After watching what has been going on recently in the news about our cattle market, I have decided to speak up.
I am writing to you today as a fourth-generation cattle rancher. My family has been in the industry since my great-grandfather homesteaded in the 1890s. I still am operating a part of that ranch today on our share of 8,000 acres.
My family before me has seen many of the downturns in land and cattle. Each generation has seen at least one major market disaster in their lifetime. It is time to speak out, especially to the cow-calf industry.
People have started to complain about the packing industry taking too much profit for themselves. Some people want government regulations or other programs to make the packer share in his profit. I will admit by the looks of it, that the packer is making themselves a hefty profit. But I do not have access to their company financials, so I can only speculate. I do not know what their exact overhead costs are or any other expenses that arise in their company. Just think of the number of employees they have to pay; the line workers in the plants, managers, truck drivers, accountants, lawyers, and the list goes on. Who are we to say as Americans that they are making too much money or that they can’t have that much? That is not the free market capitalist system. The true free market system enables all of us to be as successful and as profitable as we desire.
Here is my solution to our problem. The cow-calf industry needs to immediately stop selling calves at below profit level. What do I mean by that? Well, let’s take some numbers out of the air and say it costs a ranch $700 to raise a calf to 500 pounds. Then that cowman goes to the sale barn or any cattle auction and sells the calf for $700 per calf. The cowman just broke even. Let’s just say that that number didn’t include his salary, insurance, or any other expenses that may arise. That cowman is now underwater. When a producer takes cattle to any kind of auction, the auction works for the producer. Why do we take whatever the buyers will give us? Set a price to make a profit going in and stick with it. If the calves don’t sell for your price then take them back home. Even tell the auction company, before the calves sell, that this is what I want and if I don’t get that I am taking them home. If every cowman did this what would happen? The auctions would not be selling any cattle until a profit was made. Think about the chain. If calves don’t get sold; then stocker cattle won’t be available for grazing. If that happens then cattle won’t go to the feedlot. If cattle aren’t in the feedlot then cattle won’t go to the packers, and ultimately beef won’t be on the shelf. So, who really has the control over the market? We do, the cow-calf industry. Without us you cannot start the chain in motion for any of the other sectors in the industry to work. Why do we blame others for buying cheap cattle when we sell them cheap cattle?
Now, I am not saying that we need to gouge all the other sectors of our industry. We all need to come together and each make a little profit. If any one of the sectors of our industry fails; then all the others will fail.
We as cattlemen are forced to sell because of debt and when you are forced to sell you will take any price to just get some money. That mentality needs to stop. It is not only hurting you, but it is hurting your neighbor and anyone selling in the cow-calf sector. The reason why this concept is so hard is that everyone has a different profit margin. Some people can raise cheap cattle; some people raise expensive ones. For example, we have all seen the price spread on cattle that are 60 days weaned compared to those that are freshly weaned. Your neighbor may even get a premium for his genetics. However, the price has to start somewhere. The cow-calf industry should be the ones to set a minimum price for our cattle. I believe that it is time that we got together and agreed on a minimum price for our calves. We should not take anything lower and work together as cattlemen and urge our state and national cattle organizations to stand with us. Government and regulations are not the way and will only complicate our situation. We in the cattle industry are fighters and have weathered many storms. We will weather this one, but let’s do it ourselves without help from government overreach or regulations that cripple or industry. This may not be the right solution for you or it may be. Let’s get the conversation started and think of logical approaches to a solution.
—Kyle Barby lives in Beaver, Oklahoma.
