Cow/calf profitability NEG $70 in 2010

[J+ Cattle]

Aaron if the North American beef production declined by 1/4 don't you think the supply void would be filled by production from South America? I am pretty sure that Argentina and Brazil can increase their output and produce at a lower cost than you or I can.

J+

 

[newrancher]

If the basketweaver or the woodcarver sells his product, then wouldn't it be considered a small business? I do understand what you are saying Aaron but where do you draw the line as far as big/small producer? If the bar is set too high then the only ones raising beef will be the corporate farms and that is definitely not the answer. Back to the original subject, everyone that wants to weather the coming storm is going to have to trim some fat, and save on costs wherever they can. Stock tip of the day- beans and taters

 

[Caustic Burno]

If the basketweaver or the woodcarver sells his product, then wouldn't it be considered a small business? I do understand what you are saying Aaron but where do you draw the line as far as big/small producer? If the bar is set too high then the only ones raising beef will be the corporate farms and that is definitely not the answer. Back to the original subject, everyone that wants to weather the coming storm is going to have to trim some fat, and save on costs wherever they can. Stock tip of the day- beans and taters

The average Cattleman in Texas is running 25 to 30 head, I would have to go back and look at the stat's but if my memory serves me correct less than 2% ran over a 100 head. To weather this storm welfare cattle have got to go. To many cattlemen have fell into the breed trap. It is about producing pounds across the scales with the breed that is the most efficient on your forage without supplementing out of a sack.

 

[Alberta farmer]

I don't know much about subsidies for hobby ranchers. Who is the hobby rancher? Is he the guy who has a few acres and likes to run a few cows or is he the rich oilman who runs thousands of cows? The big "heritage ranches" south of Calgary Alberta are owned by guys who sure never made it running cows!
I might be wrong but I think the commercial cattleman(the guy trying to make a living with cows) needs to become a low cost producer and realize if he's in it for the long haul, that eventually the market will turn? You'll probably never get rich but you shouldn't be losing money...if you are you need to ask yourself why you are doing this?
I am astounded when I read on here the costs some people run up...and still think they are making money! I hear others say things like "Well I raise my own feed so I can do alright"! Unless you are haying 500 acres you would probably be money ahead buying hay. It just doesn't pencil out.
When the day comes when I have to pay to work...that is the day I will quit and go lay on the beach in Cancum!

 

[Brandonm22]

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.

Chinese banks and other investors that for whatever reason want to diversify so they buy U.S. treasury bonds. The U.S. had a ~$500 billion budget deficit (~$240 billion of that was already debt service costs). The TARP bumped that up to $1.2 TRILLION. The $790 billion stimulus bill will probably add another $300 billion this year. Obama's foreclosure preventative bill will cost another ~$220 billion. I am guessing $60 billion will get spent this year...depending on when it passes. Geitner's TARP II is estimated at over a $trillion (nobody knows but I am guessing $300 billion of that gets spent this year) and I am assuming that the auto maker bailout is bundled in that and is not a seperate plan. Then the 500 lb gorilla is Obama's promise to expand govt healthcare too 50 million uninsured. When/if that plan comes out it is going to cost SOMETHING. I am hoping we don't get an unexpected hurricane, war, or further reduction in tax collections because by my cowboy math the 2009 budget deficit is coming perilously close to $2 trillion (to get a grasp on that number at a cost of $4.5 billion each you could build 444 nuclear powered Nimitz class aircraft carriers for $2 trillion or buy 40,000 $50 million corporate jets). Everybody likes to tax the big bad rich, BUT you aren't going to get THAT from any tax increase. In short, generations of Americans will be taxed in order to service the debts that we are running up today.

 

[ddg1263]

Well one huge point I think many are missing when they consider the value of our beef to the USA and other countries is that we are a critical factor in feeding millions of people. We supply a very cheap source of protein for countless people. You can not print cattle into existence like you can US treasuries or the yen. My point is there is so much concern over bailing out every industry in the USA, but they are letting the poor cattle farmer go under. I personally can make it, but I know many others will not have a chance. Will Argentina feed us if times get hard? I do not think so. They will feed their population and the surrounding countries first. I do think this country should keep a high priority maintaining its food supply in tact. I do think they have made some critical mistakes bottle necking our industry so that only a few kill plants/feed lots control the industry. However, we have to accept and adjust to the situation we find ourselves in. I do hope the fall out in the cattle industry is not as bad as what we are seeing in the banking industry and the likes, but from what I can tell it will be just as bad. You can not operate at a loss forever in any business. This to big to fail policy has this country in a jack if you ask me.

 

[jka300]

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.

You forgot to take inconsideration that 50 - 60 years ago there wasn't so many different types of milk. Milk came from a cow back then. If you would have went into a store 60 years ago and ask for soy milk, they would have laughed at you. I have to side with Aaron, if the beef market would shrink by 1/4, it would help us all. The proof is written on the wall by us, 5 years ago there probably was 150 cattle farmer with an average herd of 200-300 cattle. Now there is only 75-80 farmers left with herds of 50-100 cattle and the price shows it too.

 

[Brute 23]

The average Cattleman in Texas is running 25 to 30 head, I would have to go back and look at the stat's but if my memory serves me correct less than 2% ran over a 100 head. To weather this storm welfare cattle have got to go. To many cattlemen have fell into the breed trap. It is about producing pounds across the scales with the breed that is the most efficient on your forage without supplementing out of a sack.

To be honest I don't think the # of head you have qualifies you as a hobby farmer. I know people who have 10 head that are in for supplemental income (meat for family) and I know people with 150 head that are hobby farmers. :|

 

[SRBeef]

I am not qualified to make any comments on the cattle market. I do see a couple things happening - when the economy gets tough folks still have to eat but they eat hamburger rather than filets. Folks, especially the ones with money, are also more concerned about the quality of what they are eating and feeding to their families. The existing cattle marketing system in the US appears to be broken.

One thought comes to mind:

when you are up to your ass in alligators you either get eaten or you learn to make alligator soup and sell the hides for handbags... or something like that.

Maybe we need to do something differently.

FWIW.

 

[Brandonm22]

You forgot to take inconsideration that 50 - 60 years ago there wasn't so many different types of milk. Milk came from a cow back then. If you would have went into a store 60 years ago and ask for soy milk, they would have laughed at you. I have to side with Aaron, if the beef market would shrink by 1/4, it would help us all. The proof is written on the wall by us, 5 years ago there probably was 150 cattle farmer with an average herd of 200-300 cattle. Now there is only 75-80 farmers left with herds of 50-100 cattle and the price shows it too.

Milk has been beaten out by other beverages. My grocery store has a whole lot more shelf space dedicated too colas, beer, wine, fruit drinks, tea, and even bottled water than it does milk. 50 years ago milk had a far far bigger market share than it does now. Likewise 30++ years ago beef had the biggest share of the meat case. Chicken did not have the market share it does now and turkey was only served twice a year. (Like the dairies) as we have decreased supply the number of buyers (feedlots, packers, stockers, backgrounders, dealers, etc) has likewise declined. IF we lose 25% of the cow herd in the next 7 years, the number of feedlots is going to drop as will the number of packers thus decreasing the price competition we have for our calves. I think longterm a declining cowherd does NOT make us money, it just ultimately decreases the number of beef meals that the consumer is used to eating. The consumer CAN live without beef (he can just buy chicken or fish or soybeans). The beef industry CAN'T live without the consumer. I am sorry if I am being too negative.

 

[TexasBred]

Brandon, nothing to be sorry about. What you say is true. The entire industry has changed...but nothing stands still or stays the same. Cattle people have to be more progressive, aggressive and be willing to spend money to make money.

Just as people eat hamburgers, fish and poultry instead of steaks, they also drink cola's, tea and fruity drinks instead of milk. Milk has been given a bad name over the past 40-50 years. The same for "red meat". Most babies don't even get real milk any more. We can't control the market but we can control the expense side of the ledger whether it be smart buying, culling, herd improvement, any other options. After that if you're still in the hole or not enjoying your hobby, sell out.

 

[Aaron]

I don't know much about subsidies for hobby ranchers. Who is the hobby rancher? Is he the guy who has a few acres and likes to run a few cows or is he the rich oilman who runs thousands of cows? The big "heritage ranches" south of Calgary Alberta are owned by guys who sure never made it running cows!
I might be wrong but I think the commercial cattleman(the guy trying to make a living with cows) needs to become a low cost producer and realize if he's in it for the long haul, that eventually the market will turn? You'll probably never get rich but you shouldn't be losing money...if you are you need to ask yourself why you are doing this?
I am astounded when I read on here the costs some people run up...and still think they are making money! I hear others say things like "Well I raise my own feed so I can do alright"! Unless you are haying 500 acres you would probably be money ahead buying hay. It just doesn't pencil out.
When the day comes when I have to pay to work...that is the day I will quit and go lay on the beach in Cancum!

Is he the guy who has a few acres and likes to run a few cows or is he the rich oilman who runs thousands of cows?

Both. As I said, tax loopholes and minimum production standards have be met and closed. I think $50,000 gross would be fair. For us, that would be about 100 cows. Know a local that runs about 300 cows, which he uses to funnel roughly a million dollars through each year from his business. Has set up all his boys real nice. Vehicles for all. Houses for all. None work the farm full-time. All claim farm to keep insurance and taxes low. About 6 4WD new Case tractors on the place at all times. All steel facilities. Couldn't care less what the cattle look like. Long as the gov. doesn't get it's hands on the business money, it's a-ok. These are the people that should be barred from agriculture.

 

[Caustic Burno]

There is a guy up the road game fenced his place sold out all the cows, stocked it with axis and red deer.
He is making way more than he ever dreamed of off cattle, selling hunts to city folks.
It is amazing at what some of these people pay to kill a nice buck.

 

[Brute 23]

Some of them people are F-O-S when it comes to what they are making on that stuff. The cost of the dear, equipment, feed, lodging and I believe game fencing is running in the neighborhood of $25K a mile. The only way to pull the high rollers is to be a high roller. They are in the same position as cattle people.

 

[TheBullLady]

This "divide" between "hobby" and "real" kills me. The 'real' guys want the hobby guys to get out bad leave everything to them, since they don't buy expensive land, feed or equipment. But the hobby guy is the one that is spending money as well.. for feed, fertilizer, etc. etc. some of which the 'real' guy won't buy. Most of the 'real' cattlemen around here have cattle that look like whippets just about now. They can't afford feed, so the old girls will just have to do without it. Hardly a good situation! So if the hobby guy can produce a good product, why is that bad for everyone?

 

[cross_7]

somebody always wants the government to step in...how bout a bail out... heck of an idea !!!
maybe we should trade in our hats for a baseball caps so it will be easier to look in the mailbox for the government check.

it doesn't matter if you made/make it by the sweat of your brow or your grand daddy left you a big ranch with lots of oil wells.
life aint fair.
deal with it.
stand on your own two feet and stomp your own snakes
the strong survive, is the way it should be.

i'd like to buy me a BIG(20000 acre plus) ranch, but cows can't pay 1500.00 an acrefor ranch land like the wealthy hunters can.
should i ask the government to do something about it ?

 

[Alberta farmer]

Aaron: While I understand your thinking on how it isn't really fair to the guy actually trying to make a living raising cattle, having to compete with the "tax write off farmers", I question if we should be limiting who can run cattle? Let's face it...very few people have the resources to just get into the cattle business?
How about the young guy trying to get his foot in the door and probably needs that off farm job to finance his farm? There are a whole lot of older farmers who got started with an oil field job! And Lord knows we need some young people in agriculture? In my area when you drop into the auction mart it is like the old folks home or something!

 

[Brandonm22]

Aaron: While I understand your thinking on how it isn't really fair to the guy actually trying to make a living raising cattle, having to compete with the "tax write off farmers", I question if we should be limiting who can run cattle? Let's face it...very few people have the resources to just get into the cattle business?
How about the young guy trying to get his foot in the door and probably needs that off farm job to finance his farm? There are a whole lot of older farmers who got started with an oil field job! And Lord knows we need some young people in agriculture? In my area when you drop into the auction mart it is like the old folks home or something!

Yes, and I really don't like giving the government any more power than they already have. If you let big bad Daddy gov. shut Bob down because he feeds his cows too much and spends too much on tractors.....what is to keep them from shutting the rest of us down when we weren't polite enough to our government masters? or looked like we might be a tax cheat? or are mean to the purty animals or some such other nonsense. Uncle Sam always gets his. Whether it is from Bob himself or from taxing the tractor dealer or the sons's pay and/or inheritance or the contractor who built the flashy barn.....GOV gets theirs no matter what.

 

[cross_7]

Yes, and I really don't like giving the government any more power than they already have. If you let big bad Daddy gov. shut Bob down because he feeds his cows too much and spends too much on tractors.....what is to keep them from shutting the rest of us down when we weren't polite enough to our government masters? or looked like we might be a tax cheat? or are mean to the purty animals or some such other nonsense. Uncle Sam always gets his. Whether it is from Bob himself or from taxing the tractor dealer or the sons's pay and/or inheritance or the contractor who built the flashy barn.....GOV gets theirs no matter what.[/quote]

well said and i agree
i feel like the environmentalist, animal rights groups as well as our own government will be the end of our way of life.
i really don't see us winning this one.
i think thier weapon of choice will be to hit your pocket book.(methane tax, property tax, animal Identification, enviromental fees and so on and son)
i think it will be a long slow death but in the end we lose.

 

[Brandonm22]

well said and i agree
i feel like the environmentalist, animal rights groups as well as our own government will be the end of our way of life.
i really don't see us winning this one.
i think thier weapon of choice will be to hit your pocket book.(methane tax, property tax, animal Identification, enviromental fees and so on and son)
i think it will be a long slow death but in the end we lose.

I really tend to agree. I think this country is headed down hill into utter mediocrity and American agriculture will be an early casualty in this "culture war". I am just to stubborn to back away from the table until the game is over.