Is Beef a Heavily Subsidized Product

[HDRider]

I am still very new to the game and have years of learning ahead of me. As I have started I have seen the costs involved in starting and running an operation. I am still some distance away from my ultimate production goal.

My question is - How many producers operate at a profit? I am asking more related to cow/calf and maybe stocker and backgrounder operations. I am not asking about feed lots. I am not asking about registered seed stock, bulls, etc.

My guess at this point is beef is highly subsidized by the producer at certain stages of production. Subsidized by the producer means they (we, me) we are operating at a recurring loss.

I know some do this for tax purposes. I am not asking if it helps for tax purposes on other non-beef businesses.

I have been in other businesses (manufacturing) for many years. I understand very well about managing cost, capital expenses, operating expenses and all that.

So when you consider labor (yours, your wife and kids, along with hired help), capital (land, machinery, improvements) and operating expenses (feed, medicine, vet, death loss, etc.) are you in the black, or are we feeding America on our dime?

 

[kenny thomas]

Any profit i have goes back into better fencing, buildings, more land. I keep adding to what's there so they can tax it more. Trying to help out the government. But mostly I do it because i enjoy it. I don't vacation unless,its taking a day off work to go to a cattle sale.

 

[ddd75]

on this site 95% of producers lose money (what they say)

 

[Cross-7]

Me personally when you figure all inputs, properly tax, and land payments, I'm losing money.
The land should be appreciating and cattle help make the payment, but cattle aren't putting any money in my pocket

 

[Bright Raven]

In Kentucky, the vast majority of cattle producers are small operations (average, 20 head). They maintain a cattle herd to contribute to the enjoyment of their rural lifestyle. It is obvious to those who understand the costs associated with small herds of cattle that there is no significant profit. Some say they do it to write off against their off-the-farm job but that is not contributing profit, it only reduces their tax burden but the loss they incur to take that write-off is still a loss. Even large operations that are national recognized, tell me what profit they make is returned to the business in the form of infrastructure and improvements.

 

[callmefence]

If you buy land and charge the cattle you lose. Most of us who count out time are going to lose.

I know some people that make money.
They stock about 1 cow per 15 to 30 acres. They don't feed hay. They don't pour out expensive mineral.

I've brought some calves home yesterday off a lease place I use just like this. I pay 2100.00 on 500+- acres.
We usually raise about 20 calves on it.
Only check them every couple weeks.
We make a real profit on those cattle.

At home and our other owned property.
No the time and equipment expense takes it all. But it's our property and I look at it differently. Partially as a investment in land improvements. And
Mostly because I enjoy it.

 

[True Grit Farms]

Since the majority of cattle sold are produced by the small part - timer, I'd say yes we're subsidizing the general public with lower beef prices. There's no way to make a decent day to day living off a cow - calf operation unless you have over 300 head of momma cows.

 

[HDRider]

I am not sure we are ready to announce a finding of a fact, but considering what I read here, shouldn't the American public understand they are getting a heck of a deal.

Pork is not subsidized by the producer.

Poultry is not subsidized by the producer.

Sure, both pork and poultry, have losing years, but not a recurring loss year after year.

I know the production methods for beef are largely different than P&P but I don't think America appreciates the value they get in beef.

All that said, I'd like to see beef producers make a decent net margin (12 to 16%).

Is the profit in the other links of the value chain? Feed lots, wholesalers and processors, retail? Someone has to make money. If they do, why can't we?

Being a price taker, and not a price maker seems like a loosing proposition.

I am fine with the cost being born as a lifestyle choice, but hiding a loss from the public seems like an insult to injury.

 

[Bigfoot]

People shy away from numbers here, but I'll keep it real for this thread. I run 85 cows, on 260 acres, with one 50 horse power tractor, and a sparse amount of hay equipment. Only because I've owned the place for many years, it's paid for. At the end of the year, I have nothing to show for my trouble, but calluses.

 

[RanchMan90]

Depends if you're in the land business or the cattle business. Buying the land and cattle on same budget can take a 20% cattle profit to less than 1% :2cents:

 

[Bright Raven]

Hd

I don't see it as a subsidy. It is simply a matter of producers willing to operate at a loss. It is not the public's fault and they owe us nothing if we choose to operate at a loss. Until the market functions on the principle that a profit must be realized for production to continue, then the public is going to benefit from lower beef prices.

 

[HDRider]

BR you can call it whatever you want. I am not blaming anyone. It appears the majority of the producers are willing to operate at a loss.

I know CT has this big debate on hobby farms, but how could one view it otherwise if it cannot, or will not turn an acceptable profit and a meaningful margin, or ROI?

I am not saying doing it as a hobby is wrong, but just pointing out the obvious. To say you are doing it because it pays for the land might be called a profit, longer term with minimal or no cash flow. And that is OK.

 

[ddd75]

most people make a modest 5 % ROI.. some real high risk takers make 10%.

If you have 500k in an operation, if you are making 25k / 50k profit you are matching them. If your land value increases you have now made more.

Can you achieve those numbers? If not, put your money somewhere else.

 

[Caustic Burno]

People shy away from numbers here, but I'll keep it real for this thread. I run 85 cows, on 260 acres, with one 50 horse power tractor, and a sparse amount of hay equipment. Only because I've owned the place for many years, it's paid for. At the end of the year, I have nothing to show for my trouble, but calluses.

The cows pay there way here .

Timber paid for the land and cows to start with, you couldn't do that today here.

 

[Caustic Burno]

most people make a modest 5 % ROI.. some real high risk takers make 10%.

If you have 500k in an operation, if you are making 25k / 50k profit you are matching them. If your land value increases you have now made more.

Can you achieve those numbers? If not, put your money somewhere else.

The land doesn't return anything till it's sold until then it is a liability

 

[HDRider]

And a tax liability when the land is sold CB.

 

[True Grit Farms]

I'm sinister I guess, but this is the reason NCBA is against COOL. This is the only way to keep the beef price low to the small producer is to be able to buy imported beef cheap. We've already proven we'll keep producing feeder calves for little to no profit, because we enjoy the lifestyle. But if the government and big business would get out of the way and let us market our products directly to the public we'd all do a lot better.

 

[ddd75]

how much is a 600 lb calf supposed to be worth 'to make a profit? 1,500...2,000...3,000... ??

Right now you get 1.50.. or 900.00

where would you need it to be to 'make money'?

 

[callmefence]

Hd

I don't see it as a subsidy. It is simply a matter of producers willing to operate at a loss. It is not the public's fault and they owe us nothing if we choose to operate at a loss. Until the market functions on the principle that a profit must be realized for production to continue, then the public is going to benefit from lower beef prices.

I think this is spot on. People are willing to run cattle at a loss so they can be a cowboy.
When you really get down to it and be honest with yourself. There's no other logical reason.

 

[HDRider]

I'm sinister I guess, but this is the reason NCBA is against COOL. This is the only way to keep the beef price low to the small producer is to be able to buy imported beef cheap. We've already proven we'll keep producing feeder calves for little to no profit, because we enjoy the lifestyle. But if the government and big business would get out of the way and let us market our products directly to the public we'd all do a lot better.

TG - That is the underlying reason I posed this question. We compete against a lower cost structure of imported beef, and they only way we stay "in business" is by giving our product away.