Let's stir it up some...

[RobertMac]

Acceptance rates of "Black" cattle has been 17% but source verifyed has been as high as 80%. That alone tells you how the breeds compare.

So, is crossbreeding the problem?

Or maybe this...

Jason wrote:

Angus has probably the most diverse genepool all within a single breed.

What exactly defines a breed if not a narrow gene pool and specific phenotype?

 

[Ben Roberts]

Jason, for you and all of the other Angus breeders, I want to make it clear that I have nothing against Angus cattle, and it's certainly not jealousy, i've made alot of money from Angus and Angus crossed cattle over the years. I look at the bigger picture, when it comes to CAB and CHB programs though, i'm not going to challenge those programs in the courts as to their validity, and neither will you, but what if PETA decides they would, just to reduce consumer exceptence of beef, claiming that all cattle producers (not just Angus breeders) are deceiving them. Don't under-estimate the power or the resources PETA has.

Best Regards
Ben Roberts

 

[Texan]

A lot of good discussion here. But, I'm not convinced that I need to do anything any differently...

And I'm also not convinced that my business practices - or Red Robin's business practices - or any other cattleman's business practices - are contributing to the demise of the cattle business as we know it today. The talk about us going completely the way of the chicken farmer seems pretty far-fetched when you really get to thinking about it. Granted, we will probably do that to some extent - we already have some vertical integration. But the fully integrated poultry model simply won't work in the cattle business because of the investment alone.

Why would packers want to own the nation's cowherd (layers) to provide calves (chicks) for ranchers (contract growers)? The investment in brood cows alone would be astronomical. Just figure what it would cost in cows alone to provide the kill for one 5,000 hd/day plant - give me a break. If packers are intent on that goal, it won't be in this country, anyway. There's too many places south of Texas with friendlier business environments and more room for expansion.

Not to mention the obvious reason that the cattle business won't go the way of chickens. There's already a certain amount of market power by packers and integration in the cattle business. With the market power and integration that packers already have in place, why the hell would they want to take even more of the risk? As it stands now, packers can lay that risk off on cattlemen that are happy to provide what the packers want in a value-based marketing program.

I just think that participation in those programs should be the business of the cattlemen that want to be in it - I sure don't see where it's anybody else's business. If I want to retain ownership and work out a grid with Tyson that I feel like is in my best interest, I'd be a fool not to do it. Or if Cactus Feeders is the high bidder on my yearlings because they think they will work on a Tyson grid, why shouldn't I sell to them? Should I take less money just because Tyson might get their hands on my cattle?

Sustainability for this generation and future generations of cattlemen is going to hinge on profitability. Just as many of us have learned that we need to provide the feeder with a better, healthier product to avoid discounts on feeder cattle, our profitability in the future is also going to involve us doing some things that we might resist at first. It will involve us doing things differently because of a changing marketplace and because of the dastardly global economy.

Those things - the changing marketplace and the global economy - are facts that we have to deal with - like them or not. History tells us that in most cases, no matter if we're talking about a species or an industry, the survivors are the ones who are willing to adapt to change. Not the ones who resist it at all costs.

I'm always agreeable to changing my ways if I think my profitability depends on it. But reinventing the wheel and trying to build a new packer/distribution/retailer system because we don't like the current players is a step backwards, in my opinion. It's a huge loss of efficiency and energy and capital. That cooperative marketing plan will certainly work in niche markets, but it's sure not gonna work everywhere. And it's not gonna work for those of us that don't want to do it.

I don't want to be in the feeding business, I don't want to be in the packing business, I don't want to be in the distribution business, and I sure don't want to be in the retail beef business. And I feel like the majority of cattlemen in this country agree with me. I applaud the efforts and successes of guys like RoberMac and Ben...but I don't want any part of it.

Like I said, though - some of us will have to do things we don't want to do. And it might be ME that has to change my thinking and ways of doing business. So...keep trying to convince me. Because I'm still listening...

 

[Sandhusker]

Texan, "The talk about us going completely the way of the chicken farmer seems pretty far-fetched when you really get to thinking about it. Granted, we will probably do that to some extent - we already have some vertical integration. But the fully integrated poultry model simply won't work in the cattle business because of the investment alone."

"Why would packers want to own the nation's cowherd (layers) to provide calves (chicks) for ranchers (contract growers)? The investment in brood cows alone would be astronomical. Just figure what it would cost in cows alone to provide the kill for one 5,000 hd/day plant - give me a break. "

------------------------------------------------------

Whoa up, Texan, just look another look at the chicken industry. The companies contract growers for the eggs and then contract other growers to raise the chicks. The only chickens that they actually own are the ones being raised for slaughter. If they don't own the brooders, why would they need to own a single cow? Those companies don't own a hen, don't have a barn, and don't have a single piece of equipment - yet they have total control of the complete process. No investment, no risk, but all the control and all the wealth those chickens create. That model will work perfectly with beef cattle.

They won't buy a single cow or an acre of ranch land. They'll tell you what bulls or AI sires to use on YOUR cows to pasture on YOUR ranch, tell you what shots you'll give and what you won't, what equipment you'll have on YOUR ranch, etc....

Now tell me, other than paper and ink, what investment would they need to make?

 

[Mike]

This is the way V.I. will work in the cattle business:

1-Furnish Bulls to cattlemen who own cows.

2-Recommend a mineral and vaccination protocol. (They will of course be in cahoots with these and get a commission when the cost is deducted from the calf check.)

3-Tell you when to turn the bulls in so that they can dictate the calf supply.

4-Promise you "X" cents per lb for calves that meet specs. (This will seem to be above market price for those who have no marketing plan and will jump on it because it looks "secure".

No bulls to buy, no meds or minerals to buy, guaranteed prices for your calves, how could life be any better?

:roll: :lol: :shock: :roll: :shock: :roll:

 

[Ben Roberts]

Texan, the poultry industry, and to a great degree the pork industry, became totaly vertical before we had all of these free trade agreements, and I agree with you, the packers don't want the investment of what it would take, for that same model in the cattle industry.

Look what has happened to the steel, textile, footwear and other industries, and now, it is happening to agriculture. Cattle numbers world-wide, one billion 35 million head, beef cow numbers worldwide 224 million with China having 29% of those, Brazil 23%, Argintina 21% and the USA at 15% of that total. You speak of Cactus Feeders and Tyson and how you don't see anything wrong, with someone wanting to sell, or come into an agreement with them for marketing their cattle, ask yourself this question, how much longer are they going to be in this country, with the cost of labor, regulations and environmental issues that they are faced with daily.

Cactus Feeders built a feedlot in Argintina in 1999, Tyson has announced this year, that they have entered into a joint-venture with them, in Argintina. Tyson, already has poultry operations in China now, beef will be next with the 29% beef cow numbers they have, beef meat packing eguipment has already been sold for export to China.

Texan, you say that you don't want to be in the feedlot, meat packing, or sales business, well there are alot of smaller feedlots and meat packers other than Cactus Feeders and Tyson that do, so you won't have to be, and what about the American consumers, they are on the side of sustainable agriculture, then there is the next generation of farmers and ranchers, that just maybe want to remain in this industry, what about them!

Best Regards
Ben Roberts

 

[Ben Roberts]

Texan- " those things- the changing market place and the global economy- are facts that we have to deal with- like them or not. History tell us that in most cases, no matter if were talking about a species or an industry, the survivors are the ones who are willing to adapt to change not the ones who resist it at all cost."

Texan, you are not going to survive in the cattle industry, because of the very reason you just gave. You are not willing to adapt to change, and you are going to resist it at all cost.

Best Regards
Ben Roberts

 

[RobertMac]

But, I'm not convinced that I need to do anything any differently...

Why would you be convinced Tyson [et al] would do anything differently for beef than they are doing in pork and poultry?

 

[Texan]

Whoa up, Texan, just look another look at the chicken industry. The companies contract growers for the eggs and then contract other growers to raise the chicks. The only chickens that they actually own are the ones being raised for slaughter. If they don't own the brooders, why would they need to own a single cow? Those companies don't own a hen, don't have a barn, and don't have a single piece of equipment - yet they have total control of the complete process. No investment, no risk, but all the control and all the wealth those chickens create. That model will work perfectly with beef cattle.

They won't buy a single cow or an acre of ranch land. They'll tell you what bulls or AI sires to use on YOUR cows to pasture on YOUR ranch, tell you what shots you'll give and what you won't, what equipment you'll have on YOUR ranch, etc....

Now tell me, other than paper and ink, what investment would they need to make?

Sandhusker, if you'll check into it a little further, you'll find that the company usually owns the breeding flocks and hatcheries. I'm sure Econ can speak to that more knowledgeably than I can, but around here, I think they even still use some company-owned houses.

The integrators often put the breeders in a contractor's houses, but they maintain ownership so they can keep tight control over genetics, health, etc. Any way you look at it, implementing the same poultry model with beef would require owning a hell of a lot of cows.

A V.I. system like Mike talks about would be more realistic:

This is the way V.I. will work in the cattle business:

1-Furnish Bulls to cattlemen who own cows.

2-Recommend a mineral and vaccination protocol. (They will of course be in cahoots with these and get a commission when the cost is deducted from the calf check.)

3-Tell you when to turn the bulls in so that they can dictate the calf supply.

4-Promise you "X" cents per lb for calves that meet specs. (This will seem to be above market price for those who have no marketing plan and will jump on it because it looks "secure".

No bulls to buy, no meds or minerals to buy, guaranteed prices for your calves, how could life be any better?

:roll: :lol: :shock: :roll: :shock: :roll:

And this is already going on to some extent - in fact, to a great extent. It's not all done with contracts, but it's being done through price signals passed back to the producer. Many feeders tell us what percentage of continental/british/brahman blood they want. If we don't meet their specs, they won't give as much for our cattle. That's how they dictate genetics.

The natural programs already give outlines on what type of feeds, medications, etc. If we follow that, we get some premiums. Packers/feeders tell us when to turn bulls out by paying more for calves at certain times of the year.

Even when things aren't done by contract, we're still paid to provide what the feeders/packers are wanting. Wouldn't we be foolish not to provide what our customers want?

 

[Texan]

Texan- " those things- the changing market place and the global economy- are facts that we have to deal with- like them or not. History tell us that in most cases, no matter if were talking about a species or an industry, the survivors are the ones who are willing to adapt to change not the ones who resist it at all cost."

Texan, you are not going to survive in the cattle industry, because of the very reason you just gave. You are not willing to adapt to change, and you are going to resist it at all cost.

Best Regards
Ben Roberts

Gee, Ben - I'm glad my bankers have a different outlook on my future. If you had read THE VERY NEXT SENTENCE after what you quoted from me, you would have seen this statement:

I'm always agreeable to changing my ways if I think my profitability depends on it.

A little further, you would have seen this one:

...it might be ME that has to change my thinking and ways of doing business.

I hope you do better presenting facts in your book than you've done in attempting to quote me.

 

[Texan]

Why would you be convinced Tyson [et al] would do anything differently for beef than they are doing in pork and poultry?

I'm convinced because of the differences in concentration of production between cattle and chickens, RM. A poultry complex around here contains everything needed to operate a chicken plant within a 60 or 70 mile radius. Breeders laying eggs, hatcheries, feed mill, all of the growing houses - everything needed is all concentrated in a small area. From conception to chicken nuggets on a reefer, it all happens in that small area. Not so with cattle.

And the geographic concentration that the integrators can do with chickens - the way they divvy up their territories - is something that just isn't going to work with cattle - or cattlemen.

Not to mention the fact that they don't want the expense of providing all of the genetics. Not to mention the fact that they have a certain amount of market leverage already. Not to mention the fact that there is a much friendlier business environment south of here...

 

[andybob]

as a matter of interest, Smithfields are advertising for an Agronomist/pasture specialist, so as to begin improving the carrying capacity of existing pig farms, for their growing beef herd. The new Angus bulls are a big improvement on the bulls used the last three years, the Herefords, have not as yet been upgraded. The expansion of the beef herd has been rapid over the last three years, now a seperate cattle management structure is being put in place, and the expansion emphasis is on more infrastructure in the short to medium term.

 

[Sandhusker]

Texan, "Sandhusker, if you'll check into it a little further, you'll find that the company usually owns the breeding flocks and hatcheries. I'm sure Econ can speak to that more knowledgeably than I can, but around here, I think they even still use some company-owned houses."

You're right. I stand corrected.

It remains that the integrators are masters of controlling assets that they don't own. If beef goes the way of chicken, you'll have a community of ranchers under Tyson, a group for Smithfield, another group for Con-agra. You'll be told how to raise your cattle, what genetics you'll use - even the cows that will be in your herd, etc.... If you don't like what is being handed down, you won't have any options. You can't go to the cash market because it won't exist anymore. You can't go to another company because they're going to have a gentlemen's agreement not to take each other's discontents. I have absolutely no doubt that V.I. is to be avoided at all costs. It will be the death knell of an entire industry and entire communities.

 

[Red Robin]

Texan, "Sandhusker, if you'll check into it a little further, you'll find that the company usually owns the breeding flocks and hatcheries. I'm sure Econ can speak to that more knowledgeably than I can, but around here, I think they even still use some company-owned houses."

You're right. I stand corrected.

It remains that the integrators are masters of controlling assets that they don't own. If beef goes the way of chicken, you'll have a community of ranchers under Tyson, a group for Smithfield, another group for Con-agra. You'll be told how to raise your cattle, what genetics you'll use - even the cows that will be in your herd, etc.... If you don't like what is being handed down, you won't have any options. You can't go to the cash market because it won't exist anymore. You can't go to another company because they're going to have a gentlemen's agreement not to take each other's discontents. I have absolutely no doubt that V.I. is to be avoided at all costs. It will be the death knell of an entire industry and entire communities.

VI is the only thing I can think of to keep the cattle business viable on a large scale in America. Sandhusker, you guys keep saying we won't have any other options, why? Would we not be allowed to sell beef to our neighbors as Ben and RobertM suggest?

 

[Anonymous]

It remains that the integrators are masters of controlling assets that they don't own. If beef goes the way of chicken, you'll have a community of ranchers under Tyson, a group for Smithfield, another group for Con-agra. You'll be told how to raise your cattle, what genetics you'll use - even the cows that will be in your herd, etc.... .

The best example I saw locally was when Future Beef was up and running--not only did they tell you what breeds to run, but who to buy bulls from for top dollar (their investors- who even helped finance your bull purchases), what brandname vaccinations had to be given and when, and when and how they had to be weaned and shipped... They were actually contracting calves sight unseen before they were even born....

 

[Sandhusker]

Robin, "VI is the only thing I can think of to keep the cattle business viable on a large scale in America. Sandhusker, you guys keep saying we won't have any other options, why? Would we not be allowed to sell beef to our neighbors as Ben and RobertM suggest?"

I disagree that it is the only way to keep the cattle business viable. I just have to ask what value the cattle business will be to you if it goes V.I.? I mean, what good is it to you and yours when people worldwide are eating US beef if you only get workers wages for your part in creating that beef? Not only haven't you gained, you lost.

Look at it from a risk/reward standpoint. You're taking emerging markets risk for CD returns. Why?

Selling beef to your neighbors is an alternative if you have more human neighbors than bovine neighors. Cherry County, NE has a cow population of 170,000 and a human population of 6100. Even in the entire state of Nebraska, cattle outnumber people 4 - 1. How much beef can one person eat a year? Ben and RM are operating in a niche. A niche is a niche.

 

[Red Robin]

Robin, "VI is the only thing I can think of to keep the cattle business viable on a large scale in America. Sandhusker, you guys keep saying we won't have any other options, why? Would we not be allowed to sell beef to our neighbors as Ben and RobertM suggest?"

I disagree that it is the only way to keep the cattle business viable. I just have to ask what value the cattle business will be to you if it goes V.I.? I mean, what good is it to you and yours when people worldwide are eating US beef if you only get workers wages for your part in creating that beef? Not only haven't you gained, you lost.

Look at it from a risk/reward standpoint. You're taking emerging markets risk for CD returns. Why?

Selling beef to your neighbors is an alternative if you have more human neighbors than bovine neighors. Cherry County, NE has a cow population of 170,000 and a human population of 6100. Even in the entire state of Nebraska, cattle outnumber people 4 - 1. How much beef can one person eat a year? Ben and RM are operating in a niche. A niche is a niche.

What have "YOU to gain. If you are asking about me personally, nothing really if the beef industry was static. It's not. I personally think the U.S. beef industry is sitting precariously on the edge of rising costs in low cost producer driven market. I don't think it's viable in it's present state. They (the big packers) are going to go somewhere else for cheaper beef. Our land prices, exposure to litigation, environmental oversight, etc. is going to be our death nail. Through VI there is more profit at least available. I think I have a better chance of getting some profit if there is at least some profit available somewhere in the beef chain. I am a risk taker by nature Sandhusker. I kind of enjoy it but as any fool like me knows, and I'd dare say any banker knows, there's a lot of exposure for the return in todays beef business. I don't know how much more the industry or I can stand. 2 or 3 really bad years and lots of people go out of business. Look at Canada and their BSE crash. There is no doubt that some good sound ranchers are tits up because of the way the old ball bounced. I don't know how it is in Cherry county Neb. Sandhusker but considering the money invested, not very many ranchers around here get workers wages. They could all sell out, put the money in the market or even the bank and play golf and make a bigger income. Most people are in the beef business because it's in their blood. Like a fella told me today at the hardware store , he said the fescue seed business is an addiction and the only known cure is 3 bad years in a row. The cow business is much the same. I would really enjoy a producer driven VI venture but as a lot, ranchers are too conservative and independent to start such a deal. It could be done though and if it happened, would you be as nervous about the health of the packers?

 

[Sandhusker]

I compare risk/return of independent cattlemen with a viable cash market to the contract chicken grower and it's not even close. You're never going to "hit a lick" with V.I., yet you still have the same investment and all that investment at risk.

I don't see many cattlemen getting rich around here, but I've see the balance sheets and tax forms of ranchers and ranch hands, and I can assure you I'd rather be the rancher. I can also tell you as a businessman, I don't want to be trying to do business in an area full of ranch workers and no ranch owners.

 

[Red Robin]

I compare risk/return of independent cattlemen with a viable cash market to the contract chicken grower and it's not even close. You're never going to "hit a lick" with V.I., yet you still have the same investment and all that investment at risk.

I don't see many cattlemen getting rich around here, but I've see the balance sheets and tax forms of ranchers and ranch hands, and I can assure you I'd rather be the rancher. I can also tell you as a businessman, I don't want to be trying to do business in an area full of ranch workers and no ranch owners.

How would those ranchers tax returns compare to some of the larger chicken producers around here Sandhusker? Some of these guys over the last 30 years have went from nothing to a very nice landholding and bank account. The chickenhouse owners also have a much larger return than their hired hands. I fail to see your point.

 

[Sandhusker]

I compare risk/return of independent cattlemen with a viable cash market to the contract chicken grower and it's not even close. You're never going to "hit a lick" with V.I., yet you still have the same investment and all that investment at risk.

I don't see many cattlemen getting rich around here, but I've see the balance sheets and tax forms of ranchers and ranch hands, and I can assure you I'd rather be the rancher. I can also tell you as a businessman, I don't want to be trying to do business in an area full of ranch workers and no ranch owners.

How would those ranchers tax returns compare to some of the larger chicken producers around here Sandhusker? Some of these guys over the last 30 years have went from nothing to a very nice landholding and bank account. The chickenhouse owners also have a much larger return than their hired hands. I fail to see your point.

How much money would those large chicken producers be making if there was a viable cash market? What if they could average just a nickel a lb more than what the integrators are paying them?. I can't really compare who's making more money because I'm only seeing one side.

Still, why would you want to take on owner's risk for worker's wages? Why put your destiny in somebody else's hands (an entity that you know is going to pay as little as possible to you) when you don't have to? It seems to me that you're saying that V.I. shields producers from market risk, but that isn't the case. If the beef market should crumble for whatever reason, you tell me what is going to happen to the contract growers.