Profiting from cattle operation is tough as ever
Eleven o'clock Monday morning at the Central Oregon Livestock Auction and to the uninitiated the auctioneer's cattle rattle sounds like a buzzing swarm of bees.
"That was $2,200 he just rattled off there," said cattleman John Johnson. "When that's your money you quickly learn to understand what he's saying."
Johnson and his wife, Tracy, run cattle half the year in Klamath Marsh, north of Klamath Falls, and the other six months on a ranch near Shaniko.
He comes regularly to the Madras auction yard.
"This is a decent market," said Johnson, meaning this auction draws several buyers.
More buyers (demand) and fewer cattle (supply) drive up prices. Buyers, sellers and the auction owner, Trent Stewart, all agree cattle prices have increased by about 20% from this time last year.
That doesn't mean ranchers are making a lot of money.
"The whole country is raising fewer cattle because of the input costs," said Jim Anspach, who ranches in the Millican area. "They have to trim costs where they can to survive."
Louis Brown, Sr. raises his cattle in California and in Oregon near Lakeview.
"We had to feed our cows all last winter in Oregon because of the drought," said Brown.
The California drought left nothing for his cows to eat. And a ton of hay costs $500 in California compared to $200 last year. The costs of hauling 35 head of cattle has doubled to $4,000. Still, Brown brought 90 calves to the auction in Madras on the recommendation the market is stronger here.
The market in Madras reflects what's happening to markets across the country.
"Lack of feed is the driving force," said Stewart. "Not enough water, no hay."
Brown says during the drought cows don't breed back as easily. Ranchers are selling off their females. "It takes a long time to replace the cow population," said Brown.
Stewart notes people are trimming their breeding stock by 25-30% over the past five years.
Yet, Stewart says ranchers are putting out almost as much meat with fewer cows.
"Genetically we're better than ever," he said. "With in vitro, embryo transfer, and artificial insemination, we produce cattle that are more predictable and with more marbling potential."
Buyer Don Mays of Ellensburg, Washington, goes to five different sales a week, and is a regular at the Madras Monday auctions. "You get better genetics out of Central Oregon than, say, Central Washington."
Mays buys the cattle for the operation, and the way of life he handed down to his sons. The Johnsons started their own operation from scratch 40 years ago. They've experienced the lean and fat years.
"Last year was horrible. This year, we got enough rain," said Johnson. The higher prices might mean a good profit for the Johnsons, "if I didn't have to spend it all to kill the grasshoppers."
The cost of keeping the grasshoppers off his feed will eat up the Johnsons' gains.
Mays looks at the lean years like an investor. "You buy, sell and replace the livestock. Sometimes you can make more in a down market."
Except ranching is not like the stock market where you can switch commodities at will. Ranchers have invested in property, structures and equipment.
"You can't walk away. You can't stop because it's unprofitable," said Brown. "Even if you want to."
Brown says he has to have a second job, sometimes a third job, and his wife has to have a job to make ends meet.
None of the people at the auction today talk like they're ready to walk away.
"You get burned worse jumping in and out than just taking the average over all the years," said Anspach.
That way the temperament of a rancher matches the temperament of an investor. Patience. Don't fret the ups and downs, just look at the long haul.
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