Katie's Journal

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Beef Prices & Random Ramblings

by @ 12:50 pm on August 20, 2011.

Beef prices are up. Last I read, the futures are showing 1.10-1.20 this fall and a continued climb to 1.20-1.30 next fall (that is the price per pound, on the hoof). Prices were up last year but ours only brought .70-.80. We have nice beef calves, I just think technology is taking over the sale barns. Apparently they’ve started doing sales where they come and video your calves, do the auction based on the videos, then come pick up the calves once sold. The sale barn is avoided altogether. Or at least, I think that’s the gist of it. We’ve never been in on one of these. But it makes sense. With so many cows and the stress of running through a sale barn you get a lot of sickness that spreads fast. Avoiding the sale barn would bypass much of that.

I know we’ve seen the inflation in cull cows. Once a cow in the dairy herd gets old, gets mastitis, gets injured, kicks me one too many times, or is otherwise no longer productive we take her to the sale. Typically these are the type that end up at McDonalds. Occasionally we have one that would make it to, say, Ponderosa. But mostly they’re just cheap junk, albeit still food. A few years ago when prices tanked so hard we were lucky to get $400 out of one. They’ve been doing best lately at Waynesberg and the last one we took there actually brought $1000.

Apparently there is a double whammy driving up beef prices. Much of the west has been hit with the worst drought in years. I read recently that TX is facing an agricultural loss this year of nearly $8 billion – double what the last record was in 2006. I know what big loss is to a farm. Many are probably still trying to recover from the losses of the last drought. Most farms are out of pasture and are already feeding hay. That not only means you didn’t get anywhere near your normal hay crop, you’re burning through what little you do have months ahead of when you should. On a good year our pasture holds till October. These farms had to start hay in July. What few bales there are to be found I’ve read about people paying anywhere from $100-150. For ONE bale. A few years ago we were forced to buy a load to finish out the winter at $50 a bale. That seemed highway robbery. You can’t make money with feed prices that high. You can’t even come close to breaking even. Running out of food, all those beef farms are culling their herds like mad. With export demand high, all those replacement heifers are going to someone’s table instead of into someone else’s herd. I read last year the national beef herd was at its lowest number since 1950. And with it still contracting while the world population is rising so fast, well, it’s not hard to see the effect of supply and demand.

Ern and I often ponder the future of farming. Even around here we see the effects of a changing society. It used to be every little field you drove by had a couple cows in it. Yeah it was only a few, but a lot of a few is still a lot. Now many if those fields contain houses. Most of the rest are just sitting there, growing up. It takes surprisingly little time for a hay field to grow up in weeds and brush to the point it’s not worth cutting. I’ve seen more ads this year for free hay fields than ever – bale it and it’s yours. No one is interested in the work it takes to farm anymore. And as more family farms are lost it becomes harder to get started. I know a couple of younger guys who would like to farm but lack the funds to start up.

Just suppose you wanted to farm. Old junk equipment is affordable, but how many people have the knowledge to work on it? Once upon a time you had a dozen neighbors to pitch in and help if your equipment broke down and the hay needed in. Now you’re pretty much on your own. Even if you wanted to start with new equipment, well, good luck. A good round baler will set you back $25k. A tractor big enough to run it is another $50k. Mower? At least $20k. Rake and Tedder? $10k for both. That gets you to what, $100k? It ads up fast. Even at old junk prices you’d still be looking at at least $25k I’d think, just to get usable equipment. Then you hold your breath and pray it doesn’t break down. I do that even with new equipment.

Back to point, I don’t see beef prices coming back down any time soon. We’re in for at least 4 more years. Beef just doesn’t turn a profit that fast. Just suppose that, right now, I decided to increase my beef herd. I’m a year to breed a calf. Another 2 years for that calf to produce her own calf. And a year still before that calf goes to market. So 4 years before an increase in what I send to market. Even then, how many young farmers do you know? Aside from the problems of startup costs, I hear over and over stories of farm raised kids who bolted as soon as they could. Eventually the land was sold. With less and less ground available for farms there is going to be less and less beef. Again, supply and demand takes effect.

Dairy is slightly different than beef. Factory farms can pack thousands of cows into a pretty small space. But even though you bring the feed to the cows and so need less space for the cows themselves you still have to grow all that feed somewhere. Once again, with less land you can’t grow as much feed. Feed becomes more expensive which by necessity drives up milk prices.

We’re actually going to be selling out a large portion of our beef herd this fall. Mainly because most of the herd is old. We went into last winter with 22 cows. By the end of spring we’d lost 6. Five of those were to old age and one was a really nice heifer who had calving problems (her uterus prolapsed). That one wasn’t a total loss as she ended up in the freezer. And of the other five we were able to save 3 of the calves which I bottle raised. Still, we figure the same will happen again this winter. Better to sell now than bury them this spring. Many beef farmers will cull out a cow at 8 years old. Many of ours are into their teens. We plan to save out the youngest and nicest and build back up as needed to around 10-12 cows. As long as prices stay up, that’s plenty to take care of and will get us most of what we need to make the mortgage payment.

I don’t have a big overall point here. Just been blurting out some random thoughts. Without Ern in the parlor it’s pretty quiet and it leaves me plenty of time to ponder different things. This subject is just one of them.

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