Cow/calf profitability NEG $70 in 2010

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MoGal

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Got my Midwest Cattleman magazine (Feb 5 issue, page 19) and reading this article Dan Childs says:

The Food and Agriculture Policy Research Institute, an agency that develops long term projections for agricultural commodities, foresees NEGATIVE cow/calf profitability for the (next) five years starting with 2008. They predict profitability to decline to a low in 2010, with $70 loss per cow. This is a considerable difference from the $150 per cow profit experienced during 2004 and 2005.


I don't know anything about this research institute, or how accurate they are........... just thought I would share their news.

How does this change your plans/goals?
 

Workinonit Farm

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Well, they may not be too far off with their predicitions. The way the current economy is, the new administration in D.C., the amount of time it takes for the economy to recover etc. all play a role in all markets.

As for me, I just take each day one at a time and plan and budget as best I can.

Katherine
 
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MoGal

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I realize he says $70 in the article, but when I did a search , this is the pdf file I found and although I don't try doing sums and figures while babysitting my great nieces................. this pdf file shows a lesser amount than $70 so I don't know what he figured on

http://www.fapri.iastate.edu/outlook200 ... Tables.pdf

look on page 28 and according to it the largest loss is 2012 with 2011 and 2013 a little behind the 2012 losses.

http://www.fapri.iastate.edu/outlook200 ... Tables.pdf - this was interesting showing beef, pork and poultry consumption by country. But can anyone explain the negative export amts for the US???

You know Katherine, one has to roll with the flow. 2 weeks ago hubby and I went to the salebarn and they had several 1400 lb holstein steers that brought 50 cents a lb........... those fellas were ready to butcher and even though dairy farmers have to be grain farmers I don't see how he came out ahead on the deal.
 

Workinonit Farm

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MoGal":26uzno9e said:
even though dairy farmers have to be grain farmers I don't see how he came out ahead on the deal.

I'm sure many of them aren't. I don't know how most of them stay in business.

It's going to get worse before it gets better.

Katherine
 

Caustic Burno

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Going to have to be tighter than a crabs butt and that is water proof. Going to have run on grass only and cull cull cull.There is no way to remain profitable with a cow that doesn't produce every 12 months.
The 10% calf crop loss is no longer going to be acceptable, calving ease low birth weight bulls matched with calving ease cattle are going to be a must. This is where brammer influenced cattle could have an advantage as the calf's seem to be able to walk out. Can't sell a dead calf or a crippled cow, the market is changing and only the most efficient will stay in business.
 

grubbie

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10% calf crop loss has never been acceptable here. I don't see how they can even come up with that 70 dollar number, too many variables from producer to producer. I wonder if that is an average from commercial feedlots, or if the small timers like me are figured in somewhere.
 

Brute 23

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People are really going to have to get a grasp on their spending. There is a big difference in losing money and not making money. If you operate on cash you have a far better chance than those operating on credit.
 

Brandonm22

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grubbie":2yld0uu4 said:
I don't see how they can even come up with that 70 dollar number, too many variables from producer to producer.

EXACTLY, I think most everybody recognizes that they need to improve reproductive efficiency and improve their marketing approach, while decreasing their costs of operating; but I bet there will still be people making $200 a cow and people losing $600 a cow (and you probably can't tell who is who just by looking at the cows).
 

jka300

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Brute 23":xru57onn said:
People are really going to have to get a grasp on their spending. There is a big difference in losing money and not making money. If you operate on cash you have a far better chance than those operating on credit.

I have to agree with that. Farmers in our area that have unbelievable amounts of debt are dropping like flies that were sprayed with raid. I used to work for a farm dealership, and it wasn't uncommon for farmers to buy over $1000 worth of parts and just charge it without thinking about it. There was one farmer we figured that he was so far in debt that it would that about lifetime and a half to pay it off. On our farm we got a saying, If we can't afford it, then its time to call it quits. It isn't much of a saying but it is true. Anyways I kinda got off of topic. Its kinda hard to swallow what that article is trying to say right now, cow and calf prices in our area are higher that they were last fall. We phoned in to the auction mart on Friday.
Here were the prices
heifers $1.14 - $1.20/lb
steers $1.18 - $1.25/lb
cows $0.45 - $0.60/lb

Last fall they were $0.20 lower than that for both cows and calves. The representative that we talked to said that the price is going to continue to climb because most cattle farmers are dumping their cattle to pay off their debt or because of foreclosure. In a way it is sad that these farmers are losing everything but on the other side, its good for cattle farmers that are still trying to survive. I know that this article is more for the US farmers but it also affect us too in Canada.
 

Aaron

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Bad news for many. Good news for the few of us making a buck at it. Going to have to see a mass exodus of people out of the industry in order for the rest of use to make a buck at it. Wouldn't hurt my feelings at all if the North American industry shrunk by at least 1/4 in the next 3 years. Too many people out there producing beef for no real reason other than as a fun little hobby or a tax break. :cowboy:
 

newrancher

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Aaron, normally I enjoy reading your posts, but that one went through me like a dose of salt. There is nothing wrong with having a hobby, and there is nothing wrong with using the tax laws to your advantage, don't you? The fact is more beef is produced by the small farmer than the big ones,and I would venture to say that most small operator have a lower debt ratio. There are not too many big operators out there that have bought there way into farming in the last 30 yrs, someone gave them a start, with either cattle, land or, equipment.Then there is the rest of us.
 

Brute 23

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newrancher, to some degree the hobby farmers have driven the prices up on land, vets, hay, ect. Do I think that is the cause for so many ranchers going out of business, no, but it did fuel the fire, maybe.
 

TexasBred

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Aaron":8w1ozctj said:
Bad news for many. Good news for the few of us making a buck at it. Going to have to see a mass exodus of people out of the industry in order for the rest of use to make a buck at it. Wouldn't hurt my feelings at all if the North American industry shrunk by at least 1/4 in the next 3 years. Too many people out there producing beef for no real reason other than as a fun little hobby or a tax break. :cowboy:

I'm a hobby cattle raiser and I love it. I figure my beef is probably just as good or better than yours. Course if you get rid of us I guess you create a supply shortage and you will make a lot more money since the demand will probably exceed the supply. I am not your competition but the folks in the poultry and pork business certainly are. Go after them. I invest in land and use it wisely and I buy prudently. I run cattle on all of it...and yep I write off everything the IRS code allows.....I don't pay the vet anymore than anyone else...as a matter of fact I haven't used a vet in 5 years except to vaccinate the dog and cat.

Now you wanna buy some land and cattle?? All I want is market value.
 

mobgrazer

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I can see this year and next year getting real tight with most people on the numbers. The people that have to buy a lot of feed I think will bail out in the next 2 years. The people in the nitch markets I feel will do well.
 

Brandonm22

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Aaron":1375nyy8 said:
Bad news for many. Good news for the few of us making a buck at it. Going to have to see a mass exodus of people out of the industry in order for the rest of use to make a buck at it. Wouldn't hurt my feelings at all if the North American industry shrunk by at least 1/4 in the next 3 years.

I disagree with that. We have half the number of cows (in the U.S. anyway) that we had in the 50s and as an industry is it really easier to make a living??? People go out of business and we lose market share to pork, chicken, and turkey. It doesn't really benefit those who are still IN. If decreasing the herd was really a good thing, the dairy farmers would all be rich by now.
 

HerefordSire

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Brandonm22":10zk0jmw said:
Aaron":10zk0jmw said:
Bad news for many. Good news for the few of us making a buck at it. Going to have to see a mass exodus of people out of the industry in order for the rest of use to make a buck at it. Wouldn't hurt my feelings at all if the North American industry shrunk by at least 1/4 in the next 3 years.

I disagree with that. We have half the number of cows (in the U.S. anyway) that we had in the 50s and as an industry is it really easier to make a living??? People go out of business and we lose market share to pork, chicken, and turkey. It doesn't really benefit those who are still IN. If decreasing the herd was really a good thing, the dairy farmers would all be rich by now.

If the quantity of cattle increased in last last 50-60 years, our margins would have likely increased. The numbers can always reverse as soon as the cattleman figures out out we cannot squeeze out any more performance per head.
 

Aaron

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newrancher":3c18oska said:
Aaron, normally I enjoy reading your posts, but that one went through me like a dose of salt. There is nothing wrong with having a hobby, and there is nothing wrong with using the tax laws to your advantage, don't you? The fact is more beef is produced by the small farmer than the big ones,and I would venture to say that most small operator have a lower debt ratio. There are not too many big operators out there that have bought there way into farming in the last 30 yrs, someone gave them a start, with either cattle, land or, equipment.Then there is the rest of us.

I agree. Nothing wrong with a hobby. But to consider beef production as a 'hobby' is what hurts the industry. Hundreds of people, many of them beef producers spend their time through our industry groups harassing, oopps..meant, lobbying, the governments at all levels to take us seriously and too come up with programs and policies that will help the industry move forward. I'm sorry, but if I was a government official *shiver*, I wouldn't be taking someone who is playing around, seriously. You don't see major programs or policies in effect for the woodcarving or basketweaving industry. Those...are hobbies. I don't think the production of any global commodity should be considered or promoted as a hobby. I've always fought for the elimination of tax holes and minimum production standards to be considered agriculture production in Canada...and my opinion doesn't change on the web.

I should add, what I am talking about goes right back to you in what you said, "The fact is more beef is produced by the small farmer than the big ones". What is considered a big farmer? Small farmer? What is the minimum gross revenue that should be met to be considered a beef producer? Canada has had, in the past, a training-incentive program for producers to obtain additional training whether is be in farm accounting, management practices, etc...in exchange for monies (it was between 15,000 to 25,000) which are basically a form of subsidization. The minimum gross revenue achieved by an agricultural operation to even qualify for the program was $50,000.00 CDN. It sure would be nice to see that value applied to all programs and policies. :cowboy:
 

Brandonm22

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Aaron":sij5mhir said:
Canada has had, in the past, a training-incentive program for producers to obtain additional training whether is be in farm accounting, management practices, etc...in exchange for monies (it was between 15,000 to 25,000) which are basically a form of subsidization. The minimum gross revenue achieved by an agricultural operation to even qualify for the program was $50,000.00 CDN. It sure would be nice to see that value applied to all programs and policies. :cowboy:

I am opposed too subsidizing ANYbody growing anything. The guy with 500 cows should not get a penny from the government any more than the guy with 5 cows should. Of course we have a government that subsidizes insurance companies (AIG) and banks (Citibank, Bank of America) so my free market views are clearly no longer en vogue.
 

SANDTRAP

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I am opposed too subsidizing ANYbody growing anything. The guy with 500 cows should not get a penny from the government any more than the guy with 5 cows should. Of course we have a government that subsidizes insurance companies (AIG) and banks (Citibank, Bank of America) so my free market views are clearly no longer en vogue.[/quote]


where does the money for these subsidises come from ?
surley they are not taking money away from working people to play others not to work.
they would be crazy.
 

Aaron

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Brandonm22":ya780i3e said:
Aaron":ya780i3e said:
Canada has had, in the past, a training-incentive program for producers to obtain additional training whether is be in farm accounting, management practices, etc...in exchange for monies (it was between 15,000 to 25,000) which are basically a form of subsidization. The minimum gross revenue achieved by an agricultural operation to even qualify for the program was $50,000.00 CDN. It sure would be nice to see that value applied to all programs and policies. :cowboy:

I am opposed too subsidizing ANYbody growing anything. The guy with 500 cows should not get a penny from the government any more than the guy with 5 cows should. Of course we have a government that subsidizes insurance companies (AIG) and banks (Citibank, Bank of America) so my free market views are clearly no longer en vogue.

So am I Brandon. I was using it as an example of how our government, for one fleeting moment, actually gave agriculture production some kind of concrete limitations as to what can be considered as such. Something I applaud them for.

Unfortunately, it seems the new world motto is "No matter how big or small, we fund them all" I am hoping neither of our governments bail out GM or Chrysler. GM employs 7000 people in their plants in Canada, and they are asking the feds to value their jobs at $1 million a piece. Absolutely nuts. :cowboy:
 

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