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HDRider

HDRider

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Know how much profit you make per head.

Gains in cash cattle prices did not translate into higher profits for feedyards last week. Cattle traded at $116, about $1 higher, but feedyard margins declined $35 per head to a modest average profit of $24, according to the Sterling Beef Profit Tracker. The decline was due to higher feeder cattle prices calculated against last week's closeouts.

Packer margins also slipped modestly, but packer profits still totaled an average of $363 per head. The packer/feeder margins spread was $339, about $1 higher than the previous week.

A year ago cattle feeders found profits of $39 per head on closeouts the third week in November, while packers saw profits of $224, for a spread of $185.

https://www.drovers.com/article/profit-tracker-feedyard-packer-margins-slip-lower

https://cdn.farmjournal.com/s3fs-public/inline-files/Beef%20tracker%20112619.pdf
 
Think about that $363. That is done with proper accounting.

That $363 is after all capital expenses and depreciation, after operating expenses, after taxes, after salaries, wages, insurance, and benefits.

On a gross profit basis, that $363 is closer to $500 profit per head.
 
HDRider said:
Think about that $363. That is done with proper accounting.

That $363 is after all capital expenses and depreciation, after operating expenses, after taxes, after salaries, wages, insurance, and benefits.

On a gross profit basis, that $363 is closer to $500 profit per head.
Click to expand...

There is such a disparity between the producer and feeder on one end and the packer on the other. Having said that, isn't that the way Capitalism is suppose to work? You prosper if "you can" and you go out of business if "you can't".
 
I have to say, this is the only value chain I have experienced where a necessary link is run as a not for profit.
 
HDRider said:
I have to say, this is the only value chain I have experienced where a necessary link is run as a not for profit.
Click to expand...

That is because in most cases nonprofit components eventually disappear. That is why industrial America vanished.
 
Bright Raven said:
HDRider said:
Think about that $363. That is done with proper accounting.

That $363 is after all capital expenses and depreciation, after operating expenses, after taxes, after salaries, wages, insurance, and benefits.

On a gross profit basis, that $363 is closer to $500 profit per head.
Click to expand...

There is such a disparity between the producer and feeder on one end and the packer on the other. Having said that, isn't that the way Capitalism is suppose to work? You prosper if "you can" and you go out of business if "you can't".
Click to expand...

It is a distorted form of capitalism. It is distorted by government rules and regulations. Some of those regulations have their intended consequences, and some have negative, unintended consequences.
 
HDRider said:
Bright Raven said:
HDRider said:
Think about that $363. That is done with proper accounting.

That $363 is after all capital expenses and depreciation, after operating expenses, after taxes, after salaries, wages, insurance, and benefits.

On a gross profit basis, that $363 is closer to $500 profit per head.
Click to expand...

There is such a disparity between the producer and feeder on one end and the packer on the other. Having said that, isn't that the way Capitalism is suppose to work? You prosper if "you can" and you go out of business if "you can't".
Click to expand...

It is a distorted form of capitalism. It is distorted by government rules and regulations. Some of those regulations have their intended consequences, and some have negative, unintended consequences.
Click to expand...

There are lots of historical parallels in other businesses.
 
Bright Raven said:
HDRider said:
I have to say, this is the only value chain I have experienced where a necessary link is run as a not for profit.
Click to expand...

That is because in most cases nonprofit components eventually disappear. That is why industrial America vanished.
Click to expand...

Here, in this business model, American producer are being replaced by low cost foreign producers, like we saw in manufacturing.
 
HDRider said:
Bright Raven said:
HDRider said:
I have to say, this is the only value chain I have experienced where a necessary link is run as a not for profit.
Click to expand...

That is because in most cases nonprofit components eventually disappear. That is why industrial America vanished.
Click to expand...

Here, in this business model, American producer are being replaced by low cost foreign producers, like we saw in manufacturing.
Click to expand...

Yes. Exactly.
 
Bright Raven said:
HDRider said:
Bright Raven said:
There is such a disparity between the producer and feeder on one end and the packer on the other. Having said that, isn't that the way Capitalism is suppose to work? You prosper if "you can" and you go out of business if "you can't".
Click to expand...

It is a distorted form of capitalism. It is distorted by government rules and regulations. Some of those regulations have their intended consequences, and some have negative, unintended consequences.
Click to expand...

There are lots of historical parallels in other businesses.
Click to expand...

Such as?
 
HDRider said:
Bright Raven said:
HDRider said:
It is a distorted form of capitalism. It is distorted by government rules and regulations. Some of those regulations have their intended consequences, and some have negative, unintended consequences.
Click to expand...

There are lots of historical parallels in other businesses.
Click to expand...

Such as?
Click to expand...

Metal fabrication is one. There are lots of examples. Where the suppliers disappear because the product they supply can be supplied cheaper in countries with a low standard of living to support.
 
Bright Raven said:
HDRider said:
Bright Raven said:
There are lots of historical parallels in other businesses.
Click to expand...

Such as?
Click to expand...

Metal fabrication is one. There are lots of examples. Where the suppliers disappear because the product they supply can be supplied cheaper in countries with a low standard of living to support.
Click to expand...
I understand global markets.

My point is more about how capitalism has been corrupted by rules that freeze someone out of markets. Mega corporations have used government regulations to kill small producers and their ability to exploit small markets. The number of custom meat processing facilities is getting closer to zero every day.

I worked in manufacturing for almost 40 years. I saw globalism in action. Globalism, and cheap foreign wages hurt domestic manufacturers, and eliminated many low margin domestic manufacturers, but the government did not purposely, at the behest of a select few, fix the game.

The mega packers ability to disguise foreign beef as US beef is doing US producers a disservice.
 
HDRider said:
Bright Raven said:
HDRider said:
Such as?
Click to expand...

Metal fabrication is one. There are lots of examples. Where the suppliers disappear because the product they supply can be supplied cheaper in countries with a low standard of living to support.
Click to expand...
I understand global markets.

My point is more about how capitalism has been corrupted by rules that freeze someone out of markets. Mega corporations have used government regulations to kill small producers and their ability to exploit small markets. The number of custom meat processing facilities is getting closer to zero every day.

I worked in manufacturing for almost 40 years. I saw globalism in action. Globalism, and cheap foreign wages hurt domestic manufacturers, and eliminated many low margin domestic manufacturers, but the government did not purposely, at the behest of a select few, fix the game.

The mega packers ability to disguise foreign beef as US beef is doing US producers a disservice.
Click to expand...

Understand. The ills you identified may be selective against one enterprise more so than another.

Speaking on a much broader economic basis. Economist agree that fundamentally, in a global world market, their will be discrepancies created by the unbalance in the standard of living.

In the US, employers provide extensive benefits other countries do not. US employees work for higher wages and demand those fringe benefits. Until the global standard of living equalizes, expect the playing field to remain unlevel. As you know, this is elementary economics.
 
Bright Raven said:
HDRider said:
Think about that $363. That is done with proper accounting.

That $363 is after all capital expenses and depreciation, after operating expenses, after taxes, after salaries, wages, insurance, and benefits.

On a gross profit basis, that $363 is closer to $500 profit per head.
Click to expand...

There is such a disparity between the producer and feeder on one end and the packer on the other. Having said that, isn't that the way Capitalism is suppose to work? You prosper if "you can" and you go out of business if "you can't".
Click to expand...

Let's investigate this a bit further.
Capitalism:
an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state. (Per dictionary)

Many of our nation's economic policies are dictated by our govt(state). As recently evidenced by the announcement of a major farm bill, in which a foreign owned CORPORATION(nameless, faceless, legally protected entity who happens to be backed by the Brazilian Development Bank) will receive over 70 million USD (taxpayer dollars). JBS, a Brazilian-owned company, received $22.3 million from the USDA farm bailout package of 2018. (Wikipedia).

Historically, in a capitalist market, govt involvement focused on protecting consumers and small producers, from monpolies and trusts. Afterall, the biggest benefit to capitalism was creating an environment of competition so fresh ideas and products could flourish and be available to the consumer. This competition also kept manufacturers in check on price gouging. We now have a small group of corporations, being financially supported by multi national banks and govts, controlling an important leg of our food supply.

That doesn't sound like capitalism to me. Capitalism, similar to words like liberty and freedom, often require a deeper look behind the curtain to verify what is actually happening against what one is being led to believe... :tiphat:
 
bball said:
Bright Raven said:
HDRider said:
Think about that $363. That is done with proper accounting.

That $363 is after all capital expenses and depreciation, after operating expenses, after taxes, after salaries, wages, insurance, and benefits.

On a gross profit basis, that $363 is closer to $500 profit per head.
Click to expand...

There is such a disparity between the producer and feeder on one end and the packer on the other. Having said that, isn't that the way Capitalism is suppose to work? You prosper if "you can" and you go out of business if "you can't".
Click to expand...

Let's investigate this a bit further.
Capitalism:
an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state. (Per dictionary)

Many of our nation's economic policies are dictated by our govt(state). As recently evidenced by the announcement of a major farm bill, in which a foreign owned CORPORATION(nameless, faceless, legally protected entity who happens to be backed by the Brazilian Development Bank) will receive over 70 million USD (taxpayer dollars). JBS, a Brazilian-owned company, received $22.3 million from the USDA farm bailout package of 2018. (Wikipedia).

Historically, in a capitalist market, govt involvement focused on protecting consumers and small producers, from monpolies and trusts. Afterall, the biggest benefit to capitalism was creating an environment of competition so fresh ideas and products could flourish and be available to the consumer. This competition also kept manufacturers in check on price gouging. We now have a small group of corporations, being financially supported by multi national banks and govts, controlling an important leg of our food supply.

That doesn't sound like capitalism to me. Capitalism, similar to words like liberty and freedom, often require a deeper look behind the curtain to verify what is actually happening against what one is being led to believe... :tiphat:
Click to expand...

It is common practice to use these terms loosely. The term "Capitalism" is often employed to describe commerce when more precise terms should be used. In the same vain, we often over emphasis government when we are discussing economics.

The fundamental issue with the ills of America's competitive status is the unbalance in the standard of living on a world basis. The government cannot fix that.
 
Ron, your post prompts the consideration that while we are competing in a global market, and standard of living is a major factor; however, the bigger factor maybe the unique challenges a "capitalist" economy faces when competing against other economies that are more socialist(state owned or financed). If you read the history of JBS, for example, their rise is amazing. Backed by a National bank, JBS's success was paramount for the success of Brazil. China is yet another glaring example.

The government can not fix that? Their policies are actually making it worse one could speculate.
Everything in nature seeks equilibrium. How is this happening economically today? The American standard of living is declining as the rest of the world standard of living improves. Inevitable.
 
Another thought; everything in nature seeks equilibrium is a scientific axiom. However, does it also apply to economics? It seems actually the opposite is true. The majority of financial wealth is held by a very small number of people.
 
bball said:
Ron, your post prompts the consideration that while we are competing in a global market, and standard of living is a major factor; however, the bigger factor maybe the unique challenges a "capitalist" economy faces when competing against other economies that are more socialist(state owned or financed). If you read the history of JBS, for example, their rise is amazing. Backed by a National bank, JBS's success was paramount for the success of Brazil. China is yet another glaring example.

The government can not fix that? Their policies are actually making it worse one could speculate.
Everything in nature seeks equilibrium. How is this happening economically today? The American standard of living is declining as the rest of the world standard of living improves. Inevitable.
Click to expand...

The government cannot drive economics. They can certainly influence it but the real gorilla in the room is the discrepancy in standard of living. Until the world reaches a level playing field in standard of living, the government has influence but at the end of the day, it cannot change world economies.

I think there will be a lot of disappointment, suffering and pain until the world reaches that "equilibrium".
 
bball said:
Another thought; everything in nature seeks equilibrium is a scientific axiom. However, does it also apply to economics? It seems actually the opposite is true. The majority of financial wealth is held by a very small number of people.
Click to expand...

Economics does not fit that axiom. Regardless of what you call it, economics is more a function of human greed, corruption, and unfair practices. I don't think anyone or any government will stop that.
 
Ron, I understand how you base your argument on "standard of living" and "government cannot fix economics".

I could go on for days about how government distorts markets. For example, how profit is taxed in other countries and in the US, disparity in environmental regulations allowing lower cost productions, same for labor and safety laws.

Gauging the bare minimum a worker will accepts does factor in "standard of living", it is called exploitation.
 

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