How To Beat Cool and Make $200 More Per Calf.

[farmers_son]

500-600 pound feeder steers traded for $1.00-$1.14 in Lewistown Montana last week. The Canadian dollar closed at 78 cents yesterday. That makes that 600 pound steer in Montana that is worth US$1.10 a pound worth $1.41 Canadian or $846 in our dollars. The same steer would have brought $1.10 Canadian a pound or $660 Canadian in a central Alberta auction last week. That amounts to $186 Canadian more for the U.S. steer sold in Lewistown Montana than for the steer calf born in Canada and sold in Red Deer Alberta.

There is simply no way the Canadian cow calf industry can survive any length of time if we are getting nearly $200 less for a calf than the Americans. That is truly uncompetitive. I cannot survive producing calves if I am getting $200 less than my American neighbour. Our federal government shows no appetite to do anything about COOL so I might have to do something about it myself.

So what can we do about it? I checked Google Maps and see it is 520 kms from Ponoka to the U.S. border. That is not all that far. Six hours on a cattle liner. It occurred to me that the only difference between the steer in Lewistown and the steer in Red Deer (other than it is worth about $200 more) is where it hit the ground at calving time.

It certainly looks to me like there is an opportunity, even a necessity, to haul pregnant cows to the U.S to calve, leave the cows there long enough to early wean and then bring the girls back home leaving baby behind to be born, feed and slaughtered in the United States. Sure it would cost some money to do that but if we can get $850 for a weaned calf it should pencil out. I might have to brand my cows CAN but that would only have to be done once and they could go back and forth to the U.S. to calf every year.

It is simply a value added opportunity.

[grassfarmer]

Come now farmers_son you've got to be pulling our leg?? I certainly hope so - because that's a pretty crazy idea.
I don't know if you are suggesting it as a personal survival strategy or one for the whole Canadian cow herd but either way it isn't really what you could call a viable, sustainable system to build your future on is it?
How much surplus summer grass do they have in Montana? - not much I would suggest.
How do you think R-Calf would react to an influx of Canadian cows into their backyard?
How do you think the new Democrat administration would react to this blatant attempt to circumvent their new protectionist policy of COOL?
It must be one of the craziest things I've ever heard voiced as a "solution".
Perhaps worst of all it's based on the continued wrong headed thinking that the US is our only viable market.
I raised in an earlier post when you were beating up the feedlots for making too much money (potentially $100 a head more than you thought they are entitled to)why not look into the packer/ retailer profiteering end. If you do you will see that there is a lot more than even your $200 a head extra (which would actually be $200 less expenses)to be made by producers - right here in Alberta, without sending cows into R-Calf country and sparking another cross border beef war with a bully we can't beat.
I suggest that you devote some time to reading the NFU document mentioned on a recent post. An intelligent and articulate man like yourself must have some view point on the truths contained therein.
A little taster is the data showing that the average price of fed cattle in Canada throughout the long period 1947-1989, adjusted for inflation, was $174 cwt. And you are real happy with $95 cwt today and are trying to beat up the feedlots to send you a few more table scraps? It is time for producers to quit fighting over the scraps and get up onto the table and share in the meal.

[Willowcreek]

Actually years ago- when NAFTA first came to be- I know of some that were planning on doing the opposite- and summer pasturing cattle in neighboring pastures in Canada- then feeding the weaned calves in Canadian feedlots...Until they ran head on into the Saskatchewan rules that don't allow foreign ownership without having a Canadian partner owning 51% of the operation- and then the Canadian producers set the precedent when they decided that there were two distinct separate herds and "all US cattle were diseased" and the regulations were put on cross border northern movement..

I personally don't think M-COOL would have ever come to light or even exist today and the cattle herds and industry would have been integrated between the two countries if these roadblocks had not been put in place so that trade could have gone both directions..

[grassfarmer]

So I take it you won't be renting pasture to farmers_son to graze his Canuckian cows on?

[farmers_son]

Now, now Willowcreek...you know that hundreds of thousands of Montana feeders were coming up to Alberta to be fed before BSE. And I have never understood Montana's devotion to closing the border when it was so obviously in their advantage to ship their steers North.

Grassfarmer…I do raise cattle for a living so my sanity is always open to question. What is crazy is to sit on our behinds and wait for the government to save us. Mr. Groeneveld, here is the one finger salute to you. There are opportunities south of the border. You and your Alberta disadvantage cannot make me do anything. I cannot afford to wait for a ALMS value chain to put any money in my pocket (as if that would ever happen) and I really do not think I can be regulated into profitability. If I can get over $850 for a weaned calf I have a profitable operation and $850 Canadian is only a few miles down the road with no mandatory anything. Why should we just go to Montana to buy our Ivomec, go to Montana to calve the cows. They can spend most of the year on our farm and only need to be in the U.S. to calve. Actually as I understand the rules, a calf born in the U.S. can come back into Canada over the summer and if it goes back into the States it is considered product of USA. So the cow needs to be only in Montana for a very short while.

Or better yet, why not just buy young bred cows here in Alberta to ship them to Montana to calf, wean the calf sell for $850 and sell the cow for whatever you can get (it will still be more than you could get in Canada) , not bring them home. You would be making nothing but money. And George Groeneveld cannot force you to do anything. Even better.

Crazy or not this shows the real cost of COOL and even figuring a normal negative basis Canadian producers are losing real money. If we were getting even $800 for a weaned calf it put a totally different outlook on things. COOL is an economic barrier determined by where the calf plops on the ground when it is born. You can calve in Alberta and look for George Groeneveld to save you or you can calve in the U.S. and cash your $850 calf cheque. You decide for yourself which is crazier.

[grassfarmer]

Farmers_Son says "Mr. Groeneveld, here is the one finger salute to you." There's the brave ABP type fighting talk coming out again, it's funny we didn't hear so much of it for a few weeks there when the Fall Producer Meetings were on - frightened the organisation might get it's levy funding challenged I guess.

Here is a thought f_s, you could always move to Montana. It's rather like the cwb bashers on the commodity forum that quote how sky high the grain prices always are on the US side of the line, and how low the inputs are. If it's so great there and so easy to make a living just move.
Suggesting that it would be feasable to send cows back and forth into a competitors country to get around their protectionist policies designed to keep our cattle out is just ridiculous.

[farmers_son]

Actually it is COOL that is ridiculous. Creating a non tariff trade barrier around where a calf hits the ground is pretty stupid.

You can send the wife out to get a job to save the farm or you can find ways to make your cattle operation pay. Actually my wife is already out working so can't do that again unless I get a second wife. (Not recommended).

And the U.S. is not a competitors market. It is part of the North American market, a NAFTA market, that is part of our market too. I am just saying we should go after what is ours. Our politicians are not looking after us but we can take matters into our own hands.

During the drought of 2002 people were hauling their cows 12 hours drive to find pasture and winter feed. If you live in Red Deer it is only 5 hours to Montana so it not that big of a deal. Even less if you live south of Calgary. If you could load the girls in a cattle liner and haul them 5 hours east or west and make $200 a head year after year you would do it in a instant. In fact you would have to be pretty complacent not to go after $850 a calf. The rules are in place to haul your cows five hours south and you can use COOL to your advantage.

But hey, if you think George is going to save you than just sit back and let that happen. You do not have to do anything. The Province is creating this new agency for the packers benefit and the packers are going to pass all those profits back to you. Aren't they? Maybe not.

We are going to have to look at doing things different if we are going to be around in five years. Calving in the U.S. will work and make me more money than any other single management change I could do. Cows will calve in Montana the same as Alberta only the calf that is born in Montana is worth $200 more. You do the math.

[BFW]

Why not just move the entire operation to the US and save alot of diesel fuel and messing around> Agreed, MCOOL is silly, but we've got it and it is here to stay it looks like.

[per]

You are an embarrassment to your ABP zone f_s, using that type of language about a Minister on a public forum while being a sitting delegate for the ABP. No wonder the ABP has lost its credibility.

[farmers_son]

Per... First you do not know me and for that matter I do not know you by name, only by your posts which are usually pretty good. I do belong to many organizations and it is none of your business which ones they are. You are assuming too much. My words here are my own and do not represent any organization.

For that matter I am on an old timers hockey team and if I post something here it is not the opinion of that team any more than any other team I might be on. I am entitled to an opinion as are you no matter who you are or how big or small your operation is or which organization or political party you associate with.

George Groeneveld is open to criticism as a Government Minister and the last time I checked it was still a free country. If George gets his way it will be less free.

BFW: COOL is here but we have to do something about it. I have grass and property in Alberta and I need to earn a return from that investment. The cattle are mobile.

In 2007 the Alberta feedlot sector fed quite a few calves in the U.S. and with success as the Alberta government fell all over themselves coughing up some more subsidy money even in the face of countervails. None of the Alberta feedlots moved their entire operation south, that I know of anyway, but they did take advantage of an opportunity to increase profits south of the border. There is nothing wrong with a cow calf producer taking note of what worked for feedlots and trying it for themselves.

Who knows, maybe it will spur some action from our government to do something to see Canada's cow calf sector from shrinking even more. As it is there does not seem to be much interest on the part of Provincial or Federal governments and it seems to be that the ALMS is an excuse to say the Province is doing something without actually doing anything other then add even more regulations and fines for the cow calf producer. No one is going to save my operation but myself.

[grassfarmer]

Farmers_son, you seem to be laboring under some delusions.
COOL may be ridiculous but it is also clearly a protectionist move, and a reality.
The US to all intents and purposes is a foreign and hostile country to Canadian beef imports. This is obvious from their activities since 2003. The shared "North American market" is packer speak - Canadian producers do not have free and open access to any such market.

I think you get confused sometimes as to who does what - accusing the current Provincial plan that might just create the opportunity for producers to break the packer deadlock and export beef off this continent as being for the packers benefit is nonsense.
Since 2003 who has backed the packers? who backed the cash advances to expand existing packer capacity rather than creating new capacity? -ABP. Who was delighted to back the dubious "not guilty" findings of the packer profiteering inquiry? - ABP Who fought to prevent packing plant start up plans that involved testing for BSE? -ABP. Who to this day vigorously campaigns for the right of the packers to manipulate fed cattle prices through their ownership of cattle? -ABP.

Your conclusion is right though - "We are going to have to look at doing things different if we are going to be around in five years." How about starting to learn where the money really goes in cattle production chain? If you read and understand the NFU document you would realise that you are aiming too low - treating the Cdn feedlot owner as the enemy for possibly (if they are very, very lucky) making $100 on a calf. Dreaming that you can pasture your cows in R-CALF country to qualify them as US beef and maybe get $850 for your calves. What about the $850 per fed animal that disappears between leaving the feedlot and hitting the store shelf?? Why doesn't that interest you as much?

[farmers_son]

I hope I have not given any impression that Alberta feedlots are "the enemy". In another post I tried to point out that there was money for the cow calf producer in retaining ownership of their calves. As BFW said, the market is what it is. But I need to make a dollar too.

In saying I could make pretty good money if I were to calve my cows on U.S. soil I am simply sticking with what I know best, primary production. There may very well be good money further up the value chain but I have no expertise in those areas.

The interesting thing about COOL is I can take my pregnant Canadian born cows into the U.S. and as long as I do not try to sell them there is no problem. The cows could calve and the calf is a U.S. citizen with all the benefits that brings. The cow comes back home to Canada the rest of the year. You just got to love it when you can beat the Americans at their own game.

I think it clearly illustrates two things... how stupid COOL is and how much COOL is costing cow calf producers in this country.

[wade]

I am wondering as to what the COOL label does or will look like in the grocery stores. Will it be a flag? Will it read "May or may not contain meat from CANADA, Argentina, ...? the same as peanut labels on everything now. Or will it even matter a year down the road or will some prefer Canadian or Argentina meat?

Oh, by the way, if you can make a dollar moving your cows back and forth, go for it!

[per]

Sorry to make assumptions f_s. I know that respect is an earned commodity and the our current Ag Minister has not earned yours. I do however think that more is accomplished with cooperation or at least conversation that is constructive rather than destructive. I am afraid that I am a failure at heeding my own advice as well. As far as your point with calving out in the US, it makes sense on many levels. It would work well if the rules don't keep changing to suit the winds of the day. My wife and I have looked at properties in the States but have yet to make the plunge because red flags keep popping up. If you are looking, the best production in relation to land prices is in upper New York State.

[grassfarmer]

And who for a minute thinks American ranchers led by R-Calf would allow this to happen?