Don't Shoot the Messenger

Recently the Carbon Cowboys posted a video of DF Fyfer explaining how the changes in breeding goals for cattle breeds have, over the last few decades, shifted the economics of beef production against the farmer and in favour of the feedlots. "The sister of the ideal feedlot steer may not turn into the ideal cow to farm with on grass". DF made these comments at the World Congress on Conservation Agriculture which was held in Cape Town earlier this year.

There has been quite a reaction on social media to this video, where in true social media fashion, farmers have missed the message and taken DF's statements as an attack on their favourite breed. Getting hot under the collar and mouthing off, rather than analysing a comment on how the economics of the beef food chain has shifted against them.

Graph 1: Change in Animal Husbandry Profitability. Source: Abstract of Agricultural Statistics.

The above graph shows the decline in Animal Husbandry Profitability over the last 30 years -1.7%. It also shows the accelerating rate of decline, how in the last decade it is -3.8%. Unless livestock farmers find ways to seriously decrease input costs, including the land component, their economic sustainability is under threat. We covered this threat in a previous newsletter.

In a climate where half the beef farmers are not profitable and producer numbers have crashed dramatically in the last decade, DF's warning is attacked by farmers as they believe it to be an attack on their breed. It's not a comment about Angus versus Bonsmara versus Mashona. It is about economics. It's about having a beef supply chain that works for farmers rather than erodes their capital. The reality is if you aren't making a return on your capital, pretty soon you won't have a breed. No matter how marvellous you think it is.

It is now reaching the point where if you plan to be in the business of conventional beef production in 10 to 15 years time you better have a big enough balance sheet to be both a producer and run your own feedlot. If you aren't going to be a Mega-Boer in 10 years that you might need to consider selling up before your capital erodes away.

DF Fyfer at the World Congress on Conservation Agriculture. Source: Carbon Cowboys

The other option is the one that DF and other producers around the world have chosen. To increase their stocking rate (get economy of scale without the expense of additional land) and change to low input production (beating the cost price squeeze by relying on increased natural grass production rather than feed and hay).

As beef producers we should be asking ourselves what are we going to do about this situation. Are we just going sit by and be farmed by the system or are we going to change? I can promise you the system is not going to stop farming your balance sheet, nor will it change in your favour on its own.