Did anyone read...

[kato]

the article in this month's Cattlemen magazine about how cattle prices behaved at the end of the past four recessions?

They pretty much doubled.

That got me thinking. The way I see it, since 2003, just about everything about our cattle business that we thought would never possibly happen in a million years has happened. And some things that we didn't even consider possible since they were so far out in left field have happened too.

So why can't we double our prices in the next couple of years? The pieces are starting to fall in place now. Numbers are dropping off in both Canada and the U.S. Apparently even Argentina has become a net importer of beef! (That's another thing that would never happen, but did anyway.) Pigs are disappearing as fast as cattle, and they have a much shorter cycle than we do, which means pork prices should jump even quicker than beef, which means beef starts looking better to the consumer. The bloom is coming off the love affair with corn based ethanol. Corn acres in the States have come in higher than expected. The dollar did not reach par yet, even though the so called experts said it would by now. (We'll have to keep our fingers crossed on this one!!!)

So what's left to complete this picture? Consumer demand for beef. I'm going out on a limb here and I'm going to predict good times ahead for those of us too stubborn to give up during the terrible times we've been living through.

How does two dollar calves sound? Sounds good to me. Just keep your eye on the general state of the economy, and when it starts to come out of it's slump, then hold on to your cowboy hats.

I just thought it was time for a little optimism around here....... ;-)

[grassfarmer]

That would be nice Kato - but $2 a pound wouldn't really be unheard of riches it is just about where we should be adjusted for inflation remember!
The other question I have is when will we come out of this recession? two years might be very optimistic thinking.
But hey, I like optimism. We certainly need something to dream about just now.

[kato]

I remember all four previous recessions. One thing they also had in common was that we did not know they were over at the time they were actually over. It was only in looking back after the fact that we could see the turnaround. The cattle markets seem to be the same in that regard.

With the first recession, I was just out of school, so didn't personally experience the cattle market, but I remember that one of my good friends' uncles had gone broke in cattle at the beginning of it. When the turnaround came that time I had a horse I had bought for a hundred dollars, and then sold her three months later for $350.00, so I can vouch for the horse market anyway. I think the cattle behaved in much the same way if I recall correctly.

After the second downturn I remember that we had a few calves, (by a few, I mean about a dozen LOL) we had bought for about 35 cents a pound. We sold them for 85, and wished we had more. Of course we did! We had also bought some bred cows for $325, which had come with a load of hay to seal the deal. By the time we weaned their calves they were worth over $600. We paid the loan that fall. We had been told when we bought them that we'd never pay them off.

This turnaround will be best seen in hindsight too. But it will happen, of that there is no doubt.

[coppertop]

A friend of mine sold 960 lb steers for
98.75 and 900 lb steers for $1.01 this
morning on Team Auction so that isn't too
bad considering everything else that is
happening in the industry.
Think I'll give him a call and hit him up
for a loan !!!!!!!

[blackjack]

Kato thanks for the optimism.Though i feel fortunate compared to some of my friends in the industry that are struggling.i remember my father telling me you sure you want to be a rancher cause its not for the faint of heart.Now i no what he meant.Hopefully we get that general rain here in Alberta next week to take some stress off everybody.

[smcgrath76]

Saw those steers go through. That is
pretty good, especially considering the
volume this morning.
I think we may be at the point where
smaller, independently minded producers
need to form working groups that act large
(buy vaccines together, use similar
genetics, etc).

[per]

You are on to something there smcgrath.

[jensend]

i've thought for a while now that if cattlemen want anything to change we should be working with consumers, not others in the beef value chain. there aren't enough ranchers (fewer every week) to have any political pull but consumers can change things. their interests are more similar to ours than nilssons' or cargill's interests are. these beef industry umbrella groups certainly haven't worked for the cattle owners and the success of persistent direct marketers is evidence that consumers can be worked with instead of having packers/retailers sitting in the middle and controlling the food supply.

[smcgrath76]

I think that is where producers working
together can really do something. We
calve at different times, have different
feed resources, etc. a few working
together could have consistent product
ready to go year round and approach
consumers in a manner that offers more
support than one can do alone.

[grassfarmer]

I agree jensend - getting closer to consumers would be a smart idea.
I'm mystified by Sean's comment though
"independently minded producers"
and "form working groups" As far as I can see in the west these two statements are mutually exclusive. It just does not seem to be in the western mindset - "working together", "co-operating", "unions", "new-gen coops" are all dirty words in AB anyway. Producers fear making progress by these means because they will be deemed communists or lefties by the ultra-right extreme capitalist forces that rule currently.(That would be the corporations, not the politicians given that the latter are merely puppets of the former.)

[kato]

We haven't gotten into direct marketing beef, but I do sell produce direct at the local farmer's market. There's just no comparison between a tomato picked this morning and one picked green two weeks ago in California. People know it, and they appreciate it. In fact, one day last summer, when there weren't a lot of tomatoes out yet, I watched them fighting over it! It was a small tomato riot right in front of my table. Judging by what I hear at the market there is is huge desire in many consumers' minds to connect to the source of their food. (and a willingness to fight for it too! LOL)

We have a couple of people who do bring beef lamb and pork, and they have strong steady sales every week. I bought some pork chops from them last summer that were unlike anything I've had since the days we used to raise our own. I can see why they have regular customers, and until the day there is a pig on our farm again, they will have a regular customer in me.

I would think that all of us here use our own beef at home, so we really don't taste the store bought stuff often. We are spoiled. Spoiled rotten! LOL. I bet anyone who is used to the commodity beef would be amazed to taste the difference in the quality that can only come from properly hung and aged beef that the big plants just don't do.

It's an opportunity just waiting, and I agree completely that the consumer is the key to changing the way things are done in the beef business.

[grassfarmer]

Kato, although we like our direct retailing beef operation and are growing it more than 50% every year with very little marketing effort I don't believe this can be the salvation of the whole beef industry. Although more people every day are getting particular about the food they eat the majority still buy their beef in a supermarket and I don't see that changing.
What I meant about working more with consumers was in an educational role. I think we as producers should be standing outside supermarkets handing out fliers that detail where the retail beef dollar goes - how much the producer gets versus the packer or retailer. This way we can hopefully get the consumer to start asking their politicians why they allow corporate concentration and captive supply practices to keep producers poor yet the price of beef in the store relatively high. This would have to be organized and done carefully - we do not want the consumer demanding the store price of beef be dramatically lower! However I think this gives producers the greatest chance of influencing politicians - if we have the public on our side we have critical mass and that is what we need - votes count to politicians more than anything else.

[jensend]

try telling consumers that a producer couldn't have his slaughter animals tested for bse if he wanted to and see the reaction. if consumers realized that producers are more concerned about food safety and quality than processors, retailers or the government you might see some action. throw in the fact that the market is dysfunctional to the disadvantage of producers and consumers.

[perfecho]

Agree totally that the biggest “restriction “in agriculture is the lack of consumer education....from the farmers perspective....and that is our fault.
Consumers (tax payers) hear from politicians how "farmers are being taken care of" and believe it to be so. Consumers see food prices continually climbing in retail stores and cannot believe that commodities such as beef is worth less at the farm gate than it was 10 yrs ago. In the last 30-40 years, fewer people have "farm relatives", and rural issues are only amongst the farm community, not the status quo consumer. Years ago, everyone was involved, everyone knew the plights of the farm community because most had a farming grandparent or close relative.
I have maintained and still do, that if we want a successful processing plant to compete with the major(s), the consumer should own it along with the producers, not just the producers. To me, this would have the buy in that would force retail outlets to carry the product as well as having buy in when majors started a price war on the retail sale price or cattle bidding at the other end.
So, when do we start educating the consumers about the struggle of the ag industry? I would rather spend my check off dollars on this issue!

[per]

We could encourage our sons and daughters to marry city kids and start rebuilding the connection. You are right on the money with your comments perfecho. Everyone that eats is involved in Agriculture and it is up to us to let them know that they are our partners.