It is bull sale season and a great time to visit with the men and women who contribute to this industry. At a recent event, I had the chance to talk to many young producers who have a clear vision for themselves and their family farm. They were bright, articulate and fully aware that changes in agriculture were inevitable and in most cases of benefit to them. With new technology and market information just a fingertip away, they were confident in their ability to make a good living from agriculture, and indeed, from their family farm.
During the conversation we had the opportunity to discuss the definition of the family farm. This is special to me, because we first have to put the word “family” into context and understand that one person’s definition of family is different from the other. By their words, the family farm is now 3,000-4,000 acres of crop with a complimentary 500-head cow herd and a program that adds value to the calves, potentially through to finish. I thought a lot about that definition of the family farm because 500 head of cows makes sense from the perspective of economics of scale and the marketing power of 500 head of feeder cattle.
But 500 head of finished cattle is a tough sell. So tough, that the industry has seen new partnerships emerge to ensure the survivability of both the large and small “family” feedlot.
In the West there has been a merging of the smaller and larger feedlots. It makes sense for the large lot to rent facilities or pay yardage and to buy feed on site rather than go through the hassle of new infrastructure and feed transport. It also keeps the original lot owner in his home and farming his land while mitigating a risk that he formally carried in the cattle. It is a big shift from the independence of cattle ownership, but there are agreements that favour both parties.
For new entrants, this often works well too. You do not have to own a feedlot to own cattle just as do you not have to own cattle to own a feedlot.
The other side of the story is the successful feedlot, let us say, fewer than 1,000 head. To be profitable these cattle feeders may spend a tremendous amount of time on the relationship with their buyers. They may also be unconventional in their thinking and have cattle for a specific market and almost always custom-feed for cash flow.
Another trait of the successful operator of a smaller feedlot is superior risk-management skills. Even if they cannot fully hedge the sell side, they most certainly can on the input side with the right discipline.
Can a smaller lot survive? Absolutely. I like to look at the American industry as an example. Of the 82,170 feedlots in the United States, 80,000 are under 1,000 head. In fact only 59 are over 50,000 head.
Comparatively, in Alberta, feedlots of 1,000 to 5,000 head make up 84 per cent of total of the feedlots over 1,000 head. So the feedlot with less bunk space is a strong economic contributor, as is the family farm. They may have changed in definition, but they have not changed in their importance to the rural landscape.
The family farm and the family feedlot most certainly have changed. If we look at our industry through the eyes of the young, we can appreciate both their challenges and their enthusiasm. At the end of the day, there is room enough for all, independently and in partnership.
Brenda Schoepp is a market analyst and the owner and author of Beeflink, a national beef-cattle market newsletter.
A professional speaker and industry market and research consultant, she ranches near Rimbey, Alberta.