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Garvo, and other feeders what are your thoughts on this article....
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IL cow man
Posted 11/14/2012 09:31 (#2696509 - in reply to #2696194)
Subject: Re: my 2 cent guesses


Buffalo IL
-Remeber all feed sources for energy to replace corn will be priced in relation to the value of corn. Most of these sources have handling, storage and freight costs and spoilage factors that make them more economical for larger feeders.

- Cow numbers have been declining for years and were spead up by the drought, but i believe they will continue. The return is too low or basically too slow. It requires major capital to buy and build cow herds and is a huge cash flow nightmare. Buy a heifer, breed a heifer, calve a heifer and wean the calf is two years. Most lending institutions want a payment for the heifer one year before the sale of the calf. Then figure an 80-85% calf crop (national ave) into that formula, replace the heifers that did not breed back, etc. Build a fence that will last for 30 years, but you need to pay for it in five or less years.

-80% of the US calves come from herds less than 30 cows. How much investment can be made for improvements by herds this size? In IL most of the pastures are being lost or have been lost to houses and hunting leases.

- I think it is tremendous the investment by feeders in to new facilities to be more efficient, lower labor requirements, and to be able to manage manure better. The problem may be similar to the swine industry in the early 90's where they improved themselves out of production. The situation there was they expanded beyond kill capacities. The problem with the cattle industry is the transition back to midwest is the other areas slaughter plants may not be able to stay open as they won't have the volume to stay efficient and basis will change in the Midwest.

- I think the Earl Butz days are back with pastures being killed and going to crops. Fences will degrade without maintenance and the cost of replacement will limit reentry along with reestablishing grass(one year no income). Hay fields have been lost also so the days of cheap hay may be lost similar to cheap corn.

-I'm trying not to be negative, but this is what appears to me occurring. Small feeders have advantages in they can manage death loss better and can feed their own feeds, but they can not spread losses or a bad group of calves over larger numbers. I saw swine operations that went down the tubes that had the same benefits, because they didn't have the size to compete for the chain space at the plants and they even had no debt and all their own grain.
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