Where am I thinking wrong?

[cowman]

In 1992 I sold 752 lb. steers, right off the cow, for $1.27/lb.? $955?
Today I have smaller steers, probably more than 100 lbs less(later calving/smaller genetics)...and they are worth...what? Maybe $1.06? $690? Is this progress?
In 1992 I bought a new Chevy half ton 4X4, all the bells and whistles for $19,000...what would it cost me today? I might suggest at least twice as much? In 1992 I needed about 20 steers to buy that pickup...today I need about 58 steer calves to buy that pickup! Is this progress?
Something sure as hell isn't working out here? I thought we were supposed to be moving forward in this world...not backwards?

[kpb]

yeah and I think prices will be lower again next year so you'd better pull in your belt a few notches, cowman.

On another thread where I was talking about losing money on my grass cattle this year, grassfarmer informed me that it was just fine with him to make $3,750 for backgrounding 100 steers. Now I don't think even that profit will be possible this year because I don't think prices will hold. But grassfarmer told me that because he spends next to no time feeding these steers and they are standing in their corrals (no land cost) he figured he was getting $100 an hour. Of course if they are standing in their pens, presumably these pens will have to be cleaned and maybe a few boogers will get sick or maybe even croak and then there is the minerals, etc. All costs not factored in.

But even if we assume he makes $3,750 or $100 an hour isn't the real point that the gross profit just won't cut it here? I mean it's great to say you're making $100 an hour but come on, if you have any kids or a life at all $3,750 goes nowhere. We can work out our per hour pay to make it look really fancy but it's gross pay that pays the bills.

If your gross pay won't buy the truck then you have two choices--don't buy the truck or work more hours at $100 per hour. If backgrounding 100 steers at $3,750 means you only work one hour every second day, then maybe you should background 1,000 so that your time is more occupied and you make $37500.

That's what we have generally done here--my wife and I used to run 425 cows by ourselves as well as backgrounding steers and grassing steers and heifers. We did this because we wanted a good gross return on our invested capital and, in a commodity-based business, the only way to achieve this is through maximizing numbers on the land base. A full-time ranching partnership can handle these numbers and, in fact, should handle them since, as grassfarmer pointed out, feeding does not take that much time and, after all, if you want a full-time wage you need to work full time.

When we were running these numbers we were working full time and earning, most years, a decent return on our land base and a darn good living. The rub is what I pointed out in the previous post--when you hit a bad year you lose a lot. If you have 1000 steers in the backgrounding lot and maybe grass 1000 more, most years you'll pay yourself a good wage and in the good years you'll do very well. In the bad years you will take a licking. That's just the nature of the business and you accept that as part of the deal.

The difference now, I think, over the previous years is that BSE has increased the risk level. Lots of us lost lots of equity during BSE and that was hard to take because it was not anticipated and could not be predicted based on where we were in the cycle or prevailing market conditions. What would happen to our U.S. market now if we found lots more BSE this year. Or if we happened to find it in a young steer?

The risk-reward level is hard to justify these days, when your equity can vanish in a day. It's not the dollars per hour that mean anything--it's the gross revenues versus risk taken. That level of risk has increased dramatically since BSE and that makes all the difference.

kpb

[grassfarmer]

Be fair kpb I wasn't saying that was my income for the year or anything - just that feeding 100 steers for 75 days to net $3750 was worthwhile in my eyes for spending an hour every 2nd day when I'm here anyway doing other things. I know you have vastly more knowledge and experience feeding and backgrounding cattle than me.

[kpb]

grassfarmer, I know that you have many aspects to your operation. My point in bringing up the backgrounding thing is that I don't think any of the traditional aspects of ranching will generate decent gross returns in this day regardless of their size. By decent I mean a good return on capital invested with a reasonable risk-reward profile. I mean we've talked about calf production which several people have pointed out is the pits right now. I showed you the numbers on grass calves and we've just talked about backgrounding. About the only thing left is feeding which I can assure you is marginal.

I like your idea of selling privately and selling grass-fed beef. Traditional ranching is in difficulty for the reasons I discussed above and the risk-reward ratio is poor. If anyone wants to be a traditional rancher they need a big base of cheap land and lots of cows. Otherwise I think you have to go to direct marketing of cheaply-produced beef.

kpb

[whiteface]

Cowman, your thinking is anything but wrong. I've always thought of you probably one of the most sane thinkers on this board. It is simply that people want trucks more than they want calves and the price of the truck goes up, along with the little piece of dirt to drive it on. Trucks are up, cows are down. I would suggest you purchase that Innisfail truck ranch for a profit minded business or if you need to stay in cattle of some sort, try and pick up the "mad butcher" along with that property. Ron has got an awfully strong following and thriving business (no farmers of course but the rest of the crowd that has the cash to buy the meat that he steals...
TYPICAL PACKER! Rob from the poor and give to the rich! Do these city folk have any idea how much he's profiting off the backs of the producers!!!!!
Only thing wrong with this picture cowman is that you and I still want these cows even though a continually shrinking majority does! Have a good day, enjoy those cows, I do!

[mb_rancher]

Ive got a suggestion for all of you that keep whining about the price of calves. Heres one suggestion- nobody has a gun pointed to your head making you raise cattle. Those of us who make a living out of raising cattle will keep doing it like we have for the last 50 years or more.

[kpb]

mb rancher, as one who has seen numerous changes while making a living from cattle for half my life, I have no doubt whatsoever, mb rancher, that you will continue to do things the exact same way they've been done for the last 50 years.

kpb

[cswilson]

One thing you can say about Agriville.com is misery does love company-tears and whine never grew much grass on any ranch I've been on.

[kpb]

and doing things the same way for the next 50 years that we've been doing for the last 50 is a sure route to success.

kpb

[mb_rancher]

Gonna have to break out a case full of crackers to go with the "whine" around this forum.....

[whiteface]

You know, mb, some of us may whine about how cattle don't make any money in this area of the world, but if you were to place a mirror on your computer screen, I hear some similar sounds comeing from Manitoba about "our" whining. Same shit, different pile.
It likely is possible to make money in cattle when you live where there is absolutly zero competition for land, the cattle and the nomads that go with them. I'm going to guess that the nearest town to which you live has a higher population of cows than people. Just a guess.
Incidentally, I didn't see a whole wack of reasoning or solutions comeing from you as far as what, how or why people should and do make thier living off their cattle...
which is what you insinuate this forums only existance should be for.
Only that you don't care for the "whining."
Randy doesn't care for it either and spinning his tires or not with make a solution to the problem his life cause, hence the long list of potential solutions in another thread. That I admire, even though not necessarily agree will work.
I still hold, no statue has ever been erected for anyone who ever followed the rules or the status quo. If you need a statue, go at her! I don't.
You know that same gun ain't pointed at your head either makeing you READ MY whines but whatever, I'm glad you do and I'm glad for your input, really, I am, and that you are a die-hard raising cattle because I don't either plan to give them up any time soon and if there were quite a few less of people like you, the price of keeping them would go up even higher (to buy them I mean) to provide them to psycos like me who have them for my own reasons as well that don't necessarily involve cold hard cash. Thanks for reading, have a good day all!

[kpb]

mb, keep doing things the same way for the next 50 years that you have for the last 50 and you'll still be just eating crackers. Me, I prefer something a little better than crackers to eat.

kpb

[mb_rancher]

kph,

BTW Im not raising cattle the same way I was 50 years ago but the money is still pretty good.

[whiteface]

kpb, there's the solution right there, although you are nobodys fool and have already seen it! Must move to Manitoba! Sell all your overpriced land and buy an entire province for yourself along with the cattle and obviously sound, money making management already in place! Your kids would have to give up hockey though (no teams in them thar parts!) and your spouse (and yourself!), a life, but cattle could once again take priortity and profit to new heights!
What a beautiful, completely unrealistic dream!
I say cash out now and move to the bahamas with a sweet little coconut drink and the sounds of the waves gently caressing the shoreline.
Beats the sound of bawling cows, tenants hard luck phone calls or whiners on Agri-ville any day. Laugh at my tongue-in-cheek-post, it was written to add humor to all y'alls day not discredit or critisize. Have a good day all! I mean that sincerely!