“But a tractor wasn’t enough. If you don’t have front-wheel assist, you’re pretty much a nobody, right?”
– JOHN POPP
Walking around at Ag Days, it’s easy to be dazzled by the gleaming, new equipment.
But the road to ruin in the cattle business is littered with the broken dreams of those who fell under that costly spell, and found out only too late that their production costs exceeded their incomes. And the jig was up.
“You guys ever notice that when you go up to the booths here, that as soon as they realize you’re a cattle guy, they don’t want to talk to you anymore?” joked John Popp, a MAFRI beef specialist who has also operated a ranch near Erickson for the past 15 years.
As he began his presentation that touched on a wide range of outside-the-box concepts, he held up a fibreglass electric fence stake that he’d bought during the three-day event held in Brandon last week.
“This is one of the cheapest things that you can purchase at Ag Days. How much do they cost? Five bucks?” he said.
“I’ve found these to be one of the most valuable tools on our farm to cut costs.”
Way back in the old days, he noted, a rancher could make a decent living with not much more than a horse, an old tractor and square baler, and a herd of 30 to 40 cows.
“But a tractor wasn’t enough. If you don’t have front-wheel assist, you’re pretty much a nobody, right?” he said. “And you have to have a quad, right?”
Then came the bale processor and mixer wagon. That meant two tractors that needed to be started every day.
All of that costs money. But the latest trend in the cattle business – among those who have survived – is a minimalist approach.
That includes not just the bale grazers, who plan their winter feeding strategy to save diesel costs as well as recycle nutrients, and the cutting-edge ranchers who are scheming up ways to stockpile grass to extend their grazing season with the goal of never having to put a bale in front of their cows again.
“Ultimately, my challenge to you guys as cattle producers, is how can you add an extra two weeks to your grazing season at the end of 2010,” said Popp. “Two weeks. That’s not a lot.”
That doesn’t mean a forced period of virtual starvation, he added. But even if a protein supplement is necessary, those extra two weeks on grass and not full feed could mean savings of up to 50 to 60 cents per head per day.
“And then in spring, my challenge is can you get your cows out five to seven days earlier than you have done traditionally.”
Genetics is another element that needs attention, said Popp. Sixty to 100 years ago, cattle managed to survive without tractors dropping hay bales in front of them, or barns to shelter them at calving time.
Misguided breeding strategies aimed at feedlot gains rather than grass production in past decades have hurt beef efficiency.
As an unrelated example, the Holstein dairy cows of today produce huge amounts of milk, but they can’t do it on a grass-only diet.
“They can’t eat enough to sustain their metabolic needs from grazing,” he said. “That’s because it has been bred out of them for generations.”
MARKET SIGNALS CHANGING
Now, in the beef industry, circumstances are changing, and those ill-prepared for the new rules of the game are getting caught flat-footed.
“Why did these things happen? It’s because the market has given us a signal. The market told us, ‘Fuel is cheap. Feed is cheap.’ I’m not saying anybody did anything wrong. We just did what the market told us to do,” he said.
“Then, two years ago, diesel fuel went through the roof, but cattle prices didn’t follow it up. We started scratching our heads. Now prices have come down again, and we’ve stopped scratching our heads.”
Getting to know your cost of production is an important part of the planning process, yet many ranchers still don’t bother to crunch the numbers for feed and yardage costs.
The simplest way to calculate hay production costs is to figure $60 per hour to run a new tractor and haybine in the summertime, and $40 for an older tractor and baler.
“Keep track of your hours, then calculate back what you’ve invested in fuel and time on your hay and straw that you’ve baled, to find out what it cost you per bale.”
YARDAGE COSTS ADD UP
Yardage costs, of the cattle that are in a confined wintering area, is the cost of running a tractor in the winter, manure hauling, and corral upkeep such as new wooden planks.
If a bale shredder is used to feed 100 cows and the job takes an hour on the tractor at $60 per hour, then the yardage cost is 60 cents per head per day.
“This is simple math, guys,” said Popp.
Compare that to bale grazing, where the rancher goes out once a week to move an electric bale grazing wire for 200 cows.
“If it takes you two hours, that’s $40 divided by 200 cows divided by seven days. That’s two cents per cow per day for yardage costs,” he said.
Those who continue losing money in the cattle business should ask themselves why they persist.
“Is it because you can’t do anything else? Is it because you love doing it? Or last but not least, is it because you like losing money?” he asked.
“In my opinion, as a rancher and a farmer, once you start eroding equity out of your business, you’ve really got to start evaluating what you’re doing.” [email protected]