The Ranching Business & Texas Longhorns - Part II
Part II -THE RANCHING BUSINESS & TEXAS LONGHORNS
by Darol Dickinson
USDA data from the last ag census reveals 1000 ranchers (cattle producers) going out of business per month. When over 900,000 people raise beef cattle this is a slow death, barely noticeable, certainly not of concern by USDA. Yet in the last 20 years, with this dwindling down process, there are less beef cows in the USA than most can remember. Last year alone 18% of beef consumed in the USA was imported. The consumer has no clue what country it was imported from.
As the USA imported 18% of the consumed beef, USDA and the Beef Checkoff are spending millions developing export markets to sell more USA beef. (The Beef Checkoff receives a tax/funding from cattle owners each time a critter sells.) The more beef sold outside the USA, the more imported beef is needed to feed the nation. Do the math.
Over 80% of beef cattle in the USA are black -- who knows what breed, but black. These black producers are the main people who comprise the 1000 business failures per month. Why does something so approved by the majority keep failing? What can we learn by these business failures? Let's study the process.
The consumer purchases beef at a grocery store. A USA consumer is the eighth buyer of that piece of meat, on average. First there was the cow/calf producer who sells calves promptly at weaning time. The good operators have already pre-weaned calves and given the main vaccinations. The cow/calf producer hauls his calves to an auction, pays $1 Beef Checkoff, (in the West he pays a brand inspection fee) yardage, and commission on the sale and gets his check. He sells wholesale, then an order buyer purchases wholesale. The buyer sends them to a gathering point, groups them by sex and color, pays more auction commissions, hauling, yardage, $1 Beef Checkoff tax and more unnecessary vaccinations. In Ohio many of these calves go to Kansas and sell at auction, then go on wheat pasture. Their new owner immediately gives new shots, pays hauling to the wheat and hopes for a profit. He bought wholesale and will sell wholesale in a few months. Next they may go to the mountains for the summer with a new owner, then to the feed lot with a new owner, to the packer and then the grocery store. The first few owners give preventative shots again and again. Every buyer and seller deals wholesale with very small margins, until the grocery store, who marks the product up 57%, then here comes the consumer with a grocery cart.
Yes, you read that right. According to USDA the first 6 owners divide up 43% of the consumer's purchase price. The average steer travels 3000 miles during their short life and has 8 owners. The first 6 owners deal only wholesale and many are going out of business, yet the grocery stores (retail) are doing quite well.
In order to profit more in this business there is the pie-in-the-sky Certified Angus program. (Everyone wants to make more profit along the wholesale trail.) This the shining light of the wholesale/retail beef business. Producers who raise the best marbled high choice or prime carcass' can receive one of the largest premiums in the branded beef business, $3 per 100 lbs live weight. Less than 45% of steers fed and carefully aimed at this prize actually earn it. In the Texas Longhorn beef business we believe "Fat is to Certified Angus what Lean is to Texas Longhorns."
Dave Nichols, Bridgeport, Iowa says the fat trim from two Certified Angus prime grade steers will fill a 55 gallon barrel. The day of cheap corn to add barrels of fat is more costly than any time in world history.
In my opinion the above is archaic, yet millions of cattle go down this trail. The chicken people are much more efficient with less land costs, one owner from day old chicks to processing, no auction commissions, no brand inspections, only two hauling fees, to and from the grower.
What can be learned here? Why do agricultural colleges continue to teach the traditional historic 8-owner system? How can hundreds of wasted dollars be prevented, and income for the rancher increase? Here are recommendations.
1) Raise beef type Texas Longhorns, keep the cow maintenance low, have genetics that produce into the late teens, raise cattle that don't require calving assistance, use one bull on a large number of cows and forget the 45 day breeding, plan a total grass operation with low input.
2) Own cattle from conception to consumption and eliminate all the costly above mentioned expenses.
3) Raise steers on grass and finish with 80 to 100 days of grain. Don't place them on feed until they weigh 900 lbs on cheap forage. Shoot for a 1250 lb carcass weight.
4) Sell retail beef. Develop a clientele that will purchase freezer beef.
5) Sell registered breeding stock (females and bulls) at a premium above meat prices.
6) Market polished skulls, tanned hides and other TL products that can't be produced from non-horned cattle.
In the future people who deal in the wholesale cattle business are going to continue to reduce profits unless they have their main income from registered breeding stock or retail beef. The huge clusters of grapes are gone from the days of the Ponderosa -- now we study how to make good profits from raisins.
Cattle people/ranchers are my favorite people. I pray these observations are of profit.
Large grocery stores have helped cattle producers by driving beef prices far above other meats. These stores sell at the highest price consumers ever pay for meat. Now it is time to take that business away from the city meat counters. The 57% needs to stay in the same pocket as the cow/calf producer.
Consumers need to understand that ranchers are their friends. We produce meat, not the grocery store. Always be nice to vegans as they have a 7 year life span then go back to real food, normally for health purposes.
Beef type Texas Longhorn cattle have economic and efficient genetics that are profitable without corn. Prepare for grain-less cattle production in the future. Breeds that have been spoiled with high quality grains may not be profitable without the accustomed care.