Practically Ranching
Join Matt Perrier as he visits weekly with interesting, thoughtful, entertaining individuals within the beef community. Conversations will inspire curiosity and creativity while maintaining the independent spirit and practical nature for which ranchers are known.
Practically Ranching
#21 - Bruce Mershon - Growing a Cowherd, Discovering a Price
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Bruce Mershon and his wife, Tracey, own and operate Mershon Cattle, a 2000 cow operation in western Missouri. In addition, they purchase and background 4000 yearlings annually. Bruce spent 30 years in the commodity trading world as he grew his family's cattle business.
Bruce currently serves as President of the Missouri Cattlemen's Association. He and Tracey have both been active leaders in their community and with ag organizations on the state and national levels.
Welcome to episode 21 of practically ranching. We set a record this week. It's the longest one I've recorded yet. You may even consider it two separate episodes, the first 40 or 45 minutes on the production side and the last half a more on the, on the marketing and live cattle fed cattle marketing side. And you may want to break it into two pieces, but regardless of its length, it's a good one. And my conversation with Bruce Marshawn is one that I, I kind of looked forward to having, not necessarily with Bruce, but with someone when we created practically ranching, back late last spring, and I think it's, well-worth all of us listening to with open ears. Um, you all know my perspectives on marketing by this point, Bruce has a different perspective and I welcome those perspectives and, and I think we bring Some good fodder here. Like I said, the first half, all we talk about is production side of things, and it's really interesting. And then the second half will be where we get into that marketing scenario and talk about some different legislative pieces that Bruce feels need to be pushed forth. And so. Uh, I'm not going to spend a lot of time on this intro because I want you to have plenty of time to listen to the real meat of the, of the matter, but, as always thank you for listening to practically ranching. And we look forward to our visit with Bruce Rashaun.
Track 1All right. You still there, Bruce?
squadcaster-22b6_2_10-11-2022_105654I am here, Matt.
Track 1Good. Did you happen to get any moisture last night or was that south of you?
squadcaster-22b6_2_10-11-2022_105654We, we got some this morning. we have puddles in the this morning. I, unfortunately, I think they'll all be gone the way the wind's blowing by afternoon, but it's, it's a starting point.
Track 1Yeah, we're right there with you. We didn't quite get puddles, but, I've gotten to the point where we're measuring in one hundreds. I always could tell the difference between me and my Western Kansas friends or Panhandle Oklahoman, Texas friends, they'd always talk about a, a five hundreds or 15 hundreds rain and gosh, up until the last year or so, We didn't even, we didn't even measure that one. but nowadays we got five, one hundreds last night and we were tickled to get to get it. So it's amazing how your, benchmark and, and the relative interest of moisture changes.
squadcaster-22b6_2_10-11-2022_105654absolutely. I'm, I would, I would have to pull my glasses out. I have to pull 'em out to just figure out tens. I'm not sure my gauge is good enough for hundreds, but we we're, we're at that point. Maybe I need a new gauge, so,
Track 1Well, hopefully the pattern will change. I'm seeing a few long term predictions that maybe it will but, sure will need too soon. Well, thanks for being here with us today, Bruce. If you would just gives us a little overview of Mershon Farms and, your family and your leadership and some things like.
squadcaster-22b6_2_10-11-2022_105654That sounds great. you know, operationally in West central Missouri, Tracy and I, have a, a cow calf herd. And I, I guess we like to say we're active in facets of the commercial cattle business. So, we're running um, roughly around 2000, a little over 2000 mama cows here. And In West central kind of scattered from northwest through southwest Missouri. We're headquartered out of Buckner, Missouri, just here in Jackson County, just outside Kansas City. You know Chiefs won again last night, so we're all feeling pretty good. Unfortunately Tiger football hasn't been as much fun, but we got the chiefs to rely on right now. So but we run, run cows. We also retain ownership on the, on those calves that out of our cows. We'll finish all the steers and then we'll breed roughly 75 or 80% of those heifers. We'll, we'll sink and AI am and Clean them up then and we'll market bread heifers through the show me select program in Missouri just private treaty. And then also through the side tricker genetics. They have a special bread heffer sale. We'll sell both bread, heffers and, and payers through them. On top of that, we'll we'll background our steers here in Missouri. Then they'll go to the feed lots Kansas, Nebraska, or Iowa, depending on what's going on in the market We'll send those calves to the feed lots and then hopefully most of the time sell 'em on the grid and we'll track that data back to our cows. All of our cows are in the ols herd book system to create EPDs on our cows and our replacement females. And then on top of that, we, we try to background another three or 4,000 calves outta the sale barns, mostly outta here outta We'll put together, we have folks that background calves for us and you know, we'll sell 'em in load lots and or feed them ourselves. So kind of, kind of all segments of the industry here in Missouri, we have both spring and fall cabin cows, so we're trying to capture, you know all of our equipment and our bulls and, and get, get double use out of them both spring and fall.
Track 1Are you split close to 50 50 on those fallen spring
squadcaster-22b6_2_10-11-2022_105654Yeah. It, it gets to where 45, 55, but, but, but pretty close. Yes.
Track 1Give us a little feel for the history of your place. I know you've been a, a pretty rapid growth curve, in my opinion in the beef industry, and I think that's a really great story as.
squadcaster-22b6_2_10-11-2022_105654Thank you. So the families, you know, always had cows. My dad had 10 in his family. And you know, four of the brothers farmed and my granddad. They always fed kettle. And we were the one that odd, odd group that had cows. but we've always had cows and then always fed hogs also just out on dirt. And then, and you know, in 98 that that curus of that disease uh, we no longer have hogs. So, Kind of thought, as a family, my brother and I, we, we kind of worked together, and the heat crops, and then we kind of own most of the cattle then we decided after 98, well then we always have SCU in Missouri no matter what the hog market's doing. So we started growing a cow herd started heifers and just started growing it. And that kind of went from family, always had maybe 150, 200 cows to where we're at today, and we kind of took over the cattle portion of it. My brother took over the, you know, manage the crop, but also was helping us with the cows. I worked off the farm through all this time for 34 years as a commodity trader fortunately here in Kansas City working for Bartlett Grain and also for Lansing Trade Group the last 15 years. So, and I've been full time farming now for just four years, but at the same time, we were trying to grow this herd. How we've grown it, I guess is I important. You know, we don't actually own an acre of essentially. We got a little hay ground here around Buckner, but it's all farm ground and about half of our cows are out on a daily fee basis the that provide forage and care. We provide everything else. And then the, the balance of them are on lease property with folks that work for us both fulltime and or part-time help with this on, on managing those, those on.
Track 1And you said those cows would basically span the state north to south on the Western, what third of the state?
squadcaster-22b6_2_10-11-2022_105654Yeah, pre, pretty much. We're far north as Gentry, Missouri, up by Albany and down as far as uh, uh, Greenfield down around Stockton. We had pretty diverse moisture this year, you know, down around Stockton. It was, was bad bad dry most all the summer pretty pretty tough year you know in northwest Missouri they we had a spot up there where the cows were It was just it rained Seemed like had trouble getting their crops in lots of good grass We had a group of cows up there They were all four and five year olds and we were we were a hundred percent bread when we preed those spring cows really wonderful you know and then we dropped down into the upper eighties you know where the grass is a little tougher that that on the ones that we've pegged we've got most everything already pegged and second round of shots in the calves And we're we're starting to we we then started weaning now for about three weeks So working through those groups
Track 1Well, that's good to have that geographic diversity. I know. And like you said, you years like this and, and I would I would venture to guess that even though you didn't get much more than puddles last night those cows down south, they may have gotten a better rain. It looked like something east of us kind of went through that far, southwest Missouri and, and maybe even west.
squadcaster-22b6_2_10-11-2022_105654Yes I think we a little bit better although I would I would probably trade my geographic diversity and my pickup in for a big ranch somewhere that I could get into tractor and drive from one to the one to the end to the other instead of every minute every time we go to check something it's a minimum of a 30 minute drive up to a two hour drive So I would trade it but you know that that's not really feasible in this part of the country so to have a big ranch So we'll just Take what we got
Track 1Besides the lack of availability of a, of a big contiguous operation like that, what led you to make the decision when you started growing there 98, early two thousands to do your for care daily fee lease type of arrangement on these cows as opposed to going out and investing in land and, and finding a place or finding places that you would actually own the grass and the cows.
squadcaster-22b6_2_10-11-2022_105654Capital you know
Track 1That's, what I figured, but.
squadcaster-22b6_2_10-11-2022_105654We were I I went when I left college in 1985 I I always thought I'd come home and farm and I had found a a girlfriend in college and when I went home at Christmas and and Tracy and I were talking on the phone during Christmas my parents pulled me aside and said Well looks like you finally found somebody pretty special to you And you you can you have two options You can come home and farm and we'd love to have you here or you need to go get get a job if you're in love But the last thing you're gonna do is bring her back to this farm in 1985 and the struggles we were going through as a family and so financially And so went and got a suit and interviewed So you know love one new love one out over the old love of farming and you know but I was fortunate to catch a job here close to the farm And continue to be involved in it And you know we've just just made that made that transition and took me 34 years to you know collect enough capital to dare farm full time but that's where we're at now so hopefully I get a couple more years before I leak it all the way
Track 1Well, it seems like you're on a good path and you say it was young love that went out. I would say that and I've never met your family or your parents, but I would say that your knowledge of risk management comes from them because in 1985 those were pretty, pretty wise words I would say to tell their their young son it was obviously it that every year is tough, but those were some of the toughest.
squadcaster-22b6_2_10-11-2022_105654Yeah they were difficult They they didn't get any better for a few years and we were fortunate enough to be still we're still here so
Track 1So your time that you started there at Bartlett and then at at, you said Lansing trade group. If you had to give me the top two or three things that you learned from your time then that are benefiting you today running cows, what would those be?
squadcaster-22b6_2_10-11-2022_105654What I I should have what I should do is use you know I I I'm pretty easily unfortunately I gotta say can put my farmer cap back on and always be bullish even though I I learned not to be back then so I wish I could say I that home
Track 1Yeah
squadcaster-22b6_2_10-11-2022_105654You know it it it does help to understand the the markets a little bit about my input cost and of those opportunities to to kind of know relationships you know wheat middlings or soy holes versus distillers those things are valuable today with our with us retaining ownership and background in the cattle the other thing I think it helped me be a manager of employees today that off farm experience of of having a staff and and how to treat 'em and to not lose my temper even though you'd like to like you know you you can do you'll do with your family but you can't do with employees And so you know there's a couple of those that just just general business management that help today I think
Track 1Yeah. and those, those are often. Traits that that our production farm and ranch leaders, we, we often don't have because we don't have to experience them a lot growing up quite often, especially on a, a smaller family operation. And so those, those would both be very valuable, especially growing to the scale is what you have with the number of inputs and the number of employees that you've got that, that would be very valuable. You're pretty focused on genetics as you grow your commercial cal herd. And what's it been three years? Was it 2019 that you won the commercial BIF producer of the year?
squadcaster-22b6_2_10-11-2022_105654Yes sir Yes
Track 1that's where I met you first in South Dakota. and Congratulations on that by the way. From a genetic standpoint let's start with the, with the female. When you go to select your replacement females, and, and obviously it sounds like you're breeding a lot more than what you need if you're keeping 75 to 80% of those heifers and then selling them, as you said, as as breads, But let's talk two steps. First, Who do you select out as your first 20 and 25% that you're probably retaining ownership and feeding, correct. And then how do you pair that down after you get 'em bread? Who do you keep? And then who do you sell? And, and what traits, what indications do you use to, to make those decisions?
squadcaster-22b6_2_10-11-2022_105654You know it's just mainly the the not heads or you know bad dispositions you know just just too fast that get cold first and then you know we'll all of 'em We'll we'll track score pelvic measure you know and we've been doing that now for about 10 years And when we started that process that would we'd reject you know five to 10% And by doing it now year after year it's one or 2% at the most that get rejected and then then that as I get bred get somewhere in that oh low fifties is kind of the worst case to to low sixties AI bread on our time ai and we use the the herd book and Tracy's actually working on it today for us from that we enroll all our cows in So we'll pull well back up just one more second We we carcas scan every female so we'll get that IMF score in the rib eye prior to breeding and then we'll use that data along with our our E P Ds that were produced on the cows or on the heifers excuse me And and we'll we'll use yearly weight's A real focus for us and has been because of because of us wanting to retain ownership and we've focused a lot on the IMF score And then we'll use the the the API OL and then the and then the terminal index you know as we pull those in and and start sorting through 'em what what we're trying to do is make sure that we're not selling the ones that are in the top half We're we're trying to sell that that bottom third to bottom half and then it'll be basically Size... you know everybody says I don't want a big cow but if you try to sell 'em a small heffer they won't bid on it But if you'll take 'em a big big heffer they'll always bid on those so you know the big frame heifers we'll sell those along with and but we're also trying to make sure that we're we're we're retaining ownership on the on the best of the of the carcass merits the year limb weight growth those are real strong features for us And then know we've worked on docility pretty hard here. We don't most most guys that buy our our heifers all always seem happy with docility Every once in a while there's there's always two or three here or there that that get somewhere that shouldn't But so those are kind of the main focuses that we're we're using it
Track 1And after you've selected that initial group and, and cut the 25 thereabouts percent off I assume you're synchronizing those. Uh, What protocols are you using for synchronization?
squadcaster-22b6_2_10-11-2022_105654Yeah so we'll we'll use the day so we'll pelvic measure and and all that on at at same time then put the cedar in the 14 day Most of those heifers are are out on in dry lots coming like in the winter and then we will ship them to grass day the next day And so they've got 30 days on grass like for a spring cabin or spring caves and you know they're gonna shrink some But hopefully we've gotten them We're not too too fleshy And then they're kind of adjusted to the grass and they've at least hopefully plateaued or started back growing again on the grass And so we feel like that's important to have bread on Fsq and then that way we know that that they'll breed on Fsq and I I think that's important quality for us selling bread heifers here in Missouri that they're not you know they haven't been growing up on your good native or your blue stems and come to Missouri and wonder what this awful tasting stuff is they have acknowledge of it and they've they've they've performed on it
Track 1So like on those spring caves and I'll back clear up to weaning, you'll wean those, Will, they go fairly quickly into a dry lot scenario and they'll develop at you know what, a pound and a half, two pounds per head, per day gain until you synchronize them and then they're going to
squadcaster-22b6_2_10-11-2022_105654Yes sir Yeah
Track 1And so they'll, they'll have that cedar in 'em while they're on that 30 day grass period. Pull the cedar 14 days, let 'em have that heat, and then luize them to breed them 33 days after. Basically you took 'em to
squadcaster-22b6_2_10-11-2022_105654Yes sir Yeah
Track 1they'll stay on grass through the summer. You pre them and what ultrasound pre checked them in July,
squadcaster-22b6_2_10-11-2022_105654Yep yep We've been ultrasound now for about 10, 11 years and so we'll feel sex we fetal sex both the heifers and and the cows that that allows allows us for sorting and when for market it helps helps when you're tagging calves you know you get group of 200 out there and you got 10 or 15 in a day And so if she's got a tag in rear that says it's gonna it's an AI sided calf with a it's either a bull or a heffer Why When they get mixed why hopefully it it helps us get em get 'em tagged back to their mothers
Track 1And then after you've done that pregnancy diagnosis via ultrasound, you'll make, at that point, I assume the decisions on which ones are staying home and which ones you're gonna market either through any of those three or four channels.
squadcaster-22b6_2_10-11-2022_105654so those were pred back in August and we're getting ready to select those this week. I wished I had gotten 'em already pulled a couple weeks ago but but this will give us you know 30 to to 60 days prior to marketing them the special sales to flesh 'em up a little
Track 1Sure. Okay. And I assume the biggest part of who you're keeping there after you've pred is probably based off breeding date. And of course, like you said, using some of those API indexes, which that would be similar for our Angus folks, be similar to the dollar combined where it's a multi trade index, just on the simile breed breed base, and Okay. Great. Talk to us just a little bit about the EPDs. Are those the same, are those comparable to a registered simile seed stock animal? Epd.
squadcaster-22b6_2_10-11-2022_105654yes It's the same same print same same data going in weaning weights carcas data that we were that we get back from feed yard that we submit that's that's the idea It's it's a lot of work but I don't know how else we We can make selections based on appearance but how do we make those selections you know for our commercial cows similar to you guys in the seeds dog And that's that's a data to me it's gonna be required going forward If we're gonna be the best cow herd we can be We we need that information to make those quality
Track 1I, there's, there's immense value in that and not everybody is set up where they can capture that. But when you can and you do I, I think you have to use it. And you're proving that. From a marketing standpoint. When you go to sell those bread heifers, how much do your customers, potential customers and buyers look at that as they make those decisions? Or are, are we guilty of, like you said, going and finding the biggest fleshiest one that's cabin in the range when you needed a cab at your place and fit in?
squadcaster-22b6_2_10-11-2022_105654It's it's mostly B
Track 1that's kind of what I
squadcaster-22b6_2_10-11-2022_105654yep Yeah mean I I was at a a meeting with some seed stock producers though a few weeks ago And I was one of the commercial guys kind on a panel with them and they were asking em Well you you tell us don't over feed the bulls but I don't have the bull fleshy you don't bid on him And it's same with the commercial heifer business I it it it's a catch 22 I do think because I do track all that information do capture a few customer that they know that what we're doing here they hope that that passes down to the heifers they're purchasing But in general they want somebody that a keer that still that they can handle that's big enough and and they know that they can that they'll get bred back And that that's a real important dust too is you know we those first half heifers are we getting them bred back at 90 plus percent and and that's kind of a point of emphasis for us is you know they they gotta breed back and and and remain in the herd
Track 1Yeah, we see the same things as, as we sell bulls here at Dale Banks, we, every customer may not look at every piece of data that we collect or every e p d that's based off of that phenotype or that data. But they know we do it and they trust that the, the integrity and the data is right, and then they know. Regardless of what bull they find that they fall in love with, they're not gonna be too far from, from right when he leaves daughters and things like that. So I think it's almost a cost of doing business or a, a way to get folks interested in the program first, and then they may pick the individuals just on how they look or like from there.
squadcaster-22b6_2_10-11-2022_105654Yes we've used a a lot of different bulls in our AI program we were part of a national reference SI with the Herford association know we got to see a lot of young but we we felt like we much diversity in our in our calt you know I those were some really good young cis but I would only end up with females out of that 75 straws or something And so we had lots and lots of different cis of of our cows And and we've switched now back to just using one sire for two or three years here And we we're we're excited about getting our sales back to more of a a consistent female that we can build off of from that uh I think there's lots of technology out there what they're doing at uh on on the DNA um that really five years from now could we feel like could really propel our operation forward
Track 1From a breed standpoint, Bruce, what would the breed make up of your cow herd be today, and do you see that changing drastically? And then also what cis are using back both on heifers and on cows going forth.
squadcaster-22b6_2_10-11-2022_105654You know we've used uh and Charla and herford semen all along with Angus we we've got lots of cross spread cows And and the reason for that was that when we were pretty much all all Angus back 10 years ago you know we were struggling with feet and longevity and and so we went to breeding them all different ways and we chased it every shiny object you can imagine and and I I have a bad history of that but that we've gone back today We we started a year ago breed every cow and even every heer we we pretty much we AIed back to side and stickers enhanced And and and everybody might want you know write this down cuz this is really state of the art selection process here Um why we pick side and tricker I believe it's a top registered sire for the breed for the last two years And I figured will all you smart Angus guys need to to to register 'em so why wouldn't they work in my herd So that was and we've just got a relationship with Side and Stricter So that's why we picked that bull and that's why we're we're moving forward It it kind of hit lots of different points you know growth along with the carcass merit and ility that we're hoping that we get you know hundreds and hundreds of of half sisters then we feel like going forward from there we'll figure out by mating we'll figure out what that combination needs to be whether it's ol or herford or or just back to Angus that that will propel us forward
Track 1On the cal side of things are you also AI in most of those? At least one time through.
squadcaster-22b6_2_10-11-2022_105654Yes about 90% of our cows get AIed every year
Track 1And then turn, and I assume walking bulls or clean up follow up bulls behind that AI program. When it comes to buying those bulls, are you selecting and, and we'll get into traits and things like that, but are you selecting two different types of bulls, ie. A terminal type of bull that's just gonna make steers and heifers bound for the feed yard and on some herds, a replacement type of maternal driven bull? Or are you just letting population genetics take its course and try to find balance there between the two?
squadcaster-22b6_2_10-11-2022_105654It it's it's a little bit of both. We have some some charlet bulls we we're using on some of our older cows you know that we don't intend to retain ownership on Or some of our you know smaller cows that we're we're not maybe synchronizing some old cows on smaller farms where you just can't don't have the time to capture 30 at a time and and synchronize So we use those on those Then then we're using all three using strictly Angus on our heifers I still have some you know bad dreams from back in the eighties on a Semial bowl so I I it's probably not fair today to say that but in the breed but those still come back to haunt me So we're all strictly Angus on the heifers and then we're using em both Sim Angus and her Foods cleaning up on a have not gotten to terminal maternal herds yet I I think we'll get there but we're not there yet today
Track 1Okay. Describe to me the perfect bull as you go out and try to find that bull that does everything you need him to do. Trait wise, if you want to throw in breed wise um, anything that can be a tool to select genetics. What, what makes up the perfect bull?
squadcaster-22b6_2_10-11-2022_105654I I I guess I've a I think he has to be at in the upper echelons and and and carcass married in the in the high IMF or MARING score um to be in the top of the of the yearly weight EPDs and then you know I'm I'm I'm not Show guy or anything So I'm not very good at selecting by looks so I I kind of rely on those numbers. I I do not select so much on birth weight we have you know clearly we have to have a certain standard we do for heifers but for cows I'm I'm looking to I'm looking for our cows to have a a 90 pound calf I think that as an industry we've gone way too far away from what a cow should be calving and I think people are giving up way too much production there in general so we're we're looking for that So we're not looking for that real high c e d real low birth weight bull for cleanup you know then he he just has to be able to get around We're you know we want him to be around well cause we're using him You know a hundred and 80 days you know he's he's gotta be able to get around for a while and and contain some some sort of his condition. We'll use quite a few bulls we look at it from a different standpoint of not how many cow should a will cover necessarily which is part of the equation but also part of the equation How much is that open cost me that you today an open is what it's not quite as wide as it was but a lot of times that that's a thousand dollars at cow And and and the the value of a four or five year old And so you know three or 4% pays pays to buy another bull a hurry so we stock pretty heavily along with synchronizing and we expect to get a high high level bread. but In Missouri kind of need a both the female andal it probably needs pretty good big belly on him to handle the fastq just the volume of of low quality forage it's gonna needs to consume So that that's kind of something else So a long lean bull might might be good and length and all but that's not what's best Missouri
Track 1I would agree. And, and I could even say the same thing. I mean, the Flint Hills are as good as it gets here from May till July, August, September, depending on summer rains. But outside of that window I think the same thing holds true. We need cattle with, with plenty of depth and plenty of guts and plenty of room and volume to take in very low quality forage and, and turn it into milk and meat.
squadcaster-22b6_2_10-11-2022_105654Yeah
Track 1Backing up just a couple steps. When you were talking about turning bulls out behind your AI program on cows, do you go ahead and, and naturally breed heifers that don't stick to your time ai? And if so, how long will bulls be out with those heifers breeding in the spring or the fall? Either way.
squadcaster-22b6_2_10-11-2022_105654Yeah We we we leave 'em out there till we pull 'em to sonogram 'em. We don't really pay any attention how long we since we sonogram we don't really pay any attention to how long the bulls actually out there because we we know which ones are AIed We know which ones kind of get in that next cycle after ai And and then and then we'll know the you know the April Cavs May cas usually what we'll do then is we'll we'll pull the we'll pull them opens in the bulls the same day we sonogram 'em and then the the opens will give 'em a utiliz shot in case they're short bred and then they are off to to the to either be sold or or go on feed for our own account
Track 1Okay. So that segues into feeding those steers. What's your management on those post weaning? How long do you retain those or how long do you have those at your places? And then at what weight are you sending those to feed yards out West?
squadcaster-22b6_2_10-11-2022_105654You most of the time we're carrying them into the Upper eight or nine nine weights this summer I carried some of our cattle longer you know all the way to 1100 pounds or so back here in Missouri just because we were trying to carry 'em deeper into the market hoping this fall would be better than the summer which it has but it I would tell you that you know that that cost of gain still gotta pay for it somewhere And I'm not it it doesn't make as much money as you think it does On the napkin cuz the cost just you know carrying them cattle you know our our cattle are you know we kind of br we breed them to perform and to grow and they're eaters that's for sure so they're they're consuming But you know the best thing probably for us is get 'em pushed eight or nine here in Missouri trying to gain two and a half three pounds a day at the most somewhere in there And then get 'em off the feed yard and and they're gonna gain four plus a day We're not gonna have we we've got no compensatory gain we're trying to carry to the feed lot. You know we're looking for you know in a perfect world to to 16 17 months of age somewhere in there Most of our steers are gonna get harvested if we if we feed 'em the way we normally do and get 'em pushed through we're looking you know for 1450, 1500 pound steer in that in that range getting harvested
Track 1and that's the same for both your fall born and your spring born calves. You're basically, making both of those calf feds long just past
squadcaster-22b6_2_10-11-2022_105654Just past Kef Feds Yeah Yeah We we we would if if we had grass especially the falls you know we'd have if we had some good grass in the spring we we'd probably carry them a little longer But so far you know we've grown the cow herd and every time we got a chance to put piece on some cattle on grass we put a cow there instead of a steer
Track 1And I think that makes sense, especially where your cattle from the closeouts that I've seen there on your bif applications and things like that they are, they're checking about every box you'd want 'em to check when it comes time to gain and, and you know, carcass quality and yield there at the, at the processing plant.
squadcaster-22b6_2_10-11-2022_105654I would say we we really believe in heterosis and we really feel like we've making a better cow. But hetero I mean they say Heterosis is your only free lunch It is till you hang 'em up and then you then all of a sudden maybe you're not Maintaining the carcass merit that you were hoping for and we're We haven't done that You know we are not at 10% prime as a like we are in the industry We're we're at two or 3% and we that's another reason that we went back to the enhanced bull and and trying to get our carcass merit back in line and and growing with the industry and getting more primes because I I believe as an industry we need to be 30 or 40% prime as an industry down the road here and and hardly any selects So we we have changed back because we we didn't keep pace Uh we got some good cows that last a long time but we we gave up carcass merit in the process
Track 1And I think that's a challenge that we all face. Whether we're a, a single breed seed stock producer or a commercial cow calf producer, is that balance between genetics, management, marketing, you name it. That is purely focused on the consumer and on the end product merit and, and value when we sell that carcass or retail cuts. And then as you said, the, the replacement female that comes into the herd breeds on load uh, moderate inputs and stays there for 10 or 12 years. I'm not saying we can't have both of those, but if you just focus on improving one, quite often there is a, a response to the other and maybe an unintended response, but but a response nevertheless.
squadcaster-22b6_2_10-11-2022_105654We we do expect you breed you seed stock guys to get that for us though Okay We're not letting you off the hook just
Track 1know at least one who is doing everything in his power to do exactly that. And I think there are a lot more of, of us just, just than than us here at Dale Banks because honestly, you look at the number one driver of profitability and any of our, her yours mind, whomever. The, the biggest driver profitability is, is reproductive efficiency. And especially as you said, if you have more opens than just a few percent I'm not sure we can make enough prime, prime carcasses to overcome. A continued loss in terms of reproductive efficiency. And that's, that's the teeter totter that we ride. And that's the balance that we try to find. And, and, and we, we talk about reproductive efficiency. This is kind of going off, as you said, chasing, chasing a shiny object. But we talk about fertility and reproductive efficiency like it's one trait, It's dozens of traits, maybe hundreds of traits. And that's why it's lowly heritable because it can be affected by so many things. Nutrition, mineral, weather, you know, you said it yourself, just differences in rainfall and, and things like that. So that makes it even more difficult to select for, and that's, frankly, that's why some folks have opted for just feeding them whatever they'll eat and making sure that you overcome any genetic hiccups in terms of reproductive efficiency with, with energy and protein, and, and we can do that, but as, as I hear about $2 and 50 cent base on on corn and in some spots in the nation right now, that comes at a cost as well. So yeah, but again, rest assured that at least here, and I know a lot of places Ben and Darla and Eddie would say the same thing, that we've kind of gotta work both ends of this this puzzle. For sure. So you are currently president of Missouri Cattleman's Association. Is that correct?
squadcaster-22b6_2_10-11-2022_105654Yes sir
Track 1And I know Tracy, I noticed has also been pretty involved in Missouri Farm Bureau and Beef Industry Council, and you all both have, have led a lot of, of different ag organizations as, as you've done your day jobs as well.
squadcaster-22b6_2_10-11-2022_105654It's been rewarding it's a it's a bit to make it around to all the affiliate meetings around the state you know we're Calvin Heifers right now and that's I I do that both spring and fall So getting in the truck and and getting off to a meeting down in southwest Missouri very often throughout the year is is difficult but it's it's been really rewarding to to be a part and you know you get to meet that's a real plus of being being in leadership is you're getting to meet so many great people around the state And I've gotten to meet people around the country By being involved and being on a couple of committees with NCBA and the and the Live Cattle marketing group and got got no folks I would've never gotten opportunity So you know getting to know you and and others in the organization it's been been really rewarding. I you know I I get there and there's so much to learn every day You know there's so many people doing so many things and we just need to stay on the front edge of it as much as possible
Track 1Yeah. there's, there's value to serving in those roles, but as you said, they they come with. Plenty of costs and time and, and everything else as well. But that, that learning I think makes it well worth it. Along those lines. And you mentioned NC b a live cattle marketing committee. My hat is tipped to you because I think a couple months ago when I got an email from you, You were the first person who actually volunteered and asked to be interviewed on, on practically ranching. Usually I'll call somebody or see somebody and it'll take two or three calls and emails and begs to to finally do this. And and here you stepped up and, and said you'd like to be on. We've finally just gotten it done. But I think there was a topic in terms of live cattle marketing that, that you wanted to talk about most. And here I've already bugged you for 45 minutes of, of our time about production stuff, but tell us a little bit what you've learned as, and what you've heard from, Is there Cattleman's members and other folks that you've talked with about our. Picture of fed cattle marketing today. We've had several of our past episodes, and I know you've heard most of those talking about those. I have my opinions and my outlooks on it, but I also am open enough that I want to hear from others some options and, and some ways that we think we can do a better job of finding the, the base price of these fed cattle that we're marketing, so that then we can use things like quality based grids and things like that to, to assess the consumer value of those.
squadcaster-22b6_2_10-11-2022_105654You bet I yeah I appreciate I appreciate the opportunity know we we have policy uh Cattlemen's to that we support and have helped with the development of the price discovery and transparency act that um Fisher is Promoted And uh now um Senator Grassley has on the Senate side we were fortunate to have congressmen um Cleaver here from the Kansas City area and Vicky Hartzler from Missouri to co-sponsor that in the house and we just feel like the we need some change and I I you know I got to set on those uh live cattle um committees for ncba I mean I I feel like I I've listened to to both sides I think what the Nebraska cattleman and the Iowa Cattleman and Missouri Cattleman many others all over the state have have said makes makes sense And our our policy is is that we need a minimum level of cash trade to create price discovery Between the the feed lot and the cattle pack uh packer today we clearly do not have that in Kansas and Texas in the southern plains And it's eroding in Nebraska too we we never supported 50 or uh that would be way too disruptive to to the industry but we believe that all the packers should have to be bitters and yeah I think that you know for a lot of folks they hear 10% or 15% or 50% or how does that really affect me And I really boil it down to you know in Kansas or Texas either state you've got three packers and Tyson one of those three packers in both states And Tyson does not on cash cattle in either states And so in Kansas for example you've got and Cargill as competitors in Kansas And if you wanna sell cash cattle you you only have two guys to sell it to And know we'd have cattle in Scott City Kansas on feed at a custom feed yard and you'd say Well I'd really like to just sell these cash And they'd say Well here's here's national I gotta bid outta X Y Z for shipment next week And I say Well how about Cargill He goes Well Cargill hasn't been here in a few weeks I say So I have one option if I wanna sell cash it Cuz Tyson doesn't come and bid at these custom yards They are all all through AMAs or formula pricing you know and I'm sure you can find exam um you know op uh some Examples of where they actually bought cash But for the most part everybody in the trade knows that they don't buy cash So here we are we have no price discovery at the feed lot level in those in the southern plains And because Cargill and National just kind of they don't I don't say I'm not suggesting they're colluding I'm just suggesting that as a commodity trader if you know the other guy's not bidding a lot more by your phone calls and conversations then there's real no reason for you to push and bid right when there's plenty of cattle around we don't get any and and uh ask back and forth I just know there's clearly not enough competition At that level today in the southern plains and you know it's been dragging you can say well there's more market ready Kele in in the southern plains than the northern plains But as you can tell it it's dragging and and continuing to weigh on the market day to day And you know there's this is one time I would actually say Bill Bullard with RF actually is right There's not enough competition between the big feed lots and the and the packer And so we you know we we are dealing with a perishable product right It's not like I can say ah darn it I'm mad I'm gonna load up my fat cattle and Scott City and I'm gonna haul him back to Pennsylvania Or something where the Packer wants him more That that's not reasonable not feasible And this market know evolved into what it has over the years uh because there was There was still competition And today we don't have that competition because of AMAs and I I sell AMAs I'm not opposed to formula trading or whatever I'm absolutely but at some point there has to be a minimum amount of competition come up with the price that we we we get for these for these cattle And today in the southern plains there's essentially no no price discovery yet And and you know so I don't think it's so much about the percentages in Kansas and Texas and the southern plains It's that we need to make or change the names of whoever packer you want but they all need to be competing for cattle And then they say Well you're limiting my ability to on where to how to sell my cattle Well if Tyson all of a sudden isn't a hundred percent ama that 10 or 15% That Tyson says I can't buy your cow anymore You don't think that feed yard's not gonna go over to Cargill or or and say Can I work out an AMA with you Since Tyson's gonna I I think those are you know just straw men are getting thrown up in the argument. What we do know is we just need more bidding going on and more bid ask going on in the southern plains And if we don't make 'em all participate here they're gonna continue to work on it Nebraska and and it'll continue to move away from less negotiated And not saying we can't some but there has to be a minimum level if I have to sell 15% of my cattle cash So be it I I I gotta do it because I gotta get the other 85% of them priced somehow And market just continues to evolve away from it And and it's it goes against Packers and Stockyards Act original you know few big guys are getting preference over little guys I mean that's reason Packers and Stockyards got started on the bricks back in the day at the at the stock yards in the in these terminal markets And give fairness to all the producers And today you know the the fairness is not there and I just feel like we we as an organization and it's it's and who who really pays right It's our rural communities It's if we constantly have less dollars going back through the cycle It's our rural communities that lose right We're got less cows now You know the last two years you would think we'd be expanding the cow herd right With the prices for box beef If it had been distributed back through the last few last couple years we should should be expanding our cow herds Instead we of weather contracted but also because of price cuz low profitability It's been twofold and that's just bad for all of our real communities all over the country So I've I've talked I've talked a lot there I should I should let you stop and ask some questions but
Track 1Yeah I I I have I have plenty of questions always anybody that knows me and plenty of thoughts and I agree with especially what you said there at the last about needing to figure out a fix if for nothing else But our rural community's livelihood and and sustainability Now I I think that there are a whole lot more It's kinda like we talked about reproductive efficiency There's a whole lot more things that are affecting this Challenge or this problem in terms of profitability of the cow calf segment than just how cattle are purchased at the fed cattle or at the at the packing plant But but that's a big driver and I think you know just from us talking a few years ago and then some of these past podcast I agree with the premise that we have to address this and find a better way of fairly equitably pricing fed cattle especially to then base these grids and formulas and AMAs as they get lumped in together I still haven't been able to convince myself or no one else has been able to convince me that going back to the old quote unquote negotiated cash model is the way to do it in conjunction with AMAs if we If we were at 70 or 80 or 90% of the cattle being quote on a negotiated type price and there were we were back to 1996 or whenever when there were only 10 or 20% that were being sold on a grid I think it works really well I'm not and and the economist that I've talked with I'm not convinced that 20 or 30 or even 50% is a critical mass enough to make that work What I feel like is there's got to be a way out here that we either through a negotiated grid or through a negotiated you know some kind of a retail based pricing structure that helps get to a consumer focused based price that we can accomplish what it is we need to accomplish of passing that consumer dollar back through all four or five or six steps in the beef industry chain you know my wife and I and and mom and dad just got the opportunity to go to the Certified Angus Beef Conference a week and a half ago and at that conference there were a a few dozen cow calf and and seed stock producers even less than that feed yard owners and then six or 700 Retail and food service representatives and a few packers not very many but most of them were food service folks either chefs or wholesalers your Cisco type reps that were selling to chefs. And it was it was very educational for me to ask a lot of questions of them of how they sell and buy their product And guys just shrug their shoulders and laughed about the fact that it used to be if they were 30 days to as much as 90 days out on either their purchases of raw beef or their sales of further processed cut stakes or whatever the case may be they thought they were in great shape and today they're talking six and nine and even as much as 12 months out that they're pricing those cuts that they're bringing in from the packer or even booking those sales that are going to this next restaurant So I think as we look at it from a whole beef whole industry standpoint the Packers uh interest in lining up cattle through AMAs through contracts through Ford pricing whatever the case may be is not simply to rob us blind It is because they know what they need six months out and what they are obliged to have And so they're trying to do it here The larger corporate feed yards are doing the same thing I mean if you were sitting at the the hedge desk you'd call it managing your risk and I think that's what they're doing. I do though I do agree that we in the on the cow calf side of things and and I think the feed yard owners and managers have to be key in this regardless of how they're selling cattle today because When it comes right down to it it is their business Now if they're trading your cattle that are retained ownership it's also your business But there are so few retained ownership cattle that you know we in the calcast segment are squawking the loudest about this and yet it's oddly enough it's the feed yard owners and managers that are probably going to have to help us figure out how to better price these cattle because they're the they're the last office or the last hands that generally are touching and making those marketing decisions and and and the other thing that I want to be sure of is we talk about especially as we talk about bringing the federal government in to mandate how cattle are marketed I had Tom Field on as one of my earlier guests from up at Nebraska and and he tongue in cheek but I think you can back it up with facts He has never been able to find one business where the federal government entered into And did a better job than it was doing when the market was working now granted with the cattle cycle as it is there are times and we've seen it the last three years there times when that market simply is pretty ugly as it's trying to work through the glut of cattle We saw the backup that we had from plant fire from Covid from labor situations and things like that Now I think we've seen a significant I don't think that the profitability of Packers will will A test We've seen a significant shift of leverage from the Packer processor back to the producer just in the last few months they were making six 700 bucks a carcass back at the height of it I think last week when we saw some data at Oregon or Washington they were somewhere in the twenties or $30 per carcass profit so I think there's a leverage shift There's a market shift but I'm not one to just say Hey the market will work itself out I do think we can do better and we need to do better I just don't know Let's say for instance and then I'll pass it back to you Let's say for instance we get to an industry standard of 30% prime which I would love to see and our consumers would love to see and I think it would make us a very healthy industry How do we reward you or anyone else for selling enough cattle That grade 30% or 40% prime if we're forcing a minimum percentage of them to go onto a cash market which by nature can't be a grid type value based marketing scenario. And and you know we want to get at these arrangements that allow the big feed yards and the big packers to have control and have all these AMA cattle outside of the negotiated arena I'm very fearful that when it comes time to sell my two pins of cattle or my customers few pins of marketing cattle there'll already be X percent that are lined up between let's say Tyson and the big feed yard in Western Kansas wherever that May case may be And they say Sorry Matt you and your customers are just gonna have to sell cash and you can't Get any bonus from a 25 30% grading prime set of cattle because we've got this rule and we've got our 75 80% locked up in these arrangements with the big guys and we can't let them go So you independence are gonna be the ones that have sell cash
squadcaster-22b6_2_10-11-2022_105654We we're talking about if you go by Dr Koon's numbers that they did for you know we're we're talking uh 10 to 15% cash in in Texas and to 20% cash you know equals price discovery per his numbers Um that that he provided the ncba So I guess you know and and and and you 18% if I believe the number is right of AMAs is strictly a pricing premium or discount It's strictly a pricing mechanism going on in it So to to say that that's gonna limit your opportunity why wouldn't they Why would the would the world a not want your better cattle I I mean I I guess I don't see the the logic that he's gonna lock out the best cattle and not take him The only way he is gonna be able to do that right is if you if you if you allow him and and and and cactus or friona is and all that to to the feeding deal and and and and restrict that But you could always feed there right With one of those guys to to to to be a part of the program Unfortunately at some point in here you have to have price discovery And I'm I'm I'm a believer Matt that we're going to integrate our in some form or another right Whether I've got my family's got 20,000 cows 20 years from now and we're we're feeding them at our new food groups We're killing 'em all there there uh here in Missouri or whatever it might be I I think there's gonna be more vertical integration What I'm contending is we have no we're not we have no way to discover price in that in that segment And until and today as we verdict that's the thing that really is to me scares me the most is this problem didn't just happen During our black swan events over the last three years this has been going on There's you know 50 the Iowa guys were talking about that 10 years ago Right That that that we needed needed this that some of us have been squawking about this for a long time You know it's just we finally got traction the last couple years to bring it bring it to out out in the open this has been going on and it's been a problem and we just we finally got some traction and we're trying to address it today So I I guess I you know you're you I assume I I'm a U S P uh member I assume you are You may even have slots I I don't know I I don't but I can usually lease those slots but I would assume gonna find those mechanisms for the good cattle We still though it comes back to and I I don't know how you may You can't we can't seem to get the pack the feed lot guy to guarantee us how many he's gonna be And the most logical is Congress government We need to force the packers to buy X amount of cash to try to create price discovery and and for all of the cattle And if and the only logical way to do that unfortunately is to go force the packer to do to do it because I don't know how you break it out among each different feed yard or whatever It makes just seems like logistically the only way to do it is at at the packer level you know NCDA went to Tyson and asked them to purchase more cash cattle they basically said We're gonna do what's best for us So that that and I don't that I if I was Tyson I could not be a bid in the market and and have less competition to bid to procure my product I get it I understand it If if the shoe was on the other foot I doing the same thing they are But again bad for our our we have a downward bias on the price and we need we need more competition in that level And I don't see another alternative I'm not haven't seen anybody offer another alternative And if it's bid the grid that's fine I'm I'm good Forbidden that But the problem with the current bid the grid that we have today there's no bidden ask Okay It always just ends up being priced at the cash market gets traded at How many times you ever hear somebody say Well my bid the grid was let's see So we traded a dollar 44 in southern planes last week You ever hear anybody say the bid the grid traded at a dollar 43 or a dollar 45 or a dollar 46 you none of that's going on out there It's all just getting traded turned in off whatever the cash price is So how we do have negotiated grid in the marketplace but it's not really negotiated much sure doesn't appear Sure Not talked about
Track 1I would not with the level and the cattle numbers where they are today I would guess that in six months I mean I never thought I would hear of somebody paying $2 over the price of corn when it was seven and a half eight bucks
squadcaster-22b6_2_10-11-2022_105654Yep Sure
Track 1And and so you know I don't We have gotten in the beef industry and Larry Cora and I talked about this three or four weeks ago in the podcast we've gotten to a point in the consumer beef industry where there's almost this price in elasticity of demand for high quality protein or high quality beef CB and prime is what I'm gonna call it and I think that we are on the cusp especially as we see cattle numbers decline and they are going to decline in a hurry because of just what you said We haven't had price signals and we haven't had the weather that has allowed people to expand the cowherd What we've done is consolidated it into fewer hands and we'll see that consolidation grow exponentially over the next two or three years And I think we'll see the feed yard consolidation you know all the new bunk space that's being laid out there in in the western parts of the cattle feeding industry They're already very established fairly sizeable feed yard So your your statement about consolidation is right on the money that can do one of two things What I think it will do as much as I appreciate the independent cattle producer and the small family managed family owned family worked farm what that what that consolidation may do is give those feed yards a better opportunity to negotiate with the big three or four the irony of it is that's probably going to result in in my opinion if we truly want to get the most value outta each carcass then we figure out within our industry how to get that back all the way equitably through the system But if we want to truly get the most dollars back outta each carcass it's probably gonna be more Pay for what you produce not less more value based type scenarios Now 18% of that being in just a Ford contracted Ford priced non-G grid type sale we can argue and discuss that but I'm more concerned with maintaining every producer's ability to get paid for what they produce than I am about anything else And and I think that the that the challenge that we have to solve here is not we aren't selling enough cattle and negotiated grid It's that we're doing a terrible job of establishing that price in the first place And if we're already terrible marketers with 15% of the cattle 12% of the cattle some weeks 22% I mean some of the worst times as far as price and profitability was when we were selling More and higher amounts of cash cattle we're not good at establishing a fair and equitable price for these cattle in the first place what happens when we're forced to sell more of them I mean most feed yard managers today have lost that tool out of their toolbox There's a few of 'em that are still really good and I'm glad that they are there on today's scenario but for the most part when I was a kid a feed yard one of the first things that I thought a feed yard manager had to be good at was pricing and selling cattle Today They need to be good at buying inputs at employee relations Everything that you just said you learned from working in the Bartlett and the Lansing type too That's today's feed yard manager too Labor and inputs is what they're focused on So I don't know that today's model Gracefully allows us to say Okay we're gonna go from here and tomorrow you're gonna have to add two or three or 5% to what you're selling Or if if they're selling 0% you're gonna have to add 15% to a cash trade of deal And they go Okay I have no idea how to even do that but okay And guess what The packer will buy those really good cattle and they'll buy 'em cash That's what I'm afraid of They they squeeze me out and they buy a super high grading set of cattle that would've brought a hundred or 200 back in premiums and they buy 'em on the cash market
squadcaster-22b6_2_10-11-2022_105654You're giving him too much credit The packer he he he used to have a staff that negotiated too Right He doesn't have that anymore They they they they used to have remember all those guys When you you were young and working for aa you you were you those guys had staff They're schedulers now right They aren't traders Yeah
Track 1rode I rode in the car with them I I know exactly how they worked and I do not want to go back I I rode in Texas panhandle in western Kansas in the mid nineties when we were selling 80 to 90% of them as cash And it all happened within a few minutes And if you caught one week link in the feeding segment and they pulled the trigger and sold two pins a junk it everybody's phones started ringing and the market was established at 66 bucks Nobody realized that they were a third Holstein a third Corey roping steers and a third whatever but everybody sold at that price And that's what I don't want to go back to
squadcaster-22b6_2_10-11-2022_105654But but we're not saying that We're not saying that we're just saying that we have to have ex mean it could happen just the same today Only communication is better between us All right There's there's Twitter and all that other stuff So hopefully you you vet that stuff out more equitably today we we still have to figure out some way to come come back and price Anyway and I'm I'm with you that there's some sort of blockchain mechanism I I'm confident 10 years from now I prob my cattle probably or if I'm still around my boys still allow me to be around that that that that we are are My cattle won't go out there and and I won't necessarily be trading cash cattle or selling on a grid I I may be in some some you know we get hit up by Piedmont Tees and the wa GOs and all that stuff you know because of our numbers Well I that I just don't think that's where we wanna be today I don't think we there's an alliance that you know whether it's 44 farm guys or pick pick pick your pick your group whatever I'm not sure that's matured enough here Alls I what we suggest is We still have to figure out a way to price that And do think we'll vertically integrate I do think we'll our cattle the good cattle will will go there and if it's some sort of blockchain pricing I'm not opposed to that But today we don't have it We don't get piece of the pie of the retail dollar Alls we're getting is this of trade between the the big feed lots and and the and the and the big big four packers and somewhere in between Until we get there we still need some price discovery and transparency And that's what the second part of this conversation should be the transparency part of it that we haven't even got to Right That that's that we really thinking about it back here in Missouri is is the transparency It'll be nice to know maybe what Tyson and Cactus's deal is we won't know the names on it but we'll be able to least maybe see what their formulas are being priced at What I really think it's more important this transparency part years from now as we when we do finally figure out blockchain and pricing that's when it's gonna really matter to the cow calf guy How need to know how that whole block see how that blockchain process works down the road So I know when I'm getting called on and allowed to sign my herd up we will we will I'll I'll have some comparisons to make on not just who comes and knocks on my door as a traveling to get me hooked up I that that's what I really I'm excited about that portion of it for the future of of our
Track 1Yeah I I think blockchain and and several of these technologies that are here now and becoming more and more validated and and I guess more workable solutions I I think somewhere in there is is where we land But I will argue that the transparency piece I if we're talking blockchain that's as far away from transparency as anything we've discussed because that's one of the things that I think has been the calling card for blockchain and about any industry that it's utilized is that it's a way to perfectly transmit information between let's say buyer and seller in Case or anybody that's involved in this program and has a right to see that but doesn't allow it to be seen by anybody else And one I I mean I may I'm no I'm no tech guru but one of the things that most companies that use blockchain use it for is the propriety and the privatization of it And so yeah I think that technology has a lot of validity But as far and and granted if the industry ie Buyers and sellers factors feed yards anybody who has an ownership if we decide hey we want this to be information for for the public you can always build that into it but most of the time I think blockchain probably gives us less transparency as as opposed to more it may be more responsive to what that consumer dollar is driving through the chain but I think it's probably not gonna be more transparent And and I I still and and again I don't I don't mean to be argumentative but my belief is that we truly are seeing a trickle down effect of the consumer dollar Now was there a time for a year and a half to two two and a half years because of a lot of different events one being the exact AMAs that we as producers have been creating over the last 30 years but others being as you said these Black Swan events and we cannot you're right we cannot blame this all on the Holcomb Fire or Covid or The labor shortage It was started back when we as producers started saying in the mid nineties that there's got to be a better way of marketing cattle They can't all be worth 63 cents a pound and so we started this Now it's up to us to fix it I think that as you mentioned I think that some of these technologies that we have access to some of the interests by a lot of different people I agree We have and and I was sitting in those live cattle marketing committees at NCBA when I held your spot with Kansas Livestock Association That was 2015 and we were having the same knock down drag outs then that you were having Now they didn't last quite as long as yours did there a summer
squadcaster-22b6_2_10-11-2022_105654I hope I hope not Yeah
Track 1man I I don't think I could have made that one but I say that because that was six to seven years ago and we had committees within KLA that we were trying to hammer this out because yeah we recognized there was a problem but because we were still making pretty good money at the fed cattle level it was hard to get anybody very passionate about it Now the last two to three years Not a challenge to get people passionate about it and that's probably okay That may be what we need to get people to thinking and discussing and figuring out a solution for what I say is the true challenge and that is a a consumer focused base price that allows us to market these cattle on a value based scenario as we wish going forward I just don't know that it's worth taking a step back in time for the intermediary until we get to like you said something that involves blockchain or whatever in 10 years I think the time's now I actually and I may be all wet I think there are packers that are interested in a better way of buying these base price what I'd say non ama non grid non formula cattle You're you may be right that in fact I know you're right that their reps that are running up and down the road going to feed yards are no longer negotiating a price on cattle They're scheduling now I think they're negotiating a few but their job is way different than it was when I used to ride with them in the mid nineties maybe that's good Maybe that's bad I don't know But I I think that there is value in figuring out where we need to be in the next few years Not just Hey let's stick a patch on a blown out tire and hope that we can make it to town Now let's just put the spare on Get a new tire or rebuild the tire or whatever That's a terrible analogy but I I just I think that it's dangerous to ask Uncle Sam to hold our hand while we fix this instead of just as an industry sitting down and exposing everything that is a problem and fixing excuse me fixing it ourselves
squadcaster-22b6_2_10-11-2022_105654I I'm I'm not a opposed to to to to that conversation at all And and for sure not I know Yeah I but I I you know I don't see the the Packers saying about how about X or how about Y I'm I'm not seeing of those
Track 1think they are Bruce
squadcaster-22b6_2_10-11-2022_105654I well they aren't in Missouri but and I I didn't see 'em showing up to the Fed the live cattle meetings coming up with new
Track 1the difference That's one difference between them and us right or wrong they know they only have three other competitors so if you and I are talking about what works for us in cattle selection or genetic selection we'll sit here and talk about it on a podcast and I'll let 800 people listen to it in the next week or two And we don't think there's anything wrong with that Somebody wants to steal your secret sauce and show up at the next land sale or whatever else next to you and and outbid you for that piece of course Or or find the next lease operator We in our in our culture we don't have a big problem sharing trade secrets Those guys have a big problem sharing trade secrets Good or bad They're not transparent quite often because not because they don't want us to know what it is they're up to They don't want the number two three and four to know what they're up to either And so it is tougher but I do I I Maybe I'm being overly optimistic Maybe I've got that farmer cap on and I I'm I'm optimistic instead of sitting buying a hedge desk being realistic But I I really do think that there is work by both buyers and sellers packers and beef industry producers to figure out a way to make this more sustainable And because honestly they don't have much of a business if we don't grow this cow herd and if we don't have profit signals to tell us to expand this cow hd go to 28 million beef cows out there and try to figure out how to keep those plants running efficiently They got a problem And so long term they there is benefit in them making sure that their suppliers I e us are still around and still making enough money to to go forth so anyway that's Probably a little altruistic but I do believe they they they know there's a need and a challenge and and we've we've exposed that very well over the last few years or the industry has and I I think there's some steps being taken I just it makes me nervous to ask Uncle Sam to mandate a a fix
squadcaster-22b6_2_10-11-2022_105654Yeah Well it's fair to agree to disagree I think And And And the the one last thing point I I I think in the conversation is you know we we got these Information that was provided out earlier earlier in the summer when from the from some of the different professors or experts around around the country and how much it would cost our to to to to to go back to negotiated or whatever which I think is just crazy numbers that they're throwing out there I mean were we really were we really losing hundreds and hundreds of millions of dollars 15 years ago because we were negotiating of of course not so so asking to stop consolidating down to to to where there is even less negotiated cash it is not a huge cost to us And I'll bet none of those professors ever ask you know in their mock feeding trials what happens if I don't only get one bid You know that I think we I know who's paying their grants and all that stuff but come on guys let let's let's be realistic We you know even well I was a trader Hopefully I got it if you got three bidders instead of two bidders you're trying to tell me that that's that's not better for competition mean I know I know You wouldn't want to go from 50 bids your on your bull sale to five bids for your bull sale And I think knowing that packer has to participate will create more competition And it's to me it's crazy to to think that we just let let Tyson not be a bitter at all in the southern plains That that's what it boils down to We need all the packers to participate at some level in the cash trade and and and and it can all it down Where only have one bidder in the marketplace is is just tough for tough on our on our our industry And it doesn't bring price It doesn't mean higher prices I'm not I know that because there's three bids We're always gonna be higher That that that's supply and demand wins out over all But we have a downward bias due to lack of participants in it I I think that just hurts us
Track 1yeah, I, I see what you're saying. A, as you talked about 15 years ago, I had go back in my pictures here. I took a picture of a slide that they had at the c b conference. And again, this was telling the beef industry's story of quality of product for the consumer. And Randy Block was there and he showed this slide of beef industry profitability. And so, and I'm sure you've seen it before, it would be cow calf segment through the packer. So cow, calf, stocker, feeder and packer. And he had two blocks from 1980 till 1998. Total industry profitability averaged 32 bucks ahead, split four ways. It's never split equally. There's some of those bars that were below, there were some of those bars that were above, but for 18 years and, and if we went before that, outside of a little, Piece in the seventies when it got, as you remember, got. Absolutely not so, but it probably wasn't that good. 32 bucks from 98, which would've been right on the heels of all these AMAs, US premium beef, you the Future Beef model that granted it didn't last, but ranches, Renaissance, all these producer led initiatives that said we wanna be paid more for the good ones and send some industry signals. We think we've averaged from 98 until 2022, industry profitability per head,
squadcaster-22b6_2_10-11-2022_105654Yeah I don't I don't know the number
Track 1$305 per head. And he breaks it out, and I can send you this slide. He breaks it out and the last 1, 2, 3, 4, 5, the last five or six years, the yellow bar, which is the Packers share, that profit is pretty.
squadcaster-22b6_2_10-11-2022_105654absolutely
Track 1Prior to that, even from 98 until 2000 and and 15, it was almost nonexistent. Now granted, we were through two supply cycles where we had the stick and we were in control and the leverage was on the production side. And you've got 2014 in there when we this is crazy to me, but $1,100 per head, total industry profitability, profitability, net profit split three ways cuz the packer wasn't even on that one cuz they were actually
squadcaster-22b6_2_10-11-2022_105654Negative Yeah
Track 1So all I'm saying is let's be careful what we wish for. In my opinion, we do need to figure out how to best keep the factory us working and, and, and sustainable. But let's not go back to that time when the whole industry was trying to split up a, a pie of 30 bucks per head in total profit. And that was, we were a straight up commodity. We were doing nothing but trying to put blood on the floor and a slab of meat on the plate. We didn't care if they liked it or not. We just knew we had to do it as cheap as we could. And, and it, you talk about sustainability, it wasn't sustainable. And I think this model is, we're having some major growing pains, is what I would say. And we've got to figure out how to work through those so that we still come out on the other end and are able to capture that profitability. Then it's up to us. And of course the market leverage and supply demand fundamentals and things like that to figure out who, what is an equitable division of those, of those profits. But, but they gotta be there We've got, they've gotta, somehow, they've gotta come from the consumer and get into the industry before we can figure out who is supposed to get
squadcaster-22b6_2_10-11-2022_105654Sure I don't I don't think we wanna go back to that I think we have lots of qu good signals just that I don't think 10 or 15% and all packers participating in 10% of the cash trade of all the cattle the southern plains takes us back there So
Track 1Is that enough? Is that enough to actually move the needle? Especially, I mean, how many southern planes? I'm, I'm gonna, I'm gonna make the hair on the back of some of my panhandle friends stand up. But how many southern planes, yards have you been through?
squadcaster-22b6_2_10-11-2022_105654Been through I I don't know
Track 1It's a different, it's a different set of steers than what you're sending. Significantly
squadcaster-22b6_2_10-11-2022_105654I no I'm I'm I'm get I get that I I get that there's different qualities all over the country right I'm I'm I'm
Track 1Well but it's significantly different.
squadcaster-22b6_2_10-11-2022_105654But there's still a percentage of it Something needs to trade cash and we need the contention is that all three packers need All the packers need to be participating All the four majors need to part participate in the cash market so that we have bidders
Track 1I if, if you don't have if you don't have a market for that, what I'd call high cut ability, maybe more variable quality beef. mean, if, if Greater Omaha grand, they're not a big four, I'll, I'll use If national is focused on white tablecloth, high end prime, and C, and you force them to do business on cattle that probably not gonna meet that on a very high percentage. Is that a fair way of telling a capitalist country how their businesses should do their business?
squadcaster-22b6_2_10-11-2022_105654I'm but I'm I'm not forcing them to, to buy the, I'm only, I'm only asking because National today is in the cash market. but we're, we are just saying that X percent should, has to be negotiated. We just need some sort of competition. Y yeah. I think it's okay to, to have them go out and in the cash market. Go buy more good quality ones. I mean, if, if, if that's what it takes for, for us to get price discovery. Yeah. How, how else are we gonna get price discovery if, why won't we, all of a sudden, why, Matt, are we gonna allow Kansas and Texas to be a hundred percent AMAs and no price discovery? That's where we're headed.
Track 1oh, We won't have a lack of price discovery. It may just be discovered using different indicators
squadcaster-22b6_2_10-11-2022_105654I'm good with that, but nobody is offering those today. Nobody's offering those other indicators today. And so we need, we need some sort of ability to have bidders in the marketplace
Track 1Yeah.
squadcaster-22b6_2_10-11-2022_105654at this point. Until we, we come up with an alternative. And that doesn't, just because we have multiple bidders doesn't mean that we go back years in time.
Track 1Yeah. I just, I, you may be right, that that may be the only way I, I still haven't accepted that. That's the only way. I think that the energies that we put toward this challenge need to be focus. On the windshield, not the rear view mirror. And that's my biggest problem is looking back to try to solve tomorrow's problem or today's challenge for tomorrow. I think, I think is, is less than ideal I would say But again, like you said, it, it's you and I, I look forward to more conversations like this cuz I think that's what, that's what helps us get at real solutions, whether it be on marketing today, on reproductive efficiency and fertility tomorrow on hybrid vigor next year. That's why I started this podcast and it's discussions like this that I think, you know, there may be somebody bouncing across the pasture in a pickup right now that goes, You know what, I got an idea. And I would encourage any of you to call somebody. I, I'm, I'm not the packer, I don't. I'm not trying to make this my proprietary solution for the industry, but I do believe strongly enough that we've got to come up with one that works and works well for those that that wanna be part of it. And so I would just, you know, encourage you, encourage everybody that's listening, let's keep thinking about this and you know, whatever the solution is. I think that we do need to spend some time making sure that there aren't more unintended consequences than there are, you know,
squadcaster-22b6_2_10-11-2022_105654Absolutely. And I and I, I, I would tell you that should this, we, we get price discovered and transparency pa passed. Do you think the Packers are gonna come up with, and the big feed lot's gonna come up with worker rounds? I, I, I, I have, I have panee here. I I, I know that this isn't just, doesn't fix us long term, but this is, this is a way to try to get competition bid back into that segment we, and then we will have to work on it again and again and again. I, I don't, I, I hope the industry comes up this, maybe this gets us to a point that we move forward with new, new ideas and new opportunities. But do wanna say for sure that I, I appreciate the opportunity to, to, to get the message out on, on your podcast. I know I wanna do that for sure. I, I really appreciate opportunity.
Track 1Yeah, I, appreciate you being on here and, and like I said, I, as you've probably figured out, I'm, I'm always up for a good debate and uh, I hope anyway, after I'm finished, I've got more respect, not less for the person that I maybe didn't necessarily agree on all the topics, and, and for sure in this case that's the truth. And, and I appreciate, appreciate you being on here and sharing your thoughts and, and perspectives and we'll look forward to continuing the visit and keep thinking and keep doing
squadcaster-22b6_2_10-11-2022_105654keep doing that. Thanks so much, Matt. I appreciate the
Track 1bet. You bet.
MattIt's time to invest in practical profitable genetics from Dale banks, Angus will sell 145 yearling and coming two year old bulls on Saturday, November 19th. They're the top end of our 2021 calf crops bred for over a century to offer a balance of calving, ease, docility, maternal excellence, carcass, merit, and sound feet and legs. They're ranch raised freeze, branded fertility checked and ready to work either this fall or next spring. Catalogs will be available in late October. Contact us today to get on the list. Videos of all bulls will be available prior to the sale. Come see us November 19th, Northwest of Eureka, Kansas, or bid online@cci.live call or text Matt Perrier at 6 2 0 5 8 3 43 0 5. Or go to Dale Dot com.
