calf prices?

[cowman]

Was reading a little blurb in one of the local papers where some agricultural expert said everything looked rosy for the cow/calf producer for the next couple of years with a strong profit potential?
Now I wonder if that is true? And what is a strong profit potential? Does that mean better than what a grainfarmer gets...because frankly working at MacDonalds might be a "strong profit potential" compared to raising grain this year!
Now I will admit calves at $800 off the cow sounds fairly good, but is it really? I mean we were doing that good in 1992! In the meantime practically everything else has been going up?
Consider this: If our costs, however you want to juggle it, are $500/cow then $800 return is a net of $300/calf? On a 150 cow herd that is like a net befor tax income of $45,000? Is that enough?
It might sound like a living wage...until something like the engine or transmission pack it in on the tractor or something! Real quick it is Kraft dinner and weiners for the year!
Now I don't think it is such a problem for us older types but that sure must be tough for a young family trying to get established and raising the kids?

[cowman]

or for multigeneration operatations where two or more families are trying to make a living.
Case in point are the two feedlots near here, both of which have large cow/calf operations as well.
One is a dad who is in his early fifties and his two sons that are just getting married.
The other is Dad, son and grandson...and grandson is just graduating from Olds College and rather than want to go to work for John Deere or some other company he just wants to get more cattle, enlarge the feedlot and get busy farming with Dad and Granpa !!! It would be nice if these young folks could realize a decent living in the indsutry because God knows those that really love the industry should be encouraged to hang in there.

[rookie]

I am hesitant to throw 2 cents in but it does seem that the young ones all gung ho are the ones thast are part of an established system more often than not.

I hope prices stay up for a and go up for a few years because frankly I am not so gung ho any more, not to mention part of a family or group farm. It is tough to justify the lack of return anymore...

I feel there is too much emphasis on the producer, and not enough on the big picture.

[rookie]

rookie your 2 cents worth are as important to the topic as any. I realize how disheartened producers are getting, hopefully there will be a light at the end of the tunnel in the agriculture industry.

[PureCountry]

I hear you cowman about the engine or tranny going and setting you back. That's happened to me before where you think you've got your head above the water and then you get shoved back under.

AND, that is why we don't have a tractor, swather, combine, blah, blah, blah...just an '84 Chevy one ton with a Jiffy bale handler. Less iron, less debt, less risk. Yeah, yeah, it's not for everyone, but it works for me.

[Cattleman]

Its a tough go of it foresure, and with the problems everyone has been pointing out, no one has even questioned the $800 bucks a calf cowman started with!! I am pretty skeptical of of $800...maybe for the good steers, but what about the heifers and the dogs of the group. $800 I doubt will be the average. The high Canadian dollar, and a possible softening in the US market, and the real wide basis on heifers, I don't see much more than a break even year, especially with these low cull cow prices.
My two cents anyway, sorry to rain on the parade.

[smcgrath76]

I think that is a pretty crappy return.
150 cows at $1000 is a $150000 investment. That should automatically return $15,000 just investing the cash at 10%. How much more do you have invested in land, equipment, labour, etc. A 150 cow operation is likely an investment of over 1,000,000. Even a 7% return is $70,000.
I know we don't do anywhere near 10% on our asset base at home (if valued at current market), but we are working on it. A multi-million dollar business should probably, pay $45,000 a year wages AND generate a return on investment.
Basically the only direction I see as a young producer is:
More cows / less labour
Control input and land costs (lease land vs. own)
Work on marketing
We are really struggling with how to make a farm profitable, pay for retirement and pay for a young family or two to live without working ourselves to death. We need to live and have a life so to speak.
Not easy. A lot of friends my age are using cows, and a job to subsidize inflated land prices with the idea that they are only in business to build equity. Read cash loss, real estate gain.

[Rodjam]

Well smcgrath76 the last part of your post sums it up for me. I bought my first and probably only quarter 2 years ago and work full time off the farm to pay for this farming habit. Maybe one day I can grow it to a full time thing, hey I might even have it paid off in time to retire if I am lucky.

[cowman]

I think you have stated the problem very well, Sean. The high price of owned land in Alberta makes it very difficult to turn a profit? Leasing land comes with its own set of problems and requires the ability to be flexible and be a good salesman! The ability to sell yourself to a landlord and keep him happy?
As far as inputs go and keeping costs down that is the age old struggle of any business? Right now I would suggest one of the toughest input costs is replacements, whether you grow your own or buy them in? The price recieved for culls makes the spread hard to justify? We really do need to get more for our cull cows and bulls in comparison to what it costs to replace them?
And finally ...more cows, less work! Some of these new winter feeding systems will definitely help, but still there is a limit in what one or two people can do? There are only so many hours in the day?
As Pure country says, more iron costs more money. More repair costs, more operating costs, more debt servicing? We all have to decide how comfortable we are with that and hit an area we can live with?
And finally on the $800/calf thing? I agree that isn't a real number. There are the tail enders that might require some time and money to reach that goal and the heifer discount seems to be getting worse each year...especially with the added costs for cattle going south. And I did not take into account open cows or dead calves. I just put that number up as a possibility?