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June 12, 2009

Livestock business struggling

Like everything else in this current economy, the livestock business is struggling to stay afloat.

“It’s been mostly down with fat cattle,” Jerry Nine, owner of Woodward Livestock Auction, said Thursday. “It’s been kind of frustrating. Fat cattle out of the feed lot will sell at $82 per 100 (pounds). At that rate, “people there are going to go broke.”

Nine said people with feeder cattle in the feed lots have taken heavy losses for the last two years.

“It’s been terrible for the feed lot” owners, he said. “Something is going to have to give. Several feed lots are for sale.”

Nine attributed part of the demise to the price for feeders going high, then the economy “slapping them in the face.”

“Owners of feeding cattle cannot survive after the last two years because of huge losses,” he said. “If we could get more for the end product, that would help.”

Nine said he wasn’t sure that the price of meat goes down in the grocery store according to when fat cattle get cheaper.

“There’s too much control from the big boys,” he said. “It’s a monopoly.”

While the picture Nine paints sounds grim, he did say there still is a competitive market “if we can keep people from growing broke in the process.”

Stocker cattle “aren’t that bad,” he said, but added, “The thing about our business is it takes so much money to operate. You can’t make too many bad decisions or you’ll go broke.

“We’ve had tough times before, and hopefully it will work its way out to where we don’t lose too many cattlemen in the process,” Nine said.

As for the price of cattle, it was “$88 per 100 (pounds) three to four weeks ago, while it’s $82 last week and maybe less this week. Taking a 100 head at a $78 loss that would be a $7,800 loss,” he said. “In a feed lot it can be a $78,000 loss in the last three weeks if you have a thousand head.”

Danny Feerer of Feerer and Feerer Polled Hereford in Fargo, said as far as growing cattle, “we could use more rain.”

However, he said, it’s the market that’s “really hurting us right now.”

“The packers are really making a lot of money with the price of meat in the grocery store and the price of fat cattle out of the feed lot. Packers this morning were bidding 81 cents to 82 cents per pound.”

At that rate, “we’ll lose pretty good money,” he said.

The packers know how many head of cattle are in the feed lot and what everybody else has, but the captive livestock owners don’t know how many cattle are out there, he said.

“If we can hit our cattle at a time when the packers don’t have as many, it’s a plus,” he said. “It’s all supply and demand. Undoubtedly (the packers) do have a good supply because they keep the price (for cattle) getting lower every week. The price of meat in the grocery store never went back down after it went up.”

While shoppers at the grocery store purchase chicken because the price is less, Feerer said they’re actually losing money by paying for meat with bone in it.

Meat is trimmed and boneless, he said, so if you “buy beef, you’re saving money in the long run.”

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