Rebuilding and expanding herds, or staying about the same — that seems to be what western Canadian ranchers have in mind as they head into 2017. Despite a sharp downturn in the cattle markets in 2016, only one member of this Ranchers’ Panel was talking about downsizing, with retirement in mind.
The 2016 fall market was a tough pill to swallow for everyone. While most of our panel were prepared for a market correction after 2015, they were all caught off guard when prices fell faster and sharper than expected.
As for 2017, here’s what they had to say about their plans for this year and some thoughts about what the future holds.
Moving from a cow-calf operation to a summer grazing program in the past couple of years gave Kelcy Elford the opportunity to redevelop his family’s southern Saskatchewan ranch infrastructure to carry them through lower beef markets with reduced risk.
Elford, who ranches at Caronport, west of Moose Jaw, says the low cattle market in 2016 will probably make “it more appealing” as they look to buy yearlings this spring for the grazing operation. They do custom grazing of cow-calf pairs and run their own yearlings on both tame and native pasture.
“We have diversified into the summer grazing program,” he says. “But we also have a five-year plan to work over the infrastructure of the ranch and eventually buy back into cows.”
From a risk management point of view, the grazing program has helped him reduce operating costs considerably. “We don’t have to bank on selling a $1,500 calf and can pencil out a more realistic budget at $800 or $900 per head. And I think this year it will be essential to take advantage of price stability insurance programs.”
While southern Saskatchewan can be fairly dry, the 2016 season delivered about 30 inches of rain, and produced all kinds of grass. However, he says he determines his pasture stocking rate based on the carrying capacity of a dry year. On some of their land, for example, cow-calf pairs are stocked at a rate of 12 AUMs per quarter section, while the yearlings are more in the 20 to 22 AUMs per quarter section range. A good moisture season allows grass to recover and improves range health. “Maintaining good range health is critical for our operation,” he says.
The custom-grazed cow-calf pairs run on both tame and native pasture from June until about November. Elford brings in backgrounded yearlings at 11 to 12 months of age ranging from 675 to 800 pounds in May and then, depending on weights and markets, they’ll be sold sometime in mid- to late September ranging from 850 to 900 and even some 1,000-pound yearlings.
Paula Larson says they plan to hold cow herd numbers steady for 2017, particularly until they see what happens with the nearby quarantine zone related to the case of TB found in a southeast Alberta herd in the fall of 2016.
At the time of the Rancher Panel interview, Larson says their ranch at D’Arcy, Sask., (about halfway between Rosetown and Kindersley) was outside the CFIA-declared quarantine zone and she was hoping it didn’t expand any farther. About 50 ranches in total, mostly in Alberta with a few in western Saskatchewan were affected by the quarantine. “We’re just outside that imaginary boundary and there’s always a chance it could be expanded,” she says.
“And I hate to say it too but we’re not getting any younger, either, so our plans for the coming year is just to hold steady with our herd numbers, and see what happens,” says Larson. They run just under 300 head of cows that begin calving out in March.
Sean McGrath says 2017 will be a year to get a handle on managing a young and increasing cow herd on their northeast Alberta ranch at Vermilion.
McGrath, who runs Round Rock Ranching with family members, will be breeding about 300 head of females this July, including about 120 head of first-calf heifers. It’s a big jump as they’ve doubled their beef herd in the last couple of years.
“We have a longer term expansion plan in place,” says McGrath. “And while we have a system that works pretty good, this will be a year just to see how everything is running and get used to it.”
With a lot of fairly young animals in the herd now — about 70 per cent of the mature cow herd is under three years old and 120 heifers were bred this past summer — McGrath’s plan is to have a good mature herd established in time for a market rebound in 2019. He believes markets could still be down through 2018. “But we want to be in a position with a mature cow herd in time for the next turn,” he says.
To achieve all these heifer numbers he has been breeding the cow herd to sexed (heifer) semen over the past couple of years. That’s increased the number of farm-raised replacements. Along with building the commercial cow herd, he is also working to develop a purebred Angus herd as well. And he has other marketing strategies in the works.
With ranch headquarters at Vermilion, they also have a second ranch farther east in Saskatchewan. They have the land base and can produce the forage for an expanded herd. “And it is an economy of scale,” he says. When you have one tractor, for example, you need it whether you have 25 head or 100 head, so expanding herd numbers just makes better use of equipment assets.
Horsefly Road, B.C.
In B.C.’s north Cariboo region, Duncan Barnett says he is trying to hold onto some optimism, as a small family ranching operation, but it’s challenging after a triple-whammy year for his diversified farm business.
Barnett and family operate a 100-head cow-calf and yearling operation east of Williams Lake “in the Miocene area, on Horsefly Road.” They also do custom haying and sell hay, and do some logging on their private timberland. All three of those markets took a dive in 2016, leaving Barnett concerned about the future of small family-run businesses.
“I’m optimistic because the Canadian beef industry produces an awesome high-quality, high-value food product and people do have to eat,” he says. “And we produce a good-quality product on our ranch. But when the market turns down, I have to wonder about the future of smaller operations.”
Barnett says after a reasonably strong beef market in 2015, he had planned for a correction in 2016, but he didn’t expect it to be as severe as it was. He had planned on a market averaging about $1,000 per head and it turned out to be $900 per head.
He had developed a fairly solid market for direct farm sales of beef, as well, but then the two local abattoirs closed, so he doesn’t have that option any more.
It was an extremely wet growing season — that made haying a challenge — but there is plenty of somewhat poorer hay in the country, so that market is down. And because of the ongoing softwood lumber dispute with the U.S., the market for timber is down as well.
“So you get all this happening at once and it can get pretty discouraging,” he says. “As a smaller rancher you can handle it if you got one poor market year in five, but when you get two decent market years and eight that are poor, it makes it pretty tough.”
Barnett sold his steer calves in what is usually the “top of the market” week at the local auction market, but in 2016 it turned out to be “the worst week to sell calves.” He kept his heifer calves for the winter and plans to breed those in 2017. Aside from keeping replacements, he’s also hoping there might be a better market for cow-calf pairs in 2017, but he’ll wait to see what the market brings.
While Bill Murray believes there’s still money in the cattle industry, he won’t be worrying about prices for the 2017 calf crop as he has already sold the farm.
A life-long rancher at Makinak, in east-central Manitoba, southeast of Dauphin, Murray downsized his herd over the past year in a move that reflects he is getting close to retirement, and “maybe it is a good time to try something new.”
Murray still had about 110 head of cows at the end of 2016, but was just waiting to complete the farm sale transfer to new owners. He had sold 70 head in January 2016 and overall the operation was down about half from its more typical 230-head size.
“A year ago I could see the downside coming so decided I might as well sell some and get what cash I could,” says Murray. “There is still money in the cattle business, at least for my operation. If we had the 2016 prices in 2004 (a year after BSE) we would have been laughing. Margins are tight, but you can still make money. The key in this business is learning to control your expenses. I know I wouldn’t have made any money if I had a lot of new equipment sitting around.”
Murray says retirement is due to the fact he’s been at it a long time, none of his family was interested in farming, and if there is another cattle cycle coming he wasn’t interested in dealing with the ups and downs of that for another 10 years.
“I’m not that old to retire completely, but I’ll try something else,” he says. “I don’t mind chasing cattle around, but I don’t need the management headaches, I’ll leave that to someone else.” He says the new owners are looking to restock the farm to about 250 head and would eventually like to grow it to about 400 head.
Wegner, who farms with his family at Virden in the southwest corner of Manitoba, has about 70 head he’ll be calving out on pasture this May. That’s down from a high of about 130 head. Those May calves are backgrounded over the winter and sold as yearlings the following September.
“We saw that the market was changing so we decided to downsize and we’re going to start rebuilding this year,” he says, noting his sons have shown an interest in joining the farming operation. “We knew prices were going to fall, but we didn’t expect them to fall as fast or as hard as they did.”
Wegner has developed a low-cost beef operation, with cattle out on pasture year-round. “There haven’t been any cattle in the yard for three years,” he says. Along with summer grazing he mostly stockpiles forage to carry the cattle over winter. Although he can lay in hay supplies to feed the herd during a tough winter, so far it’s been sufficient to supplement stockpiled forage with about two round bales of hay per cow over the winter. Cattle are back on green grass by early April, before calving in May.
After an extremely dry growing season, that forced them to sell part of their herd in 2015, Penny Patton says they started rebuilding herd numbers last year and plan to continue through 2017.
Patton, along with partner Kyle Miller, were running about 150 head of cow-calf pairs in 2015, on their farm in Westlock County north of Edmonton, but had to sell about half of them that July because it was just so dry. But it was a reversal of fortunes in 2016, she says.
“We ended 2016 with enough silage to feed 200 head and we also have about 400 silage bales,” says Patton. “We have feed, feed and more feed.”
Patton says they did buy about 45 head of cows in 2016 and will be looking to increase numbers in 2017, as they work to get back to about 150 head.
Calves were weaned in mid-November 2016. They had thought about selling in the fall, but due to circumstances decided to background everything for at least 60 days and perhaps sell steers in early 2017. They’ll feed heifers a bit longer and then select their replacements.
“I don’t know if we will get back to 150 head in 2017, it depends on the market,” she says. “It is probably a good time to expand, but we also have to keep in mind that we only have so much land, so we don’t want to take on more than we can handle, especially when growing conditions can be variable.”