Price of calves need to double!

[The Don]

Good to see a happy ending to that chapter!
I was looking for a couple of cords of firewood. It seems that firewood has increased in value to match all the other energy sectors. Now I'm eyeing up the windbreak trees that I planted 25 years ago. I will need to get rid of the windbreak to gain access to the soon to be retired pasture. Anticipating I can crop it or rent it out. A win win finally! It will take a full year to season so I should start soon.
If I make a dollar off of that land it would be a positive instead of losing $10 k plus a year feeding cows.
You know what Canadian Cattle Association says in the 5 % rule. If you make a dollar a year... in a million years you will be a millionaire!
Stay warm!

[DaneG]

All is well that ends well!

[DaneG]

Well here we are prices have pretty well doubled since the initial post!

[The Don]

Prices for cattle have increased They may have doubled. But all of the inputs have doubled or tripled. If you use real data and factual current numbers is there a profit ?

[DaneG]

No, not a penny profit everyone is just raising cattle as an expensive hobby. We are all going broke we just don’t realize it yet!

[The Don]

There will be a bit of a time lag. But eventually the American rancher in Kansas ,Oklahoma and similar states will start to realize that when you have to feed cattle hay through the winter (and that's expensive hay). Instead of having them graze winter wheat. It costs a bunch of money. They will start to see what it is like in northern areas where cheap feed for the winter is not "a thing".
According to an article that I read they stated that crop inputs to grow that high yielding crop in Canada rose over 26 percent in 2022. They project costs will rise again by 10 to 15 percent in 2023. Cattle producers are also effected by those rising costs.
So if you use real numbers to get an actual current cost of production. Then doubling the price paid in 2021 is not enough. In fact, when you consider that if your business lost money in any year. Going forward you need to substantially increase income to compensate for the loss. Carrying losses at current interest rates is very bad.
Part of the problem is that there is no factual base cost of production. You can tell me that you have a cost of production of $600 / cow. That only has meaning if that is transferrable. If you sell me your farm will I realize that same cost of production?
The "Beef Industry" has been making a lot of money by taking the profit from its foundation producers (cow - calf producers). When you destroy your foundation the structure will fall.

[WiltonRanch]

Even with current prices it will take years of these kind of prices to make up for the years of poor prices. We are running a little less than half the numbers we were running 7 years ago and even then you could see the scam was collapsing. We now keep only what our land base around home can handle. I’d never want 500 head or some high number to justify a meager existence on cattle alone. Right now the cows complement my grain operation and utilize the poor land and I don’t mind keeping cattle most days. I’m not blessed with table top ground and have lots of of sloughs and potholes. Perennials rotated through the crappy land and cows to utilize them makes sense. Far as I’m concerned that’s the only way they stay around. Nobody values animal protein enough to justify devoting ground to grass which can grow wheat or canola profitably.

[The Don]

I watched Corbit Wall this morning. Calves selling "High". They (back grounders / feeders) can't afford to pay more!
Five weight heifers sold for $1.684 pound or $824 head. Four weight steers just broke $1000. I think that feeding expensive hay to those cows would make the cost to keep a cow alive and in good breeding condition more than $800. A thousand dollars probably won't cover it either (especially when you average steers and heifers).
The "beef business" forgets that the cow - calf operator faces all the same increases that the backgrounders and feeders do.
Most of the podcasts that I listen to ignore or down play the unprofitability of the cow - calf sector. They focus on the drought. It's the drought that has caused all of this and once it rains things will return to "normal". My opinion is the drought accelerated the herd reduction. A herd reduction that was driven by the lack of profitability in the cow - calf sector.
The industry can calculate and tell me the feed / energy required to keep an 1100 pound cow, British breed, on day 180 of the pregnancy, with a - 20 degree temperature, a 25 kph wind and a matted hair coat. They can do that with a relatively high degree of accuracy. But they choose not to calculate the cost of production for those animals.
This year a cow - calf operator should always take the trailer on sale day. Don't be afraid to put those calves back in the trailer... if the prices are not what you need to be profitable.

[DaneG]

Cost of production is not cut and dried like the nutritional requirements of a cow. Cost will likely range several hundred dollars from low to high between ranches. Number of cows, debt load/overhead, management, calving season and duration and marketing are some of the variables that can influence cost of production. Which all are to some extent are controllable by the manager/owner and ultimately contribute to the outcome of profit or a loss.

[The Don]

Agreed. It would be a complicated process to generate accurate costs. There are methods to do that. Accounting methods that which would establish base costs for the industry stakeholders. However using the current "disinformation " should not be an acceptable option. Consider that they don't get the easy part right! That is a choice!
They use these flawed calculations and "information" to present a picture of the industry that is not based in reality. They are in essence "cooking the books".
The cost of this disinformation is born by the cow - calf producer. My opinion.

[DaneG]

https://www.canfax.ca/resources/cost-of-production/cop-results.html

[The Don]

II just took a quick look at the numbers. They look more real than anything I have seen from Can - fax before .Canadian Cattle Association before. Hours of entertainment at 03:00 hrs when I can't sleep. My education continues.
Thanks for the link!

[The Don]

That's a lot of numbers!
Looking at the CA-MB-1. "starting late October , 30 days of 20 lbs alfalfa hay supplemented on pasture"
My cows would starve on that ration.
1300 # cow 20 # hay / day = 1.5% of body weight / day.
At a time of year you should be pushing as much food as possible to the cattle. Your last opportunity to get those cows into shape for the winter.
The numbers don't hold up under scrutiny.
There is no cow depreciation shown.
There is no additional feed shown for heifers / young cows. A 13% replacement rate in the herd would result in a total turn over in 7.7 years . At any time greater than 50% of the herd would be less than 5 years old. 5 years old would be a date where that cow would be fully developed and can with stand a reduced ration. But not as low a ration as they are showing.
Even giving up $63,000. in labour the operation is still deep in the red, they are living on fresh air. I could go on...
This is a little more realistic than they usually present, but it is not real.
The reason the cow - calf sector is shrinking is not only the drought. Lack of profit is the big driver.
My opinion.

[15444]

That's a lot of numbers!
Looking at the CA-MB-1. "starting late October , 30 days of 20 lbs alfalfa hay supplemented on pasture"
My cows would starve on that ration.
1300 # cow 20 # hay / day = 1.5% of body weight / day.
At a time of year you should be pushing as much food as possible to the cattle. Your last opportunity to get those cows into shape for the winter.
The numbers don't hold up under scrutiny.
There is no cow depreciation shown.
There is no additional feed shown for heifers / young cows. A 13% replacement rate in the herd would result in a total turn over in 7.7 years . At any time greater than 50% of the herd would be less than 5 years old. 5 years old would be a date where that cow would be fully developed and can with stand a reduced ration. But not as low a ration as they are showing.
Even giving up $63,000. in labour the operation is still deep in the red, they are living on fresh air. I could go on...
This is a little more realistic than they usually present, but it is not real.
The reason the cow - calf sector is shrinking is not only the drought. Lack of profit is the big driver.
My opinion.

I'll be taking part in the COP study this year, so it will be interesting to see where I stack up with compared to everyone else. Once I get finished with getting tax books ready this week, I can focus more on the numbers as the first zoom meeting with the focus group is next week.

[The Don]

Can anybody explain this to me?