Guest Op: Ranchers need a profit opportunity
My wife asked me the other day how much money we were actually making ranching these last few years. Haven’t calculated breakevens in a while so thought it was a good time to do it while I was sitting in the tractor feeding cattle this morning.
Calculated on a per head basis:
Feed/pasture 365 days x $2 = $730
Hired help $36000 / for every 500 cows = $72 (Should be 2 per 500 he)
Property Tax $4 acre x 19 acres = $76
Breeding cost = $50
Vet (vaccine/antibiotics/wormer) $25
Mineral = $34
Using the above numbers my initial break even is $987 per calf sold
Divide this by a 95% calf weaned survival rate (which is generous) becomes $1039 per head break even.
You can see this doesn’t include a wage or health insurance for me or my family and we have still haven’t taken into account the purchase of the cow which costs $165 per year if she lives and is productive for 5 years ( not all will) using a $1500 bred cow and 4% interest (again generous).
This also doesn’t include things you need to operate such as money which must be borrowed and paid back with interest to purchase things like feed bunks, bale feeders, vaccine guns, mineral feeders, batteries, tires, fuel, sheds, panels, head gates, working chutes, corrals, fence posts, hydraulic oil, engine oil, grease, four wheelers, repairs, mowers, rakes, balers, feed processors, augers, machinery, tractors, loaders, and everything else we purchase to keep dollars turning in our local communities.
For the past four years if I were to sell every calf off the cow in the fall, my revenue would have been $925/hd which does not even cover my initial break even cost. And what help I’ve gotten from the federal government in the form of indemnity payments, while appreciated is minuscule and more importantly undependable.
It’s no wonder the median age of ranchers continues to go up and will continue to go up more and at an accelerated pace. Should I convince my kids to ranch? Sometimes I wonder.
I’m not complaining. I am still here. With a little luck, hard work and grit I have found a way to make a good living ranching. But the next generation does not want to sacrifice like I had to and those that came before me. And most ranchers that are still here are making it through relying on previous years equity or other business ventures.
My wife asked me the other day why we do this? After thinking about it for a minute. My answer was… Somebody has to. We might not be making money but we are keeping a lot of other people in business….You’re welcome.
1. Reinstate COOL
2. Reform the 35 year old Beef Checkoff
3. Pass legislation that restores competition in the marketplace and prevents monopolization of the beef industry (like what happened to chicken and pork) like the 50/14 bill.
4. Quit importing cattle and beef from other countries and allowing it to be labeled “Product of the USA” by simply altering it.
5. Begin the “‘branding” process of USA beef and USA ranchers to our economy touting its superior quality and safety rather than misleading and deceiving our consumers. Sell them a superior product at a superior price rather than use inferior product to price ours.
6. Do not allow packers to forward contract cattle without first establishing a price. This is giving them a license to steal!
And if all of these become tasks that prove unable to be achieved, introduce a Revenue Based Livestock Insurance program modeled after Crop Insurance and let the taxpayers subsidize our existence so they can pay for it twice…at the production level and at the grocery store simply because the packers/retailers are greedy and refuse to share in the profits.
This is what has happened to the farming industry in order to sustain a cheap global food supply while still keeping our farmers farming. It is becoming more evident that if we want ranchers to keep ranching something has to be done or the landscape of South Dakota and other states will forever be changed. What will our rural communities look like in 20.years if me and 5 of my ranching neighbors exist the cattle business and some out of state entity merges all of them together in order to achieve economies of scale in order to reduce input costs. It happened to the hog industry and it is getting close to happening to the cattle industry! Once the packers control the independent feedlots and they simply become margin operators (which is already happening) the independent cow/calf producer is doomed!
Please give this some thought and get involved before it’s too late and we convince our children to seek a more profitable, more dependable and less stressful way would make a living.
By Eric Iversen
Mellette County, South Dakota, rancher
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