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Staggering Figures

burnt

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A recent Column -

“Staggering Figures”

Neil held out the invoice for the newly bought calves. “Buck twenty out there,” he stated, “plus the freight. It works out to about a buck thirty”. At 485 pounds weaning weight, the rancher that produced those calves received a grand total of$582 per calf in the fall of 2010. As a cow calf operator, I could only shake my head. Even with their lower overhead, the western cattle producers must have a hard time penciling a profit with those prices. Here in Ontario, it is disastrously short of breakeven.

When I recently presented a Member of Parliament with the Canadian cattle producer’s request for mediation on the BSE class action currently in progress, the Member pointed out that some calves were again bringing “a buck thirty” per pound. Under my silent stare, he falteringly stated that while the cow-calf operator might not find even that improved price to be overly profitable, the feeder/finisher will have a hard time penciling a profit with the higher priced calf. “There are just not enough dollars in the finished animal”. I pointed out that that was not my fault so why should I work for nothing to subsidize the consumer.

The actual value shortfall was sharply highlighted by a farming account my long-retired uncle recently described to me. His early farming experience gave perspective to today's prices. Soon after marrying my aunt in 1947, he bought my Grandfather's Zurich area farm including 6 cows, about 20 head of young stock, grain and machinery all included. They milked Durham cows, he said, “because they were dual purpose and milked better than the Herefords”. The main piece of machinery was a “B” Allis Chalmers tractor. The total package cost slightly above ten thousand dollars.

After the move, Grandpa’s love for the place compelled him out to the farm almost daily to check on things. Thus, when Uncle Harold shipped two finished steers to Toronto stockyards in 1951, Grandpa noticed and asked about their absence.

"Shipped them to Toronto Stockyards", Uncle Harold replied.

"How much did you get for them?" Grandpa asked.

"$900" Uncle Harold told him.

Grandpa was literally staggered by the news and just stumbled in a small circle for a few minutes mumbling to himself "Nine hundred dollars, nine hundred dollars . . ." Uncle was locked in paroxysms of laughter as he relived the moment, "$450 each", he chortled.

In about 1950 Uncle Harold paid $7500 for one hundred acres and roughly $3000 for the livestock, feed and machinery. And shortly thereafter sold two finished steers for almost $900? “I just hit a good market” was Uncle Harold’s assessment. He had received more than double the $200 Grandpa was accustomed to receiving for butcher steers just a few years previous.

So, whether one uses the $200 or the $450 figure, and even taking into account our increased productivity, it is staggering to extrapolate those values into today’s economy. And then remember that in the depths of the BSE crisis in 2003, many steers sold for less than $450.

A business that survives only by cannibalizing its production base will necessarily and inevitably fail. So indeed, “a buck thirty” seems a bit skinny and could use some fattening up, all things considered. Staggering figures, indeed.


JES, July 9, 2011.
 

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