Before I write this column I scan the recent market for cattle to get an estimate of the revenue that cattle are bringing to the producer and then see if there are any trends in the cost of production that are identifiable.
We are seeing record prices for calves, older cows, and stockers—those that will spend a shorter time being fed than smaller calves before they are ready for slaughter.
This is a heady time and the prospect of a few more years of these high prices makes me regret getting out of the business. However, my age coming towards the late seventies, should moderate this headiness on my part.
When the margins in the business—medium-term margin of around $80 per mother cow—have been low for so long, it feels good to see the primary producer getting a fair return. The closer the price gets to retail in the value chain, the more money has been made.
This chain is the cow/calf, yearling, backgrounded feeder then the finished animals. The packers or slaughterhouses are next in the chain followed by the retailers.
Most studies have shown that the retailers have done the best at making a profit in red meat sales. It will be interesting to see if price increases at retail will slow down consumer demand when these record calf, yearling and burger cow prices hit the store shelves.
In the meantime, let the farmers and ranchers have their heady time. They deserve it for all the hard work. Heaven knows that the cost side is under inflationary pressure with carbon taxes on an ever-increasing scale, with all kinds of inputs to cattle production going up.
The cost and value of water is higher during drought. Did I mention the cost of insurance, if you can get it?
Since these heady times won’t benefit my partner and me, we will sit back a little and try to keep our living and land care costs under control. We have, after all, lived through the “best of times” during the past five decades, even though the cattle margins were just above or below the cost of production.
“Ever the optimist,” I say, “Hope springs eternal.”