I was reading an editorial the other day in a major beef magazine that got my attention. The author was telling livestock producers that they should feel pretty darn good about making $50 a head on their weaned calves.
How in the world do you make a farm payment, buy groceries, pay for insurance, taxes, fuel, repairs…and list goes on… with $50 calf profit per year? It has gotten so bad that some livestock producers truly are comfortable with not making any money on their herd. So if they make $50 bucks per calf they jump up and down with satisfaction.
Folks immediately get away from this line of thinking.
How many of you would rather make a $1000 profit per head on your calves?
Yes, I can hear many of you folks mumbling, “That dang Greg has lost his mind.”
That’s fine because everyone has the right to their own opinion, and you are not required to change anything that you are doing. But before I get started in detail about changes that you need to make on your operation to get away from the break-even crowd, or the $50 buck per calf profit crowd, I want to share a true story with you.
I was talking to a seasoned, older cattleman several months ago at a cattle sale. We got to talking about the current cattle cycle and the depressed prices that are being paid today at cattle sales around the mid-west. In 50 years of coming to this cattle sale every single week, he told me he saw his first blaring red flag that day.
When he walked into the sale barn’s restaurant that morning to have a quick bite to eat before the sale started, he was astonished. The old rancher said. “You could have heard a pin drop on the floor. It was ghostly silent. The fear on every livestock person’s face was real. Folks were scared to death that the low markets were going to take them off their farms.”
He continued, “Normally every sale day you could not hear yourself talk. The laughter and conversations were normally deafening. Not that day. These livestock folks see the end of the road for their animal operations. You can only lose money for so long. Then you have to quit. If you are in debt, the bank makes that decision for you. I just got up and left, it was depressing seeing the fear on everyone’s face.”
This is not a joke, commodity mainstream cattle operations are hemorrhaging at levels that we have never seen before. As another example, I went to a cattle sale the other day and watched 3,000 head of black calves sell through the arena. Every single calf brought the same price basically for their weight class. Every single calf that day lost money for the producer that raised them. This is a great example of how difficult it can be to make a good living from your farm today by depending on local sale barn prices to market your animals.
What Can We Do?
We can sit around all day finding reasons why we are not making any money in the cattle business. Some of the more common ones you hear are: the Packers are taking all the profit, fake meat is putting pressure on real meat prices, meat is bad for you, China is not buying our meat, Europe is not buying our meat, livestock are destroying the environment…the list goes on from there.
That is enough of that.
Let’s cover the bright road forward with highly profitable livestock operations: those that separate themselves from the commodity market, take ownership of their marketing and become Price Makers instead of a Price Takers.
This isn’t easy. It takes persistence, hard work, sacrifice and risks. It takes finding out who your ideal customer is, and learning to tell your farm story from your heart. It also means raising the right kind of animals. First, you want animals that can make you money. That means:
• 1,000 lb finished animals instead of 1600 lb finished animals
• Slick hided animals versus the hairy ones being marketed today
• Super docile livestock, easy to handle
• Electric fence broke animals
• Animals with big guts, minimal legs
• No giraffe legged animals or elephant size
• Animals that will breed every year without feeding supplements
Raising these kinds of animals might open another market for you too: Grass genetic seed stock sales of females and bulls.
This kind of operation also means differentiating your product from the calves at the sale barn or your neighbor’s. That could mean:
• 100% all natural, grass finished animals
• No growth implants
• Grain Free
• Chemical free animals – no wormers, no ionophores, no antibioics, no lasalocids, no monensin, etc.
• Only market animals that you would want, sell the culls.
• Stand behind your sales.
Folks we absolutely can do this if we look at how we market our livestock in new ways. Nobody else cares if you make a profit on your calf. So you need to take action now. Just remember the next load of calves you give away at the sale barn, make a promise to yourself that will be your last load.
Get started today!
For another perspective on beef marketing, check out John Marble’s article this week asking, “Are You Raising Cattle That Fit Your Market?”