Hi I’m Mike, 2020 has been a bizarre year for most of us.
For some it has been filled with tragedy, for others it may be adapting to a new way
of life, or maybe not.
On the ranch, 2020 has brought us a number of new challenges and today we take a look
at some of those, how they affect the ranch and its bottom line, in the cost of ranching
in 2020 on our Wyoming life.
Ranching has never been easy.
Since the beginning of mans struggle to raise livestock there have been obstacles to overcome.
From predators, to disease, things that are hard to control, to other humans who wanted
what you had and choose to take it for themselves, bringing on battles and wars all fought over
what kept them alive.
Food.
It doesn’t matter if you are meat eater or a vegetarian now, your ancestors, without
which you wouldn’t be here, raised livestock.
And in the beginning, those livestock were raised for one purpose to feed your family
and your family alone.
Every family had a goat or a milk cow, a few chickens or maybe even turkeys.
Theses livestock were as valuable as our refrigerators and our pantries are to us today.
Farmers raised what they could, when they could.
If apples were out of season or not available you didn’t have them.
In fact up until 1870, most in the US had ever seen a banana.
Those first being available in Jersey City thanks to the Boston Fruit Company.
Bananas by the way, in the late 1800’s would cost you about 1$ per pound.
With inflation about 13$ in 2020.
That would be one pricey curved yellow fruit.
With shipping lanes and more advanced economies came trade and lots of it.
Soon, your great, great, great, great grandfather didn’t need to have chickens.
Eggs were now available down the road at a larger, more economical chicken farm.
Advancement put his chicken house out of business, and he probably didn’t mind.
Advances in technology and trade created time.
That time was saved in part by allowing farmers and ranchers, your ancestors to move away
from rural America and into the cities.
Farmers and ranchers that stayed now found themselves with bigger shoes to fill and more
mouths to feed.
Welcome back, and if this is your first time here, thanks for coming along.
It’s a weird world we ended up with today but obviously we all have to figure out how
to make it work for ourselves.
Today we are going to dig into ranching, more specifically the finances of ranching.
How can small ranchers, like ourselves can keep going and keep feeding America and the
world.
According the USDA, the united states department of agriculture, there are 2.1 million farms
in the united states.
88 percent of us farms are small family farms, those that have an income of less
than $350,000.
Those small farms control almost half of the farmland in the US, but oddly enough only
account for 20% of agricultural sales, about 40 Billion dollars in the US.
On the other had you have Midsized and Large farms that make up another 9 percent of family
farms, those with another 40% of the farmland and accounting for 64% of total agricultural
sales over 250 Billion dollars.
Then you have the corporate farms, or non family farms.
Only 3% of total US farms but with 11% of the farmland and making up 16% of total ag
sales or another 64 Billion dollars.
Those numbers, don’t quite up for me.
With only a little over 60,000 corporate farms in the US, controlling 11% of the total farmland
available each one of those is making a little over a million dollars per year.
Almost 200 thousand midsized and large family farms are making about 1.3 million per year
and small farmers over 1.8 million of them are splitting the rest.
Earning on average 22 thousand dollars each and that’s before taxes.
Keep in mind, these numbers are also old.
We haven’t gotten an updated statistic from the USDA in a few years, but it wouldn’t
surprise me if the proportions are even more out of wack today.
So how does all this come into play in the cost of ranching in 2020?
In 2017 I put out a cost of ranching video, you can check it out here or check down in
the description for a link.
In that video, I broke down the cost of raising a cow on the ranch and how much we had to
make from each calf in order to break even.
Those numbers really haven’t changed in the past few years.
The cost for us to raise a calf is still about 800$.
That is taking everything into account, taxes, electricity, vet bills and feed costs, even
for grass they eat off the pasture.
The interesting part is that the cost of raising livestock is always on scale.
Is it cheaper to have 5 cows or 500.
Well, when they all sell for the same price, it doesn’t much matter, because all we know
is what their calves are worth.
The year we first came to the ranch, leaving our corporate jobs behind to help out family
and eventually find our way of life.
I remember calves were being sold for about 1$ per pound.
That means a 550 lb calf at weaning time was around than 550$.
That was 2008, then legislation was changed and prices of calves shot up, to over 2$ per
pound by 2014.
That same 550lb calf was now worth twice as much.
Because the price of cattle is constantly changing, mostly due to supply and demand
but not of the consumer but of the feedlots and processors, producers, ranchers and farmers
have no control of what their product is worth.
And this year, according to the USDA and the NASS, the national agricultural statistics
service, the average price of calves across the US has dropped to a low that we haven’t
seen since 2003 to less than 99 cents per pound.
Current prices, according to the same sources put the national average at 1.07 cents per
pound.
That 550 lb calf that cost 800$ to raise is now only worth 588$.
There is a term that I am hearing more and more from farmers and ranchers and that is
that they cant afford to sell their calves.
Its like saying you cant afford to go pick up your paycheck, your one paycheck for the
year, because doing so may just put you out of business.
Why are calf prices so low?
Why did they fall from over 1.50 in January to where they are now?
Didn’t we all see the empty shelves in the grocery stores just a few months ago?
You probably did, I know I did.
But the problem is far from solved.
Store shelves were empty because processors had to shut down due to covid 19.
That halted processing of beef and in turn deliveries of beef to your local stores.
When things started back up, now processors are behind.
They have lots of catching up to do.
And lots of animals to move through the system.
We talk about making money, but whos really making the money.
Those bigger ranches which account for a total of 80% of agricultural sales in the US, over
350 billion dollars alone are at the top of the food chain.
Those animals they had to sell, go into the system first.
Feedlots buy calves from from ranchers and farmers but there is only so much space.
Prices on our ends, are lowered to stop ranchers from being able to sell their livestock and
slow the number of animals entering the system, supposedly to let the processors catch up.
Hopefully they do because the way I see it is that industry itself is choosing to put
small ranchers and farmers in the position of choosing to sell cattle at a loss or spend
more money holding on to them and hope things get better.
Small farmers, over 1.8 million of them who may not be able to make it another year to
make sure that the other 12% can.
The game has been played for over 100 years, the problem is that economic advancement and
yes even technology may have just beat another small farmer out of business.
That’s the cost of ranching in 2020.
Those that do survive this year and manage to live through the fallout will be faced
with a choice.
Do you let someone else tell you what you are worth.
Do you let the big boys tell you what your product is worth.
On April 11th, 1958, John F Kennedy, a senator at the time gave a dinner speech in Bismarck
North Dakota.
During that speech, he said.
“What does the farmer want? an opportunity to market his produce at a fair price, protected
from extreme economic fluctuations – a chance to live out his life on his farm with some
degree of security.
He is, after all, the only man in our economy who must buy everything he buys at retail
– sell everything he sells at wholesale – and pay the freight both ways.”
That was in 1958 and not much has changed.
But not all is lost.
A number of small farmers and ranchers are finding ways through this year and into many
more in the future.
The cost of ranching in 2020 is going to be change.
I think you are going to see more and more ranchers and farmers offering products directly
to the consumers.
You are going to see more local processors, allowing farmers and ranchers to provide safe
products to the consumers and you are going to see more consumers buying local and supporting
their local ranchers and farmers.
The big farms and ranches and corporate entities will still have their place, they aren’t
going away but its time that the little guys stands up for himself too.
Here on our ranch we are finishing more and more cattle ourselves.
Getting them processed at a USDA inspected processing facility and bringing them right
back to the ranch.
Offering that meat for sale to our local customers and providing a service.
Food.
Food that can’t be disrupted by change in policy, or a single processor shutting down,
or a feedlot not wanting to feed calves a minute longer than they want to before they
go to that processor.
If nothing else comes out of 2020, its going to be a change in the way people think.
That they must do what’s best for themselves.
Food.
Health.
Family.
Safety.
These are all things in our control, and we can take control of them, it just takes courage
to change.
2020 has been a shit show.
Will it get better?
I don’t know, I don’t have a crystal ball.
What I do know is that we will continue on.
Farmers and ranchers will continue to strive to be the best we can, to solve problems as
they come, to diversify, and to succeed.
In that same speech in North Dakota, JFK also said the following-
Whether we sail with the wind or against the wind, let us set sail and not drift or lie
at anchor.
Basically that means, do something, try anything.
Make changes to be successful.
Thanks for coming along today, subscribe and follow along as we explore the ranch life
and escape the ordinary.
Check out our website ourwyominglife.com Coming up we have more on winter feeding and
how we are trying to save the ranch money in the middle of a drought and a whole lot
more, including our first harvest of meat chickens, coming up just around the bend but
if you don’t subscribe, you might just miss it, be sure to hit the bell button for notifications
as well.
Until I see you again, have a great week and thanks for joining us in Our Wyoming Life.