HDRider
Well-known member
The latest from our packer lady
Viral post going around whiny cowboy community about how feeder margins are $13, cow calf margins are $61 and packer margins are $300. Through some series of math, the author equivocates an annual salary of $60k to how many head each sector has to produce to reach that salary.
It amazed me. Truly.
If that's the correlation you want to go with: okay.
A major packer employs 5,000 people. If these 5,000 people earn an average salary of $30k per year, plus another $10k per in insurance benefits etc, for an average total comp of $40k per person: that's $200M in payroll. That's not including worker's compensation, employer payroll taxes, or other cost of labor.
So at $200M in payroll, that's 651k animals that's have to be harvested on a $307 per head gross margin to cover annual payroll. If they kill 6000 a day, that's 108 days of slaughter or 21 weeks of the year of killing just to cover basic payroll.
That's not paying another dime to fixed cost. That's not paying utility bills. That's not paying for boxes or bags or any of the other inputs. That's 21 weeks of kill in vacuum. In a perfect scenario where nothing else goes wrong and you sell at sheet and buy right and every load perfectly pencils out to $307.
It's laughable. No, really. I laughed.
What makes it even funnier is that this $61 vs $300 is probably their take on a net margin. Which means the whole point they are making about a $60k salary is mildly irrelevant, since cost of labor is already figured in. (At what rate, who knows. The cowboy cost metric for figuring net margins has always been elusively calculated.) But on a net margin basis, the argument gets even weaker: "Oh, poor little cowboy. You are upset someone made more money than you."
That's it.
What other motivation goes behind crying about comparing net margins? Are we going to compare net operating cost? Or net investment cost? Are we going to compare cash flow? Are we going to compare any other relevant point in the data set or just some highly gray politically motivated margin calculation that makes assumptions on operating cost?
By this logic, is the argument is that packers should be non-profits? Should cowboys make more money than the investors in a billion dollar business? If so, why? Should it be fair? Fair to whom?
Y'all have no actual idea what the P&L of a packer looks like and it becomes so clear every time you pop off some flippantly biased and overwhelmingly ignorant statement about margins.
You want your cattle to make more money? That's fine. I'm here for it. But this philosophy that your best option is to TAKE money from the packer instead of CREATING value is what is going to put you out of business.
You can add value or add volume.
Or you can continue being a socialist and asking the government for a handout and to make things "fair."
https://www.facebook.com/meatladyOG/
Viral post going around whiny cowboy community about how feeder margins are $13, cow calf margins are $61 and packer margins are $300. Through some series of math, the author equivocates an annual salary of $60k to how many head each sector has to produce to reach that salary.
It amazed me. Truly.
If that's the correlation you want to go with: okay.
A major packer employs 5,000 people. If these 5,000 people earn an average salary of $30k per year, plus another $10k per in insurance benefits etc, for an average total comp of $40k per person: that's $200M in payroll. That's not including worker's compensation, employer payroll taxes, or other cost of labor.
So at $200M in payroll, that's 651k animals that's have to be harvested on a $307 per head gross margin to cover annual payroll. If they kill 6000 a day, that's 108 days of slaughter or 21 weeks of the year of killing just to cover basic payroll.
That's not paying another dime to fixed cost. That's not paying utility bills. That's not paying for boxes or bags or any of the other inputs. That's 21 weeks of kill in vacuum. In a perfect scenario where nothing else goes wrong and you sell at sheet and buy right and every load perfectly pencils out to $307.
It's laughable. No, really. I laughed.
What makes it even funnier is that this $61 vs $300 is probably their take on a net margin. Which means the whole point they are making about a $60k salary is mildly irrelevant, since cost of labor is already figured in. (At what rate, who knows. The cowboy cost metric for figuring net margins has always been elusively calculated.) But on a net margin basis, the argument gets even weaker: "Oh, poor little cowboy. You are upset someone made more money than you."
That's it.
What other motivation goes behind crying about comparing net margins? Are we going to compare net operating cost? Or net investment cost? Are we going to compare cash flow? Are we going to compare any other relevant point in the data set or just some highly gray politically motivated margin calculation that makes assumptions on operating cost?
By this logic, is the argument is that packers should be non-profits? Should cowboys make more money than the investors in a billion dollar business? If so, why? Should it be fair? Fair to whom?
Y'all have no actual idea what the P&L of a packer looks like and it becomes so clear every time you pop off some flippantly biased and overwhelmingly ignorant statement about margins.
You want your cattle to make more money? That's fine. I'm here for it. But this philosophy that your best option is to TAKE money from the packer instead of CREATING value is what is going to put you out of business.
You can add value or add volume.
Or you can continue being a socialist and asking the government for a handout and to make things "fair."
https://www.facebook.com/meatladyOG/
