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Lethbridge Herald Newspaper Archives

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Lethbridge Herald, The (Newspaper) - February 21, 1974, Lethbridge, Alberta District The LetWnridge Herald Local news SECOND SECTION Lethbridge, Alberta, Thursday, February 21, 1974 Pages 13-24 Cattle feeding industry sinking By RIC SWIHART Herald Staff Writer Alberta's cattle-feeding industry is on the ropes, and higher beef prices for the consumer and lower profits for the primary beef producer are being predicted. A Herald survey of key livestock feeding operators in Southern Alberta this week showed cattle numbers on feed to be prepared for slaughter were extremely low or decreasing. And all feeders and feedlot operators contacted said it was a sheer matter of economics they have been selling cattle for slaughter at a loss of up to per head for the past six months. Two operators of custom feedlots with a combined capacity of cattle reported they will be out of business within six months if present market conditions, feed grain prices and feeder cattle prices don't change. Custom feedlots are enterprises set up to feed cattle until ready for slaughter. The ieedlot operates on a cost plus expense basis and private individuals and companies are the owners of the cattle. Private feeders cut back Private cattle feeders men who raise and buy cattle for their own feedlot are feeling the pinch even more because they are taking the entire brunt of the losses. One feeder contacted said he was starting to cut down on the number of cattle entering his lot while another has not put any additional cattle on feed for the past three weeks. Hi-Way (52) Feeders Ltd. at Raymond is one feedlot which has managed to maintain its cattle population Ross Nilsson, manager, said the chaotic marketing and production picture is now just starting to exert pressure on his customers. Unless things change cattle .will only be sold from his lot, none will be replaced. John Gamine, manager of Dri-Land Feeders Ltd. at Warner, said the key to the dismal story of cattle feeding today is the skyrocketing feed grain prices. He said the cost of adding one pound to an animal is more than 60 cents and the selling price for the finished animal is far from returning even this factor. Dri-Land Feeders was built in 1972. It is owned by members of the Alberta Barley Growers Association which consists of 105 grain producers in five barley growing companies in Southern and Central Alberta. Market for barley The association had been feeding cattle in various feedlots throughout Alberta for about five years. They built the Warner facility to create a market for their barley. There are only five customers of Dri- Land Feeders who aren't members of the barley growers association. Each year, the barley growers commit a certain amount of barley to the feedlot. They then buy cattle to eat the barley. No price is fixed on the barley and the farmers aren't paid until the cattle fed the barley are sold. "In the past five months, the barley growers got nothing for their Photos by Elwood Ferguson said Mr. Carnine. In previous years they realized an extra 20 per cent profit on their barley through the sale of cattle. Roger Holt, nutritionist at Hi-Way (52) Feeders, said there are three main factors which influence the cattle feeding industry: the price paid for the feeder animals, the price of feed and the price the feeder receives when the animal is sold for slaughter. He pointed to a period last September as the turning point for cattle feeders. -Grain price jumped At that time, the price being paid for feeder cattle was high but the cost of feed barley was only about per bushel. Added to this was a record high price for fat cattle entering the slaughter houses across Canada. But in October, the price of feed grains jumped to per bushel and the prices of fat cattle started to drop from near the 60 cent per-pound levels to the low 40s. Feeders stuck with expensive feeder cattle were forced to feed them expensive grain and sell them for relatively distressed prices. He pointed to one pen of 150 cattle bought for 60 cents a pound last September. They weighed 790 pounds when bought and were sold for 47% cents per pound at a weight of pounds this week. The average weight gain was 360 pounds at a cost of 55 cents per pound. On this pen of cattle, the loss amounted to Leonard Haney of Iron Springs, owner of a feedlot which weekly sells 200 head of cattle, said he can't see the price of feed grain decreasing. He feels it will hold at the high prices at least until the end of the current crop year July 31. Lower profits This means cattle feeders will have to save money either at the purchase or selling end of their industry. Because he is losing money on every animal sold, he is cutting back on his animals. For every 200 he sells weekly, he only buys 100 replacements. By cutting down on the number of cattle entering the feeding industry, Mr. Haney feels pressure will be exerted on these cattle. With more of them on the market prices will drop but this will mean a lower profit for the primary producer of cattle. The only other option for a continued feeder operation is for the consumer to pay more money for beef Mr. Haney said the consumer has got out of the habit of paying a high percentage of his income for food. "The agricultural employee and the farmer are subsidizing the food costs of the rest of Canada by the fact that their wage scale, hours of work and work conditions aren't comparable with those in he claimed. Garnet Altwasser, general manager of Lakeside Feeders Ltd. of Brooks, Canada's largest cattle feedlot, said the cattle population in his lot has dropped to from and no replacements are going in. Losses cause decline Mr. Altwasser has instructed the men who buy cattle to limit their payments to 42 to 44 cents per pound for steers and 33 to 34 cents per pound for heifers entering the feedlot and these figures may be shifted further downward. Steers gain more weight Price squeeze hitting South feedlots Hi-Way (52) Feeders Ltd. feedlot near Raymond better off than many cattle feeding operations in Southern Alberta faster than heifers and therefore are more valuable as a beef production unit. "But we've got to have 70 cent per- pound beef for our fat cattle or there won't be any cattle said Mr. Altwasser. He said the huge losses incurred by cattle feeders is causing the decline in cattle numbers and if something isn't changed soon, the bankers will stop lending money. "There are a lot of worried bankers around." Dick Gray, president of the Alberta Cattle Feeders Association and co- owner of Valley Feeders Ltd. in Lethbridge, said the cattle population in his" lot is going down all the time. He said one hope for the industry is for the price of cattle to be fattened to come down 10 cents per pound. Because of the high losses being incurred, Mr. Gray isn't going to buy any more cattle himself. No replacements Lucky 6 Feeders of Raymond solved its money problems last October just when the majority of the cattle feeders started losing money. They simply sold all the cattle they had on feed and didn't buy any replacements to put into the feedlot. This group consists of six women, including Pat Berndt, Phyllis Nilsson, Linda Card, Louie Allred, Lucy Duncombe and Gerdi Fairbanks. The ladies have been feeding cattle for four years. Mrs. Berndt said they borrowed money four years ago, bought, fed and sold their cattle and lost some money. They bought right back into the business and operated in the black since But last October there was a big price spread between what the feeders were costing and what the finished animals were worth, she said. If they had bought then "it would have wiped us out." Just to make sure she can get into the cattle feeding industry again, Mrs. Berndt arranged for her own cattle brand. She claims the other ladies might not want to feed cattle again but she wants to. Biggest challenge A marketing expert at the University of Alberta has claimed one of the biggest the food_ industry to develop a system of- providing food at a fair pnce and in reasonable abundance at a fair profit. Marvin Gaits, Lethbridge regional economist with the Alberta department of agriculture, said to achieve such a challenge the free market must be allowed to take its course and through the supple-demand picture arrive at a reasonable profit. Or else, it must be turned to more government control and subsidy whereby the profit margin is predetermined. But cattlemen insist the free market is what is needed. They are against government intervention in their industry. Mr. Carnine said a subsidy is the wrong approach. A subsidy never cured anything. He said all aspects of the industry must be freed to seek their own levels. If not, there won't be as many cattle ready for slaughter and this will cause a shortage of fat cattle. A shortage of fat cattle will cause the packing houses to bid more for the slaughter cattle and this will drive the price of beef up for the consumer. Hi-Way (52) manager Ross Nilsson may not replace cattle sold for slaughter I 1 What it's all about cattle are fattened on special feed until they are ready for the packing plants but their numbers are falling Dri-Land Feeders at Warner half empty means no return for barley growers ;