Whining again!

[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!

[smcgrath76]

FS...
I agree with your logic. I noted that this referred to the primary producer, not the processor.
As there is limited competition in the Canadian marketplace for feeder cattle (LOL), and there are thousands of producers, and some are even willing to sell below cost, how these buyers source cattle has now become a perfectly competitive situation amongst sellers. If I offer X $ someone will sell (or will have to sell), so I have no need to offer more. I know that they do not have the luxury of shopping around for a better deal, so therefore the lowest cost wins as being the most profitable (or smallest loser).

I know it is not an easy sell, but we are currently working through a variety of options to pull our operation out of this cycle, and go around the captive market. It is easier said than done, but for us it is a path we think we need to take.

I think several posters on this board have some great ideas (and implementations) of how to do this as well.

[cowman]

The problem with assuming the lowest cost producer will win is this: Cattle are raised for a variety of reasons...not all of them make sense from a purely business perspective?
Sometimes I wonder if it isn't more like raising tropical fish or something! LOL
The absolute best, low cost producer, may not be able to compete with the guy who is using the ranch as a tax writeoff against other business interests?
How many people will live like dogs so they can play "cowboy"?
I applaud the people who are innovative enough to get into the value chain and become butchers, wholesalers, retailers? I guess I have to ask though...when do they no longer become farmers?

[BFW]

Cowman, I understand the intent of your statement on the effects of outside money on ranching and on agriculture in general. However, to qualify for the tax exemptions or the ability to defer agricultural income from one year to the next ones main source of income needs to be made from agriculture. If this is indeed occurring as you suggest, I would like to know how so as to take advantage of it myself.

[cswilson]

BFW I'm biting my tongue here-just ranch till you need glasses I guess.

[BFW]

Cswilson, I guess I'm a little thick as I don't know what you are getting at with that statement. All I'm saying is that I don't know of a legal way for someone outside of the agricultural industry to reduce their tax position by buying a few cows or yearlings. It is more likely a case of these people dabbling in the cattle industry for a hobby or show than as an actual investment. I think you may have misunderstood my comment.