What became of Econ 101

[Jason]

I have friends that live in Mississippi, and investors have been buying land as everywhere else. They don't want to have to run cows, and trees are a "no hands on" venture.

Canadian beef has nothing to do with them exiting the industry. Other ag enterprizes are shutting down as people want, and can get higher income from other sources.

 

[Sandhusker]

Bill, "Take out the Canadian animals that were processed in US plants and exported by plants such as Creekstone."

You need to educate yourself on Creekstone's business. They don't use Canadian cattle.

 

[Bill]

Bill, "Take out the Canadian animals that were processed in US plants and exported by plants such as Creekstone."

You need to educate yourself on Creekstone's business. They don't use Canadian cattle.

Are you saying that pre-BSE Creekstone didn't harvest any Canadian cattle finished in US feedlots?

In fact they were pushing USDA to allow them to purchase and test Canadian cattle after the border was closed.

Full text of Creekstone's response to USDA
by Bill McDowell on 4/14/04 for Meatingplace.com
Here is the full text of Creekstone Farms' April 13 response to USDA regarding the agency's denial last week of Creekstone's BSE testing request:

DATE: April 13, 2004

TO: Undersecretary J.B. Penn
United States Department of Agriculture

Undersecretary Bill Hawks
United States Department of Agriculture

Chief of Staff Dale Moore
United States Department of Agriculture

CC: Secretary Ann Veneman
Secretary of Agriculture
United States Department of Agriculture

FROM: John Stewart, C.E.O.
Creekstone Farms Premium Beef Bill Fielding, C.O.O.
Creekstone Farms Premium Beef

SUBJECT: RESPONSE TO USDA

On behalf of Creekstone Farms I want to thank you for the opportunity to have met with you in Washington, D.C. last Thursday, April 8. We had hoped for a different outcome to the meeting, however, and are very disappointed with USDA's decision not to allow Creekstone Farms to voluntarily test all of the cattle we process for bovine spongiform encephalopathy (BSE). As we have discussed in the various meetings held with the USDA over the past several weeks, BSE testing of our cattle is something our export customers and consumers are asking for, and we feel we should be able to provide it to them.

Creekstone Farms will challenge the USDA's decision, and are currently analyzing our legal options. We are challenging USDA's authority to control the sales of BSE diagnostic tests in the United States and your decision to prohibit companies like Creekstone Farms from conducting 100 pecent testing of young animals that would meet our customers' needs and requirements.

We are hopeful there will be a resolution to the current U.S. beef trade embargo with Japan. It is imperative to companies such as ours that trade be resumed. However, we understand the position of our Japanese customers, consumers and their government, as well as the challenges their staunch positions represent. They are requesting 100 percent testing of all beef bound for their market as the precursor to the resumption of trade. The USDA's current plan to test only older U.S. cattle for BSE will not meet this requirement. On Monday, Japanese Vice Agriculture Minister Mamoru Ishihara announced that the "U.S. government's decision not to accept [Creekstone's] offer is, frankly speaking, regrettable."

Creesktone Farms has received a tremendous amount of support during the past few weeks for our proposal to test all of our cattle for BSE. We will continue to work with our senators and congressmen, as well as industry experts, to help find a solution to this recent USDA decision. Please understand our situation as well as our consternation over why the USDA will not embrace our plan. Creekstone Farms plans to test more cattle than the USDA, at a lower cost. If our plan were to be implemented, we would test over 300,000 head of cattle over the course of a year, versus the USDA proposed cattle population of approximately 220,000 head. As well, the USDA is planning on spending a minimum of $72 million of taxpayer money to conduct these tests. The Creekstone Farms' plan will cost less than $6 million using the identical test kit, and our customers are willing to pay for the cost of the testing.

We ask that the USDA reverse its decision of last week and allow Creekstone Farms to test our beef for BSE. In addition, Creekstone Farms is asking for USDA approval of the following secondary options:

1) Expand the USDA's surveillance program to involve 1 million head of young animals.
2) Approve the procedure whereby Creekstone Farms is allowed to ship brain stem samples to Japan for BSE testing in their laboratories.
3) Approve Kansas State University as an official USDA laboratory with direction to establish Creekstone Farms as a satellite laboratory.
4) Approve the purchase of young Canadian cattle that would be BSE tested at our processing plant in Arkansas City, Kansas.
5) Approve labeling domestic product BSE tested due to increased consumer concern in the U.S.
This letter is also giving notice to the USDA that our loss in revenue is a minimum of $200,000 per day. We will continue to track this loss on a daily basis to determine damages. Additionally, we have nine important questions that we would appreciate having USDA address and respond to immediately. Please be advised we will be sharing this with the media.

Sincerely,

John D. Stewart
C.E.O.

Bill Fielding
C.O.O.
Creekstone Farms Premium Beef, LLC

 

[Sandhusker]

Bill, "Are you saying that pre-BSE Creekstone didn't harvest any Canadian cattle finished in US feedlots?"

That's what I'm saying.

Bill, "In fact they were pushing USDA to allow them to purchase and test Canadian cattle after the border was closed"

You'll notice those are secondary options. They were wanting to get some cash flow from the testing facility they had just built and was sitting idle.

 

[Bill]

Bill, "Are you saying that pre-BSE Creekstone didn't harvest any Canadian cattle finished in US feedlots?"

That's what I'm saying.
Bill, "In fact they were pushing USDA to allow them to purchase and test Canadian cattle after the border was closed"

You'll notice those are secondary options. They were wanting to get some cash flow from the testing facility they had just built and was sitting idle.

I think perhaps it is you who needs to educate yourself on the beef business as well as Creekstone.

In addition, Creekstone Farms is asking for USDA approval of the following secondary options:

Did you fail to notice or intentionally not mention the "In addition" part? That would mean as well as, also, including, etc.

Creekstone wanted USDA to allow testing of all their harvested animals INCLUDING young Canadian cattle.

4) Approve the purchase of young Canadian cattle that would be BSE tested at our processing plant in Arkansas City, Kansas.

 

[Anonymous]

Bill- That was after (secondary to) the USDA already turning them down on US cattle.....

We ask that the USDA reverse its decision of last week and allow Creekstone Farms to test our beef for BSE. In addition, Creekstone Farms is asking for USDA approval of the following secondary options:
1) Expand the USDA's surveillance program to involve 1 million head of young animals.
2) Approve the procedure whereby Creekstone Farms is allowed to ship brain stem samples to Japan for BSE testing in their laboratories.
3) Approve Kansas State University as an official USDA laboratory with direction to establish Creekstone Farms as a satellite laboratory.
4) Approve the purchase of young Canadian cattle that would be BSE tested at our processing plant in Arkansas City, Kansas.
5) Approve labeling domestic product BSE tested due to increased consumer concern in the U.S.

 

[Sandhusker]

Bill, "Did you fail to notice or intentionally not mention the "In addition" part? That would mean as well as, also, including, etc. "

I saw that. I'm surprised you did since it's in the same sentence as "secondary options" which you missed earlier. "In addition, Creekstone Farms is asking for USDA approval of the following secondary options."

 

[mwj]

Tam, I'm sure this is irrelevant to you, but since NAFTA, over 80% of the cattle producers in my area are out of business and their pastures are growing pine trees. You demand that these producers accept and welcome Canadian beef that has displaced their beef and put them out of business.

If they could not make money with the prices we have had the last few years they deserve to be out of buisness. :shock:

 

[Beefman]

Ya know Beefman, you kinda remind me of sh. You can talk for an hour and not say $hit! Did you see where I commented on your meatrix video anywhere on this forum? Did you see where I embraced any kind of group that you babbled about?
How about I ask you about your perversions? You would probably ask where the hell did that come from. Well I'm asking the same thing. Why are you babbling to me about things I never commented on? :roll: :roll: :roll: Play your little games with someone else! :x

Chill. Go have a Coke and a smile. Reread my post. I did not credit you with being the author of anything you've stated. I just acknowledged your Stevie Wonder quote back to you. Now go back to being Fed Up on whatever it is you're Fed Up about.

 

[RobertMac]

Tam, I'm sure this is irrelevant to you, but since NAFTA, over 80% of the cattle producers in my area are out of business and their pastures are growing pine trees. You demand that these producers accept and welcome Canadian beef that has displaced their beef and put them out of business.

If they could not make money with the prices we have had the last few years they deserve to be out of buisness. :shock:

They aren't around for these 'record prices'...but on that note, I was reading a piece by Kit Pharo. 1950s prices were $20 to $30/cwt. When today's prices are adjusted for inflation, they are more like $10/cwt. :shock:

 

[RobertMac]

Tam, I'm sure this is irrelevant to you, but since NAFTA, over 80% of the cattle producers in my area are out of business and their pastures are growing pine trees. You demand that these producers accept and welcome Canadian beef that has displaced their beef and put them out of business.

Let me try understand this.

You honestly believe that Canadian beef is the only reason those American producers have exited the industry? Canada is the only reason they are no longer in business?

How much of the NET US beef supply did Canada supply pre-BSE. Take out the Canadian animals that were processed in US plants and exported by plants such as Creekstone. Also remember to take out the amount of beef and live animals shipped from the US to Canada.

Is it that your area has land values that are too high to run cows on and that there is a better return growiing pine trees. It is not feasible to run cows on all areas in North America so I am curious if that is the case in yours RMac?

Since 1970s, the USA beef market has lost market share, production/consumption has not kept pace with population growth, and demand has generally trended down. When the door is opened to new supply, what are going to be the consequences on that market? Hint...the same thing that happened when the Canadian market had a sharp increase in supply because of the BSE border closing...only not as dramatic. Anyway, who cares if a bunch of Mississippi rednecks go out of business.

You and Jason tell me something...at what land value is it too high to run cattle? And what is the land value here???????????

 

[Bill]

Tam, I'm sure this is irrelevant to you, but since NAFTA, over 80% of the cattle producers in my area are out of business and their pastures are growing pine trees. You demand that these producers accept and welcome Canadian beef that has displaced their beef and put them out of business.

Let me try understand this.

You honestly believe that Canadian beef is the only reason those American producers have exited the industry? Canada is the only reason they are no longer in business?

How much of the NET US beef supply did Canada supply pre-BSE. Take out the Canadian animals that were processed in US plants and exported by plants such as Creekstone. Also remember to take out the amount of beef and live animals shipped from the US to Canada.

Is it that your area has land values that are too high to run cows on and that there is a better return growiing pine trees. It is not feasible to run cows on all areas in North America so I am curious if that is the case in yours RMac?

Since 1970s, the USA beef market has lost market share, production/consumption has not kept pace with population growth, and demand has generally trended down. When the door is opened to new supply, what are going to be the consequences on that market? Hint...the same thing that happened when the Canadian market had a sharp increase in supply because of the BSE border closing...only not as dramatic. Anyway, who cares if a bunch of Mississippi rednecks go out of business.

You and Jason tell me something...at what land value is it too high to run cattle? And what is the land value here???????????

So what you are now saying is that it is not Canada's fault that those producers went out of business? It would be pretty hard to place all the blame on us when we NET supply under 5% of your beef. (Not sure on that but I believe that is one figure that has been passed about.)

What are you asking me about your land values for? Here is my QUESTION again:

Is it that your area has land values that are too high to run cows on and that there is a better return growiing pine trees. It is not feasible to run cows on all areas in North America so I am curious if that is the case in yours RMac.

You tell us the answer. You live there.

 

[Mike]

One of the reasons that so many pine trees were planted was the payments from the guvment. People were paid to remove farm and pasture land from the system and replace it with timberland. Free planting plus $10 bucks per acre per year was/is paid.

The paper company lobby pushed these bills through to lower the price of timber, subsequently lowering their cost of supplies. Pulpwood now is at rockbottom.

It's fairly easy to switch pasture to pines. But much more expensive the other way around.

Big business comes out ahead again.

 

[DiamondSCattleCo]

You and Jason tell me something...at what land value is it too high to run cattle? And what is the land value here???????????

I won't comment on Mississippi land values, but I was watching Montana, Colorado, and Utah ranch land prices a few years back and they were staggering. A few snippets that stuck in my head: Utah - 7.5 million for a ranch house, water rights and property enough for 220 pairs. Montana - $1 million for a rundown ranch house, no water rights and land base for 50 pairs. Colorado - $4.5 million for a ranch house, water rights and property for 125 pairs. No animals, no equipment.

These of course were high side prices, hence the reason why they stuck in my head, but those prices have continued to climb since the time frame I was watching them. Even halving those prices, you could never possibly make the payments on cattle margins.

Compare to prices in my neck of the woods. Lets take the 7.5 million. A home quarter with facilities and a decent home (2500 sq ft+) will sell for the $400,000 mark. That leaves $7 million for cattle, equipment and land base. Land in my area is selling on high side for $50,000 quarter, which will support 50 pairs all grazing season. You need another 2 quarters of hay land to support those 50 pairs in the winter (thats high side, the past few years, 1 good quarter of hay land will support 50 pairs all winter). 50 bred cows these days will run you $50,000 MAX. So $200,000 will give you 50 head and enough land base to run them on. So for the investment of $1 million, you can have land and animal to run 250 head. Tag another 1/2 million for high end equipment. $2 million to have a home, 250 cows, land and equipment. With today's margins up here, you couldn't make the payments if you had to borrow for the complete lot. So there is no possible way to make a 7.5 million land only investment pay, or even a $1 million investment pay, if you didn't already own cattle and equipment.

Many US cattlemen that I talked to were planning on selling out at the high prices, and taking off to other parts where they could purchase land and animals at reasonable prices. Alberta had substantial numbers of US cattle producers move in and buy. The Alberta guys came into Saskatchewan, raising our prices up to the current levels. 10 years ago, good land in my area was selling for $20,000/quarter.

Rod

 

[Anonymous]

Rod- You have to remember you wouldn't have those low prices if Sk didn't have their Agricultural subsidy that doesn't allow for any foreign ownership/control of Agricultural land.....

 

[DiamondSCattleCo]

Rod- You have to remember you wouldn't have those low prices if Sk didn't have their Agricultural subsidy that doesn't allow for any foreign ownership/control of Agricultural land.....

What has that got to do with YOUR high land values? Foreign ownership of US lands is even more restrictive, and is common place in virtually all countries. And thats not a subsidy, OT, but protection of the lands for the people that live in that country. And we have no rules stopping people from becoming Canadian citizens and purchasing land.

I really grow weary of you blaming Canada for all your woes. Corporate America is making money hand over fist, moving west and paying exorbitant prices for your lands, raising the prices to the point that it no longer makes sense to raise cattle on those lands. Its time you guys started looking at YOUR government's policies and forcing some change, versus blaming us.

Rod

 

[Bill]

Rod- You have to remember you wouldn't have those low prices if Sk didn't have their Agricultural subsidy that doesn't allow for any foreign ownership/control of Agricultural land.....

What looks like it has the makings of an intelligent thread and the mouth from Montana feels the need to poke his face in and turn it against Canadians.

What you wrote is hilarious coming from one of the biggest whiners of how the US is being taken over by foreigners. Keep thiose immigrants out OT. Don't let the Chinese own your debt, trade imbalance .......yada........yada.......yada.......... Subsidy that doesn't allow foriegn ownership?

Don't bother replying with your same old rhetoric Deputy Dick, we have heard it all before.

 

[Anonymous]

Rod- You have to remember you wouldn't have those low prices if Sk didn't have their Agricultural subsidy that doesn't allow for any foreign ownership/control of Agricultural land.....

What has that got to do with YOUR high land values? Foreign ownership of US lands is even more restrictive, and is common place in virtually all countries. And thats not a subsidy, OT, but protection of the lands for the people that live in that country. And we have no rules stopping people from becoming Canadian citizens and purchasing land.

I really grow weary of you blaming Canada for all your woes. Corporate America is making money hand over fist, moving west and paying exorbitant prices for your lands, raising the prices to the point that it no longer makes sense to raise cattle on those lands. Its time you guys started looking at YOUR government's policies and forcing some change, versus blaming us.

Rod

I can guarantee you if you allowed US ranchers/speculators to buy land in SK-- the value would be much higher....And I don't know where there is much for laws not allowing foreign ownership in the States....At one time the Japs owned several ranch's, elevators and business's in Montana....

 

[IL Rancher]

I don't know if there is much land left anywhere that can pencil out to buy just for cattle (Or ag in general) unless you have some base already in your control and paid for. This place sold for what would have been, to keep in numbers that you were using, 320k a 1/4 sectio in 2000... Most ground around here today would sell for 720k 1/4 section.. Yowie...

The main difference is on 160 acres you can run a heck of a lot of cows. This is mostly corn ground mind you but if you relaly wanted to grass it out you get about 10 AUM's per acre. Hay could push the 8-9 ton rate pretty easy according to folks who have hayed it (Our more marginal land has done 7 tons if fertilized well and good growing conditions).. We figured at one point we could sell this place for... 6.5 to 7 million if the FIL wanted to and move out west... That money wouldn't be able to get a place with this much produciton ability out there for the most part.. At least not where he was looking..

 

[DiamondSCattleCo]

I can guarantee you if you allowed US ranchers/speculators to buy land in SK-- the value would be much higher....And I don't know where there is much for laws not allowing foreign ownership in the States....At one time the Japs owned several ranch's, elevators and business's in Montana....

Again I ask what that has to do with YOUR high land values?

And the Japanese own land in the US the exact same way they own land in Canada. They form US corporations, that are owned by Japanese corporations. The exact same thing happens in Canada.

Rod