Does the united States need a beef export market ?

[Jason]

The very word integrated means each aspect is integral, or equally important to the whole.

For any industry to be completely integrated, all have to make sufficient profits to survive and continue to produce.

If we use the land size of 40 acres per cow/calf unit, and say an arbitrary value of $400 per acre, that's $16,000 per unit just for land ownership. The fact that land appreciates makes it difficult to seperate the value of production vs value of investment.

Let's seperate it by using a ROI formula of 8%. Land is worth $400 per acre but the land owner wants an 8% return. That would be $32 per acre or in this case $1280 per unit of yearling bovine production. On 950 pound grass yearlings that is $1.35 a pound, no other expenses considered.

If we assume land appreciates 3% per year, we can use a 5% figure for beef production, but each year the land value is higher so it is 5% of a continually higher number. At 5% the beef portion is $800 or 84 cents for a grass yearling.

How can the most expensive investment (land) in the beef chain be expected to get a regular return unless the final product is priced higher and higher? What about areas where land is cheaper per unit? What about more expensive?

Integration of any type really doesn't address land costs, and it can't. It has to be based on variable costs such as labor and utilities, and on the final selling price of the product. Those with the highest costs and most work will get the biggest part of the gross, or they will not continue to stay in business, to the detrement of the rest of the integrated system.

Knowledge and information is the main part of the integration of the beef chain. If we as producers know what our costs are and what the feeder, packer and consumer want/need, how those wants/needs affect our costs, and how we can respond, we have a chance to be part of this industry. The days are numbered for a producer that just waits until the end of the year to see if he got enough for his calves to go another year.

 

[RobertMac]

Jason, not sure of the point you are making here, but if it is that you can't pay for land with the income from the ag products produced off THAT land...all I can say is, "Duh"!

You do show why the packers don't want to own the land or the cows in their beef VI model like they don't own the land or the infrastructure in their pork and poultry VI models. If they eliminate independent marketing options, then producers will have to contract with a packer to be able to sell what they produce. Just like the poultry industry today, there are NO independent buyers of poultry. If beef producers continue to except the status quo, let the packing industry continue to consolidate, and let the packers integrate into the feedlot and wholesale/retail segments, we will become the same as the poultry producers...no independence and no control over our destiny.

 

[Jason]

So now we all agree the most limiting factor in profitable cattle production is land costs.

Is it easier for producers to control the cattle to the retail beef stage? Or is it easier for packers to control the cattle back to the ranch?

The point about the cost of the land is that there comes a point where 100% of the retail value of the beef produced won't cover the land cost let alone any of the other costs involved in getting it to retail.

The question becomes if all land owners see no value in producing cattle, where will packers get any raw materials to make any money from?

Remember there comes a point where land costs are beyond retail revenue. Do you really think the packers would pay a land owner more than the retail revenue just to get cattle?

Many producers currently sell cattle or beef at below sustainable levels because they don't count the cost of the land. The land is their retirement fund, or they have another generation wanting to maintain the "lifestyle". Demographics tell us that number is rapidly declining, so those that are building herds now are getting bigger.

We have examples on Ranchers of producers with 1000 plus momma cows. 500 is fast getting to be the smallest number feasible to run in many areas.

I have just under 200, too many for 1 person, not enough to hire help. I am running multiple business plans to decide what next. None of them include whining that if only the packers gave back another few cents for fats, or if wages were only cheaper. People deserve a living wage, if I can't pay it, I don't expect someone to starve to make me money.

If I thought it was profitable to start my own slaughter facility and market direct, I would. One family here has done that, but they have 13 brothers involved and the wives often market beef for free. Not exactly a model one can copy.

The numbers are there to study. Make choices based on reality not the "but if they weren't so big" falacy. Most that complain about the packers are those that used to make a living from cattle with little work. Those days are gone.

 

[Sandhusker]

Jason, "The question becomes if all land owners see no value in producing cattle, where will packers get any raw materials to make any money from?"

Australia, South America, Central America, .....

 

[Jason]

And somehow you think those countries won't experience the same pressures?

Australia has most of their cattle industry in shambles from their extended drought.

South America is under watch for foot and mouth. Only processed beef is allowed in.

To try to bring up many Central American calves is difficult as the temps those cattle will get sick at is rather high...60 degrees will "freeze" many of them.

Transportation costs are higher making the trip non profit...so again where will packers get cattle from?

This whole scenario will take a long time as I mentioned some sell below the actual cost of production.

The only thing that will sustain beef production as we know it isn't new controls and added costs, it is getting consumers to pay more for the same quantity of beef. Maybe the industry as we know it is on its way out.

I doubt it will ever get so no beef is consumed, but things will change in consumption, price and selection. Some will no longer be in business and those who are will be bigger in some sence, either pasture to plate, or just bigger numbers.

 

[Sandhusker]

Jason, "Australia has most of their cattle industry in shambles from their extended drought."

Droughts don't last forever.

Jason, "South America is under watch for foot and mouth. Only processed beef is allowed in."

1) FMD can be eradicated.
2) The whole continent does not have FMD
3) The packers have a history of getting rules changed in their favor.
4) Right now, the USDA is trying to open up areas in Argentina, even though it is a FMD country, for imports. That should tell you something.

 

[RobertMac]

Maybe the industry as we know it is on its way out.

And what is going to replace it....look at the poultry industry because those are the companies that are taking over the cattle industry.

The only thing that will sustain beef production as we know it isn't new controls and added costs, it is getting consumers to pay more for the same quantity of beef.

Mike, this is the cue for your favorite quote.

So now we all agree the most limiting factor in profitable cattle production is land costs.

No, Jason, it is the prohibiting factor for those that want to buy land and pay for it with cattle income ONLY.

Is it easier for producers to control the cattle to the retail beef stage? Or is it easier for packers to control the cattle back to the ranch?

Depends on the producer.

Is it more profitable for the producer to control the cattle to the retail beef stage? Or is it easier to sell weaned calves and let packers to control the consumer's dollar back to the ranch?

 

[Jason]

The scare tactics of foreign beef have been used for years, hasn't happened yet.

The higher freight costs get the less likely raw materials will move great distances.

Integrated beef supply is most likely the way the industry will survive. It can't be based on the chicken or pork models, because beef is raised differently, and does not work well in confinement barns.

Some idiot will bring a rare example of someone who raises cattle inside, but it is not the norm. Pigs and chickens like warm barns, cows like cool open spaces. Disease and public perception will dictate the ways animals can be raised.

The packers have no way of controling a producer that wants to go to retail. Contrary to what some think, they don't control what consumers will buy. The producers have the choice as long as they have the cattle. If packer bids were to fall far enough that producers would go broke by selling, they would change what they do. Some would stay in business by going retail.

The time could come where packers just close their doors because there isn't any margin left. More likely alliances will be formed that assure both packers and producers a piece of the pie. It doesn't make sence for producers to start from scratch learning the hard way how the processing of cattle works.

Those that will learn from others will be the ones that survive while the blamers and whiners will get left behind. Deal with change or have it thrust upon you. Change is just an opportunity to do things better.

 

[Sandhusker]

Jason, "Integrated beef supply is most likely the way the industry will survive. "

If it's from the top down, ranchers are done for. We all had better fight that with every ounce of strength we have.

Jason, "It can't be based on the chicken or pork models, because beef is raised differently, and does not work well in confinement barns"

Confinements have nothing to do with vertigral integration. The packers will still base their beef model on pork and chicken. Those systems work very well for them, they would be fools not to stay with what works.

 

[RobertMac]

The scare tactics of foreign beef have been used for years, hasn't happened yet.

The higher freight costs get the less likely raw materials will move great distances.

Foreign beef doesn't have to come into the N.A. market to effect it. What needs to be understood is that the multi-national that dominate our markets are expanding their presence in all other beef producing countries. While NCBA is trying to focus producers on the fact that 95% of the world's population is outside of N.A., their "beef industry partners" are expanding their foreign production programs to undermined the need to provide that 95% with N.A. beef!!!

Integrated beef supply is most likely the way the industry will survive. It can't be based on the chicken or pork models, because beef is raised differently, and does not work well in confinement barns.

The pork and poultry models don't work because the animals are raised in confinement barns (that's just a production efficiency advantage they have over beef), the models work because the packers have complete control over the markets!!!!!

The packers have no way of controling a producer that wants to go to retail.

Wrong!! Ben just told you how he was regulated out of business. HACCP did two things for the large packers...it gave them control of quality control and safety protocols in their plants (we see how well that has worked out)...and it gave them a means to eliminate their competition (this is probably why Ben is skeptical of government solution for our industry). Over 95% of fed cattle are processed through 5 packers...controlling the ability to turn cattle into beef IS CONTROLLING PRODUCERS THAT WANT TO GO RETAIL!!!!!!!

The time could come where packers just close their doors because there isn't any margin left.

Why is Smithfield about to build a new beef packing plant if there is no money in the beef industry????????
Why are Tyson and Cargill expanding their foreign programs if there is no money in the beef industry?????

Processing cattle is only a segment of the beef industry chain that these companies own. Did you not learn anything from your experience in retailing?????? Like how to spread profits?????

Those that will learn from others will be the ones that survive while the blamers and whiners will get left behind. Deal with change or have it thrust upon you. Change is just an opportunity to do things better.

I agree, but I'm having trouble deciding which side of the fence you are on. :???:

 

[Ben Roberts]

[
Wrong!! Ben just told you how he was regulated out of business. HACCP did two things for the large packers...it gave them control of quality control and safety protocols in their plants (we see how well that has worked out)...and it gave them a means to eliminate their competition (this is probably why Ben is skeptical of government solution for our industry). Over 95% of fed cattle are processed through 5 packers...controlling the ability to turn cattle into beef IS CONTROLLING PRODUCERS THAT WANT TO GO RETAIL!!!!!!!


Hind-sight is always 20/20!

If I had read the 9,000 page report, conducted by the Justice Department, at direction of the Federal Trade Commission in 1917, for the President of the United States, before I got into the cattle industry. I would have went to work for one of the major packers, worked my way up the management ladder, and be retired today a wealthy man. I would have never thought about becoming a producer. After I read that report, I realized that cattle producers are fools.

The government, is not going to help us! WE HAVE TO HELP OURSELVES! I've tried to bring some enlightenment to our industry, some understand what I say, others remain fools.

Best Regards
Ben Roberts

 

[Maple Leaf Angus]

The government, is not going to help us! WE HAVE TO HELP OURSELVES! I've tried to bring some enlightenment to our industry, some understand what I say, others remain fools.

Best Regards
Ben Roberts

:clap: :clap: :clap: :clap: :clap: :agree:


If you cannot find a way to make it on your own outside of the system, you will be just another tiny cog in a very large wheel with no say whatsoever in how it "should" be. At best, you will be able to milk a bit of token support out of a reluctant government.

I came to see that about 10 years ago and spent a lot of energy trying to correct the system. I gave up. And now I have too little stamina left to care about much anymore.

Just a deep-seated burning anger against a system that will endlessly and gladly exploit the efforts of the dedicated working man or woman who love what they do. And are very good at it.


Dang, at one time if I had heard someone say that, I would have called him or her a communist. Whatever happened?

 

[Sandhusker]

I disagree, Ben. The government makes the rules. They're in effect the referees of the game, and you can't win any game if the refs are against you no matter what players you have and what plays you run. Look at Creekstone.

 

[Ben Roberts]

[
If you cannot find a way to make it on your own outside of the system, you will be just another tiny cog in a very large wheel with no say whatsoever in how it "should" be. At best, you will be able to milk a bit of token support out of a reluctant government.

I came to see that about 10 years ago and spent a lot of energy trying to correct the system. I gave up. And now I have too little stamina left to care about much anymore.

Just a deep-seated burning anger against a system that will endlessly and gladly exploit the efforts of the dedicated working man or woman who love what they do. And are very good at it.






I totally agree and understand you Maple Leaf Angus, I have the stamina too still put up a good fight against the system, I don't have the energy anymore, to fight with my neighbors though, that want to remain in denial.

Best Regards
Ben Roberts

 

[Ben Roberts]

I disagree, Ben. The government makes the rules. They're in effect the referees of the game, and you can't win any game if the refs are against you no matter what players you have and what plays you run. Look at Creekstone.

Sandhusker, disagree all you want! I would expect nothing less from R-CALF and some of its members. Public officials care little about the opinions of individuals, but they do respect and give great consideration to the combined opinion of organized individuals. Creekstone, was one individual.

Best Regards
Ben Roberts

 

[Sandhusker]

I disagree, Ben. The government makes the rules. They're in effect the referees of the game, and you can't win any game if the refs are against you no matter what players you have and what plays you run. Look at Creekstone.

Sandhusker, disagree all you want! I would expect nothing less from R-CALF and some of its members. Public officials care little about the opinions of individuals, but they do respect and give great consideration to the combined opinion of organized individuals. Creekstone, was one individual.

Best Regards
Ben Roberts

Creekstone is also an example of the futility of trying to go against a government that is working for the competition.

You seem to be switching horses, Ben. You've said that R-CALF (an organized group of individuals) was wasting their time going to Washington. Now you tell us that government will give a group great consideration. Can we get government to work for us or not?

Personally, I think the only way to address a problem is to fix what is broken. If you don't, the problem never goes away and only gets worse. What is broken is that we have a government catering to big business, not the actual voting public. Take care of that big problem and a lot of the smaller problems take care of themselves.

 

[Ben Roberts]

[You seem to be switching horses, Ben. You've said that R-CALF (an organized group of individuals) was wasting their time going to Washington. Now you tell us that government will give a group great consideration. Can we get government to work for us or not?

Personally, I think the only way to address a problem is to fix what is broken. If you don't, the problem never goes away and only gets worse. What is broken is that we have a government catering to big business, not the actual voting public. Take care of that big problem and a lot of the smaller problems take care of themselves.

Sandhusker, R-CALF is not an organized group of individuals! R-CALF is a protectionist group, and not very well organized! I have used as an example many times, the Sierra Club, a well organized group that started with sixty members, now over six hundred thousand strong, and look at the power and authority they have.

I agree, we need to fix what is broken, I disagree with what you believe is broken. Cattlemen need to take back the control of their industry, and become a "big business" by organizing into a group even larger than the Sierra Club.

Best Regards
Ben Roberts

 

[Sandhusker]

Ben, "Sandhusker, R-CALF is not an organized group of individuals! R-CALF is a protectionist group, and not very well organized! "

:lol: :lol: Come on, Ben. We demand common sense in trade agreements and we're protectionist? We don't think the US should import product from one of the how many countries we import from until they get cleaned up and that is protectionist? Protectionists want to close the border to ALL countries, Ben.

If you compare R-CALF to other organizations, I'd say we're very well organized. Our leadership communicates via quarterly magazines and email updates probably once a week. Membership shows they're in the game with roll-over sales. Washington calls on our leaders for testimony. Those are signs of a vibrant group.

Ben, "I agree, we need to fix what is broken, I disagree with what you believe is broken. Cattlemen need to take back the control of their industry, and become a "big business" by organizing into a group even larger than the Si"

I'll agree 100% that cattlemen need to all get together. Right now, there's only one national organization that represents cattlemen.

From your posts about being regulated out of business by the government, I surmised you saw them as the problem. What do you think is the biggest problem?

 

[RobertMac]

Ben, do you honestly believe that the five packers that control over 90% of fed cattle processing capacity will be willing to work with a producer organization the way my packer works with me? You have well documented the low opinion of producers these packers have...aren't they going to do everything in their power to crush such an organization? And with their pork and poultry income, they have a lot of power! Not saying it can't be done, but we will have to have a different attitude from producers and government.

 

[Ben Roberts]

Sandhusker, i'm not going on this merry-go-round with you again!