Whining again!

[cowman]

Searching through some manifests yesterday for the brand of a cow who was taking the MacDonalds special, I came across an invoice from my local auction mart for 2000?
Steers calves-676 lbs.@$1.3950....$943
Hfr calves-635 lbs. @$1.32......$838

Now on Monday I'd stopped in at the mart to watch the presort? Didn't stay all that long. I saw a good group of about 40 head of steers(638 lbs) sell for 98 cents! Pretty dismal?
In 2000 I also bought a new 3/4 ton 4X4? Now it is getting a little long in the tooth and I've been shopping around a bit for a new one. If memory serves me correctly I paid $35,000 for that truck...I'm pretty sure I won't be buying one for that price in 2006?
Now I don't believe I run cows much cheaper than I did in 2000...but I ran them pretty tough then, and I still do! I suspect my cow costs are cheaper than most people?
Now the price I got for a steer in 2000 would be about $280 more than I get for one in 2006! HMMMM...Maybe I should be whining? Takes a lot more steers to buy that old pickup this year!

[coppertop]

cowman, cost for power, taxes, fuel, machinery, repairs, service services such as mechanics, plumbers. electricians etc., have all increased significantly. Not much wonder that many farmers are working off farm to bring in enough to keep the bills paid and the operation going. I just replaced the final stock waterer in the past two and a half years, the new one is the exact same model and brand as the other two, but the cost has increased by almost $50.00.

[blackjack]

...hey cowman...with the govt and the cattle associations promoting the back to the horse and buggy days for all of us cow- calf boys ...i wonder if the city of red deer will allow us to tie our team up at walmart...or better yet wheel get the govt to build a walmart every 6 miles like the good old days with the old elevator system...then we could all walk and everybody would save money on health care...doesn't it almost sound like heaven...

[whiteface]

I like your "whining" cowman! I'll miss it if/when this site goes bust. You going to leave me a way to contact you when I can't visit with you here? Leave your number with Barb at the auction mart or something cleaver like that? Let me know.
Have a good day all!

[coppertop]

blackjack, I bet if you researched the Red Deer city archives there is likely still a policy on the books regarding tying up horse and buggies in the city !!!!!

[cowman]

The whole point I was trying to make was this: No matter how cheap we can raise them...the fact is...WE JUST AREN"T GETTING ENOUGH FOR THESE CATTLE?
Now I know how the market works and I know there are ups and downs. But the fact is this: To stay in business...and for a meaningful progression of that business to continue...there just has to be a decent return?
You don't owe anything...great! You want to do "voodoo economics" so you can justify your life long dream to raise cows...great! But bottom line is someday...someone has to do the math and realize...Hey! This doesn't make one hell of a lot of sense?
You may be in it for the lifestyle....will your children? Well maybe...if they aren't too bright...like the old man?

[smcgrath76]

While I have some personal thoughts about the market at the moment, I think long term we have to realize that to play in the cattle commodity game in a perfectly competitive marketplace (from a primary producer perspective not a processing one), the law of diminishing returns prevails.
In commodity production, he with the lowest cost wins. Commodity production will tend to consistently drive down margins.
The question is probably how to get past the cattle thing and extract the value from the product. Easier said than done though.

[grassfarmer]

Cowman, to your original post I don't mind you whining or complaining about the price of calves. I do wish you would get past this navel gazing, look at the reasons and try and move ahead with some solutions.
As I've shown you many times the problems we face are caused by lack of competition, or monopolies, dominating every other link in the cattle production chain. The bankers, fuel and oil suppliers, machinery, transport, processing and retailing links are all dominated by a few huge corporations. This is the root cause of our problem. Yet you come on here saying calf prices are too low yet argue that Cargill or Tyson can do no wrong they are just good business men who are super efficient. That is total BS - when you are in a market dominant position you do not need to be terribly efficient to survive - unlike ranchers and farmers where it is critical to their survival. The other advantage these type of corporations have is they can externalise their costs - if they want a new or expanded packing plant the Government will use taxpayers money to fund it. Producers do not have this option - if they want a plant they have to build it, and pay for it - they have to internalise their costs.
Calves are a poor price now because grain prices have risen? well not really, by the time a fat steer hits the retail counter he is probably going to gross $2500. There is plenty money there to provide a viable return to all sectors of the production chain. Because of market domination and price fixing the packers can set the price at around 82 cents/lb meaning $1000-$1100 per animal is the total return for land costs, capital investment,labour,breeding, feeding and producing the beef. The price squeeze this produces has resulted in the feedlot industry working on $20 or less margins which they are now trying to pass onto the cow calf/producer. With the investment we have in land we can not operate on $20 margins. I don't blame the feedlot guys or the grain growers they operate under the same squeeze we do. The problem lies because the processor/retailer level are taking probably $500 an animal more than they need to make money.
Until you accept that fact and try and change things "whining" about low calf prices relative to new truck costs will be your lot.
If you understand the monopoly price squeeze concept you would also understand that your new truck or tractor isn't necessarily priced at a "fair" value either - they are artificially priced to reflect the lack of competition and price fixing in the machinery sector.

[ivbinconned]

No new trucks around here. Since grain and calf prices are about where they were in the 70's I drive an 1982 truck...mint condition mind you.

Around here in 72 a new truck and a quarter of land were about the same price...just like they are today.

But I would bet the value of a quarter in most of Alberta is far higher than that new truck!

[Horse]

I was seriously thinking of buying some cows again[must have fallen on my head again] I saw good older cows sell for app $35/# and run it through the calculator and decided the best I could hope for was a unpaid job so how do people figure when they pay 8/10,hundred for cows I must need a new calculator or something.

[blackjack]

ivbinc...your assumption is totally correct...the price in the land has tripled in the past 10 years...i could be wrong but i do not foresee a lot of younger ranchers taking up the slack here in alberta...and yes us albertans do not have much to complain about when it comes down to increased capital...but when you talk to some of the oldtimers that could buy a truck with cash after selling the calves...seems to me they obviously made some real cash... by the way cowman i do agree with you...and my point is that i see the cow-calf man regressing instead of progressing...and the day i have to go back to the pitchfork will be the day i retire...i wonder if cor van raay will feed all his cattle with the pail and chop...

[farmers_son]

Interesting thread…..

I noted smcgrath76’s comments. It could be that “cattle commodity game in a perfectly competitive marketplace” does not accurately describe the cattle industry in North America. It could be that we have not been operating in a perfectly or even a nearly perfect competitive marketplace as commodity cattle producers in Canada and the United States.

Instead I would suggest the North American primary cattle producer and the margin operators such as the backgrounders and feedlots have been operating in a protected economic environment designed to provide domestic producers with sufficient competitive advantage to maintain a viable beef production system that nearly meets the derived demand of the North American consumer.

What competitive advantage primary producers enjoy, and the resulting economic environment that allows us to extract what profit we can from the marketplace is achieved within North America through government interference in the market. Examples of governments providing a competitive advantage for primary cattle producers within North America include a wide range of tariffs and restrictions on imports of beef into North America, sources of very low cost grazing for cattle, direct subsidies in times of reduced incomes (not only to producers but further along the value chain as well), subsidized grain and feed production, government subsidized veterinary colleges, legislation regulating competition and so forth. A new competitive tool government presently has in the works, soon to be implemented in the U.S. for its producers: MCOOL.

In the past decades the method most often employed by the primary producer to influence the amount of competitive advantage governments provided domestic producers was whining. Prior to the last decade, whining was used with some considerable success by producers on both sided of the 49th parallel to garner sufficient returns from the marketplace to ensure at least their survival if not profitability. Today we continue to see whining being used successfully in the United States by R-Calf for want of a better example. And it is my impression that the cattle industry in the U.S., certainly the primary cow calf producer has enjoyed a period of considerable prosperity in the last years albeit at the expense of their Canadian counterpart.

In think what we Canadian cow calf producers are seeing happening at present is a deliberate shift, initiated by the U.S. government on behalf of their producers but the with the tacit if not explicit agreement and cooperation of the Canadian government; a shift in competitive advantage from Canadian cow calf producer to the producer in the United States. I think we are seeing a very deliberate and thought out effort to throttle down the Canadian cow calf industry which was enjoying too much competitive advantage vis a vis their U.S. counterpart, mostly as a result of the loss of the Crow Rate. The removal of the Crow Rate cause an expansion of the cattle industry within Canada at the same time as the U.S. herd was shrinking. Obviously this was politically untenable and we as Canadian cattle producers are presently experiencing some adjustment pains as that inequity is corrected. The government giveth and the government taketh away.

Cowman’s comparisons of the price ratio of a calf versus the price of a new pickup would not be comparable between Canada and the United States as the U.S. producer continues to enjoy profitability if not the record profits of the past few years. I tend to agree with Grassfarmers comments but would point out that we cannot overlook the reality that what small competitive advantage we as primary producers enjoy or do not enjoy is very much influenced by government policy in both countries. The present cost price squeeze being uniquely felt by Canadian producers in recent years versus their U.S. counterparts is a direct result of government policy in both countries, not BSE. BSE was recognized early on as a North American problem. That the resulting hurt was felt mostly by Canadian producers is a matter of government policy both national and international.

It will take a great deal of whining on this side of the border to change the present direction of government policy regarding the cattle industry on the Canadian side of the North American cattle industry. It seems to me that our producers have become hoarse from past efforts to make their voices heard in the halls of government.

[cowman]

Several of the comments, to my post, were the best ones I've ever heard on Agri-ville in the several years I've been on here! Grassfarmer and Farmers son definitely win the prise! I actually expected some drivel about how I can screw my neighbor on hay or something! Or starve and abuse my cows...via some whacky new age idea?And while I have a really hard time knocking efficient business(Cargill/IBP)...come on these guys have to get real?...you got to share some of the wealth?
Of course that is not "modern business"? You look at quarterly results...and if that doesn't work...you walk! Too bad the dumb old farmer can't look at it that way?

[Horse]

On the news last night they said the bonuses some CEOs are getting and at the top was Precision Drilling at 74Mil$ some bank exec at 50 odd mill and Tyson Family share holders got something like a 200 mill payment.
I wonder how the class B shareholders made out.

[cowman]

I would also point out farmers sons' contention that the end of the CROW was the start of a bad situation? Before they killed the CROW Canada was a net importer of beef.
The end of the CROW, along with the unwillingness of the federal government to fight the grain wars, put the western grainfarmer in a tough position? The fact is the export grain business just didn't cut it. About the only option was to diversify into livestock production?...especially when value added was being thwarted by the CWB!
Perhaps if this ethanol/biodeisel thing really takes off it will allow more income from grains and oilseeds and we will see a reduction in cattle and hog numbers? This hopefully would get us back into a situation where we are not dependent on exports?
I do think that if our federal government had stood up for agriculture more we would have a much more stable rural area than at present? And I don't think we would be an industry composed of what is rapidly becoming a bunch of old men!