Being a low cost producer

[farmers_son]

Actually it is a lack of competition that is the bitch. And some would say we are already on welfare with CAIS payments and set asides.

[cowman]

farmers son: You make a very good point about either investing more money or continuing reducing costs and eventually coming to a point where you can't afford to continue? This isn't just happening in livestock but in all agriculture?
How many grainfarmers have delayed purchasing new machinery because the money just wasn't there...and then one day wake up and everything needs replacing! At that time they say to hell with this and pack it in!
Isn't that where a lot of livestock producers are at today?
How many farmers have basically decided "when the tractor gives up the ghost, thats it?"
How old is the average farmer? If you are a few years from retiring does it make sense to buy that new tractor? How many have this mindset? Does it not make more sense to put the "tractor money" into a secure money bearing investment?
No body farms forever. Sooner or later we all quit...one way or the other! We might be passing it down or we might be selling out and that might influence how we operate at the moment? I think everyone should have a long term plan about where they are going? A lot of municipalities offer seminars on estate planning and farm transfers. A good place to start?

[kato]

Low cost, high cost, what really matters is finding a way to become a high profit producer!

I think that comes in bits and pieces over the years. I think we've all looked back at a certain move we made somewhere along the line and said "That was brilliant!". The trick is to follow it up with more brilliant moves.

One of our most brilliant moves happened back when the market crashed in 96/97. We went out and bought a bunch of extremely cheap top of the line heifers and doubled the cow herd for next to nothing.

Anyone else like to share a brilliant move they've made? I bet there are some good ones out there we could all learn from.

[kato]

Remember ..... brilliant! LOL

[olhoss]

"Actually it is a lack of competition that is the bitch."

Then get busy and make some. Stop complaining.

When Weyburn area farmers needed an inland terminal, they built one. Of course the leftists complained about that too.

[farmers_son]

Olhoss. On the one hand it is exactly as simple as you say. Make some competition. And on the other hand it is very difficult. A year ago there was a lot of talk of building competition, today hardly any. Yet the need is there as much as before and as margins decrease the will to do something about it will regain momentum.

[cowman]

FS: Well there have been some plants built? The one at Salmon Arm has added some competition to the cow market? Sunterra is killing steers at Innisfail and maybe soon at Rockyview?
Not real sure how well the others are progressing? The new gen co-op at Pincher Creek is having problems, not sure how far along they are at Spruce Grove or Dauphin, Manitoba?
However Tyson is back in the game after the strike and getting up to speed? They are buying a lot of cows these days? And I assume Cargill high River is operating at a good clip?
Top that off with the numbers going to the US as both fats and feeders and I would say there isn't a lack of capacity? Now there might be a lack of competition but that has more to do with border regulations than real competition for our cattle.

[olhoss]

"On the one hand it is exactly as simple as you say. Make some competition. And on the other hand it is very difficult."

And leftists don't handle "difficult" very well.

[grassfarmer]

olhoss, what insulting garbage you write, playing the "leftist" card to a very intelligent contributer to this forum yet failing to come up with any intelligent input yourself.
Your talk reminds me of Jack Daines who was giving a lecture before a breeding cow sale where he was telling everyone how they should be buying cows as beef was the only thing to make money. The Saskatchewan farmers were all dumb growing grain and selling it at $1 a bu to ship to Picture Butte where the real smart guys are. But back in Sask. they were happy as a "Tommy Douglas" style bailout package was on the way. The implication being that these great free marketers, the feedlot owners, bastions of free enterprise were showing the dumb farmers how to make money.
Ignores the fact that the feedlots were only too happy to set aside their free market principles when a BSE bailout package came along. Also ignores the fact that the longterm profitability of the feedlot sector is a negative number.
These "leftist" taunts maybe play well to the rednecks who seem to believe this nonsense if you repeat it often enough.Unfortunately it leads to a culture where collectively ranchers think they are suffering financially because they aren't as efficient as their neighbours yet individually they are all taking jobs in the oil patch and relegating ranching to a part time hobby.
It also leads to organisations like the ABP (Anti Beef Producers)skewing democracy to follow an agenda that is obviously totally against the wishes and interests of primary beef producers in Alberta as seen by their recent AGM policy votes. You "anti-leftist" people kid yourself that you can beat the world if only you are allowed free enterprise but are laughably niave given the complexity of international trade, politics and Corporate power. And by the way I've never been anything other than Conservative.

[olhoss]

<i>"Your talk reminds me of Jack Daines who was giving a lecture before a breeding cow sale where he was telling everyone how they should be buying cows as beef was the only thing to make money. The Saskatchewan farmers were all dumb growing grain and selling it at $1 a bu to ship to Picture Butte where the real smart guys are. But back in Sask. they were happy as a "Tommy Douglas" style bailout package was on the way. The implication being that these great free marketers, the feedlot owners, bastions of free enterprise were showing the dumb farmers how to make money."</i>

And cattlemen have made more money, even through the border closing.

<i>"Ignores the fact that the feedlots were only too happy to set aside their free market principles when a BSE bailout package came along. Also ignores the fact that the longterm profitability of the feedlot sector is a negative number."</i>

The corporate feedlots are pretty much a dog that will hunt with anybody. Even leftists.

<i>"These "leftist" taunts maybe play well to the rednecks who seem to believe this nonsense if you repeat it often enough.Unfortunately it leads to a culture where collectively ranchers think they are suffering financially because they aren't as efficient as their neighbours yet individually they are all taking jobs in the oil patch and relegating ranching to a part time hobby."</i>

Yeah, much better to whine to the nanny state for a piece of the janitor's income.

[smcgrath76]

I think it is probably fair to say that the cost of feed grain is negatively impacted for grain farmers and positively impacted by feeders when a payout to grain farmers is provided. No different than packers bidding the BSE payment out of feeder cattle.
In reality free enterprise in the beef sector is likely moving into further processing. This is hard to do on an individual rancher basis, and requires huge levels of teamwork. consider the average herdsize of 45 or so. Keep 5 replacement heifers a year and you have 40 head to ship. At 15 seconds per head, you have successfully contributed to 10 minutes of work on a packing plant line. 48 herds to fill an 8 hour shift. 12,500 herds to fill an 8 hour shift 5 days a week, year round. It is unlikely that any single rancher, or even reasonably sized group of ranchers can enter the further processing sector or inject any reasonable level of competition. They can go around it with other products such as farm gate sales, but only to a limited extent.
It may be a subsidy, but to me, this is where governments, and ABP/CCA should play a role. I guess I am a Big C'er after all.

[olhoss]

<i>"It is unlikely that any single rancher, or even reasonably sized group of ranchers can enter the further processing sector or inject any reasonable level of competition."</i>

So the Pool and the rest of the leftists said about the inland terminal at Weyburn.

The Pool eventually built their own, but that had nothing to do with WIT. lol

[cowman]

Maybe it is time for a bit of a reality check before we go down the road of more "producer plants"?
With the expansion of Tyson/IBP Brooks and Cargill High River, we have the capacity to kill just about every animal in the west? Don't think capacity was ever a problem down east.
Add to that two new Sunterra plants, the Salmon Arm cow plant, and maybe a couple of other large plants and the fact that live cattle are moving south again...and there really is no more room for additional packers? There really isn't.
IBP has been killing large numbers of cows the last few weeks, Moose Jaw used to be a big cow plant...don't know if they are back at it again or not?
When the border opens to cows/cow beef I would suggest some of our present packers might be scrambling to fill their lines?
Who will survive if we suddenly find ourselves in a under supply situation? Well I guess we all would concede Cargill will? And IBP? And probably Sunterra...Price is pretty sharp? So who is left, to go broke? XL, Salmon Arm, Spruce Grove?
It is always nice to dream of playing in the big leagues, but usually that is all it is...a costly dream.

[cowman]

In regards to Jack Daines.
The Daines family are definitely in business and are definitely "right wingers"! As a family corporation they own casinos, retail stores, auction mart, apartments, a real estate firm, oil interests, rodeo grounds,a large farm and run close to 500 cows. I think they have always served on the local Conservative boards and donated lots of time and money to several charities. One wing in the local hospital was built from a fund devoted to Jacks father.
Every last one of them is outspoken and not bashful to tell it like it is!
They were pioneers in this area and to a man the older generation went to Europe to fight the bloody wars of WWII.
We need more people in this country with the entrepreneur spirit that the Daines family has. By the way they are Welshmen!

[cowman]

cowman, you are 100% correct. The Daines family has paid their dues to their community and to the province. Jack is outspoken, but has certainly weathered more than one storm himself. There are families like them in every community, although not as many have such a high profile.