walk among the cows to check for the little things as we would have if the cows were in the yard? Lots of times it's exactly those little things that make the biggest difference. Things like the calf that didn't find mama in time for colostrum, or the low grade navel infection that's hard to spot until it's into a joint. Or the cow that didn't clean. Driving through the pasture on a Sunday afternoon just won't do it.

I don't want to start up the old early versus late calving controversey, but the point I'd like to make is that jumping here and there in search of a way to cut costs will not do you any good if it means you lose calves over it.

A high calf survival rate is the foundation that profit or loss is based on.

That's my opinion. It's also my opinion that if we all calved at different times, we'd all be better off because the big runs would be spread out and hopefully we'd all get a bit more for our calves.

[cswilson]

We all used to calve on grass until it became trendy to calve early and do the cows work for her. As for a calf that gets navel ill on clean grass or can't get up and suck when it's 70 above out-maybe those kind of genetics don't need to be propagated. The funniest thing I hear about guys not wanting to calve late is that their cows udders will get spoiled-any cow with proper udder structure will do fine calving on grass. It's amazing how a calf born with nature on his side will get sucking on some pretty ugly looking udders-and we have some lol.Late calving isn't trendy in ranch country it's been going on for years it's just now the farmer's are discovering it. It's funny how BSE converted some more guys to calving later-they dumped their old culls out on grass and forgot about them and were amazed that they all brought calves in. Kind of amazing when you think of it-a cow actually calving unobserved and unbothered-you'd almost think they'd been doing it for 1,000's of years.

[countryguy]

I know of guys that live with their cows during calving season and calve them in fancy calving barns only to leave the barn for 10 minutes and come back to find a dead calf.

Fact is,calves are going to be lost no matter when their calved out so I'd much rather not live with them and let them do their own thing.

Their seems to be a 1001 reasons not to calve a cow on the grass these days and I laugh at everyone of them.If we can run a decent sized grain farm with no hired help and get it done,anyone can.

[smcgrath76]

I know for us, the management thing has changed. Management means managing our business, not our cows. We have an extensive vaccination program, we spend a lot of time working on fencing, water developments (these make us money), we spend a lot of time looking for semen/bulls, we don't spend a lot of time checking, treating, feeding cows. We calve later and have better management than through the 80's, 90s'. We also have a horse or two, so cows in the bush, etc. are not a real problem for us (although I appreciate that they would be for some).
We can make more money budgeting properly, planning things out and checking on markets than we can managing our cows. Our infrastructure is fully depreciated, so when it comes to a choice of working with what we have or investing in new infrastructure, the choices at home are pretty obvious.
I agree that live calves per cow exposed is a pretty important number, but there are a lot of ways to get to the same value. If you have the infrastructure to calve early and it works, then fire away. With our infrastructure, it would take a lot of extra live calves to pay for a facility upgrade (A good example of a functional yet fully depreciated asset is our calving/horse barn which was built in 1916 by my great grandfather. I guess we should get it declared a working historical site and invite tourists to pay for the privelage of cleaning it.
LOL)

[PureCountry]

Kato, I agree with you about the importance of management, and cswilson pointed out the points you made yourself whether you realized it or not. Cows with prolapse troubles need to be culled no matter what, and daughters should not be kept out of them either...management. The quicker you eliminate problematic genes from the herd, the easier management becomes.

Of course cows and calves are going to die sometimes whether you calve in January or July, but if management is well-executed on both counts, apples to apples, Summer calving will be less stressful and MUCH less costly 9 times out of 10.

And I can't believe how often we all argue these same topics over and over and over and over.....

[rookie]

so what else would you all chat about then ,purecountry ?

[farmers_son]

On being a low cost producer… I do not want to be a low cost producer.

When people talk about being a low cost producer what they really mean is they strive to be a lower cost producer than their neighbour. The industry thinking is that each of us can best influence our profitability by finding ways to raise weaned calves for even less money. If that were true then we all should be very profitable as we have been reducing costs for generations in this country yet we continue to seek ways to reduce costs even more as the carrot of profitability is ever out of reach.

Why do I not want to be a low cost producer? The main reason is as we reduce costs the marketplace i.e. the packers reduce the real price of the live cattle they purchase from us. Now one might say that even so it is necessary to reduce costs in order to stay in business as others are forced to leave the business. Yet continually reducing costs will drive me out of business at some point, it is just a matter of when.

If we consider that the farms and ranches that are in the best positions today have been around for generations then we realize that farming/ranching is a long term investment. To maintain and build on that investment means incurring costs. I have to incur costs today to if I expect our farm to be around 20 or more years from now. As margins continue to decrease and the need to reduce costs becomes more irresistible then there is no choice but to cannibalize our farms future by reducing investments in the next generation. Seriously reducing costs can only be done for a limited amount of time before a choice has to be made to either spend some money on a future or get out.

Some would point out that South America is a low cost producer of live cattle. True they are a lower cost producer then we are and the production of live cattle will shift towards them. Yet they have no monopoly on reducing costs and within another generation the production of live cattle will shift to Africa who potentially could have lower costs still.

How much longer can we reduce our costs. Ten years, fifteen years….The focus of the North American cattle producer has to shift from reducing costs to obtaining fair returns from the marketplace as we rapidly approach the point where we can no longer reduce our costs any further.

[smcgrath76]

Amen to that one FS. That is the problem with commodity agriculture, being disconnected from the end consumer (or vice versa), and few players in the endgame for live cattle.
In my mind a healthy agriculture sector is going to depend an awful lot on producers getting closer to consumers and adding value to their products. Easier said than done though.

[olhoss]

<quote>Why do I not want to be a low cost producer? The main reason is as we reduce costs the marketplace i.e. the packers reduce the real price of the live cattle they purchase from us. Now one might say that even so it is necessary to reduce costs in order to stay in business as others are forced to leave the business. Yet continually reducing costs will drive me out of business at some point, it is just a matter of when.</quote>

Yeah, competition is a bitch, let's all go on welfare.