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An analysis of the fed beef industry in the Fraser Valley region of British Columbia Osborn, Edward Tryon 1968

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ANALYSIS OF THE FED BEEF INDUSTRY IN THE FRASER VALLEY REGION OF BRITISH  COLUMBIA  by EDWARD TRYON OSBORN B.S.A., U n i v e r s i t y  of British  C o l u m b i a , 1963  A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE  REQUIREMENTS FOR THE DEGREE OF  MASTER OF BUSINESS ADMINISTRATION in  the Faculty of  GRADUATE STUDIES We a c c e p t required  THE  this  thesis  as c o n f o r m i n g  to the  standard  UNIVERSITY OF BRITISH April,  1968  COLUMBIA  In p r e s e n t i n g ments f o r an bia,  by  gain  that shall  Library  not  be  University  of  agree t h a t  of Graduate  Date:  April,  1968  British  f o r s c h o l a r l y p u r p o s e s may  be  by  his  publication  representatives. of  a l l o w e d w i t h o u t my  Studies  The U n i v e r s i t y o f B r i t i s h V a n c o u v e r 8, Canada  require-  for  this thesis written  E.T. Faculty  the  permission  Department or  copying or  the  f u l f i l m e n t of  Colum-  s h a l l make i t f r e e l y a v a i l a b l e  I further  this thesis  Head o f my  understood  the  study.  copying of  the  cial  and  in partial  advanced degree a t  I agree t h a t  reference sive  this thesis  Columbia  for  extengranted It is  for  finan-  permission.  Osborn  i ABSTRACT The ate  the  study  was  F r a s e r V a l l e y Fed  r e q u i r e m e n t s i n the of B r i t i s h  the  Beef  Lower M a i n l a n d and  information  i n d u s t r y was the  necessary  acquired  sources  of  acquire  industry s t a t i s t i c s ;  the m a j o r i t y  Provincial  of  the  the  The regions  profitability  study  has  increased  However, i t s t i l l  percent  balance  of  The the  of  the  able the  ranch  and  calves  data to  interview  provides  with  the  i n the  extent  the  above  British  i n the  above 20  percent  Fraser Valley industry  pro-  beef-production.  are. met  by. t h e  mainly  importation  from A l b e r t a  Saskatchewan. input  f a c t o r markets i n d i c a t e s t h a t  necessary  province  to produce  although  industry i n marketing i n a few  The  approximately  carcasses  to  industry.  in size  fed  on  sample  p a r a m e t e r s on w h i c h  Columbia  and  with  information  s i n c e 1951.  increased  only  cattle  resources  from w i t h i n  evalu-  secondary  to acquire  the  percent  British  a n a l y s i s o f the  important  and  a n a l y s i s o f a random  o f the market requirements  to a l e s s e r  analyse,  personal  investment  i n d u s t r y has  fed beef slaughter  and  by  to p r o v i d e  of the market requirements;  of  regions  government a g e n c i e s ,  a .survey  some 400  period.  The  market  i n d i c a t e s t h a t .the f e d b e e f m a r k e t i n t h e  fed beef  82  Federal  a financial  Columbia  viding  evalu-  to the  Island  a review of the  fed beef producers,  feedlot operations,  evaluate  Vancouver  to d e s c r i b e ,  by  and  management techniques;.and of the  Industry, i n r e l a t i o n  and  Columbia.  The ate  undertaken to describe,..analyse,,  the p r e s e n t  the m a j o r i t y  months o f t h e y e a r  fed beef are  of  increases  avail-  p r a c t i c e s of  the the  feeder  cattle  difficulty  of r e a l i z i n g  optimum use  There e x i s t s types  of operations  operations  are  farm  s u p p l e m e n t e d by from t h e in  the  crop  the  interior  zones.  A  although  few the  i n the  Fraser Valley.  important  on many o f  The  although  industry i s undesirable r a t e of  circumstances,  i n the  policies.  majority of  the  10  and  The  f a r m s „ l o c a t e d on  and  pasture  feed  grains  manure p r o d u c e d i n the  the  cash  heavier  f e e d l o t s e x i s t w i t h i n the a unit the  there i n the  benefit-cost ratio  f e e d l o t s would  the  and  i n g r e d i e n t f o r use  m a j o r i t y of  the  i n d u s t r y on  Province.  o p e r a t i o n has  sizes  try  the  l a r g e r commercial  and  special  feeder  o f the  ingredients u t i l i z e d  discount  The  sizes  cattle  the main energy s o u r c e  tax  i n the  purchase of  largest  of  variability  by-products  regions  A discounted  facilities.  feedlots u t i l i z i n g  of y e a r l i n g c a t t l e .  feedstuff  feedlot  a significant  f e e d l o t i s an  production  of the  capacity of f e e d l o t s use  exists feed  percent.  region  2500 head barley  a wide d i v e r s i t y  as in  ration.  a n a l y s i s of various  indicate that capital investment  soil  opportunity  However, t h e  types  investment at a  in  after  presence  of  ensures  the c o n t i n u i n g presence of  the  same s c a l e and  a moderate i n c r e a s e i n the  indus-  f u t u r e under p r e s e n t  institutional  and  economic  iii TABLE OF CONTENTS CHAPTER I.  PAGE  THE PROBLEM AND THE REGION UNDER STUDY The  2  Problem  Statement Data  .  2  o f t h e problem  2  c o l l e c t i o n methods  2  L i m i t a t i o n s of the study.  II.  O r g a n i z a t i o n o f the Report  3  The  4  Region  Under S t u d y  Climate of the area  5  Population o f the area...  6  ECONOMICS Nature  OF THE FED BEEF INDUSTRY  8  o f t h e Demand f o r B e e f . . .  9  Characteristics Sources  o f the Supply o f Beef  o f income i n t h e b e e f  Necessary  Internal  9 process  feeding  i n the Fed Beef  process..  Industry  factors  10 11 13 15  Cost o f producing f e d beef  15  Value o f f e d beef a t the f e e d l o t  17  External The  feeding  resources f o r the beef  Factors of Location  factors  19  P r i c e Making P r o c e s s  Nature III.  3  20  o f the North American  C a t t l e Market  25  THE FED BEEF MARKET IN THE SOUTHERN COASTAL REGION OF  BRITISH COLUMBIA  Factors Affecting Region  Fed Beef  27 Consumption  i n the 27  iv CHAPTER  PAGE Lower M a i n l a n d and V a n c o u v e r Market  Island  Fed Beef  . . .  33  S i z e o f t h e market  34  Sources o f supply of f e d beef Fed c a t t l e IV.  .  prices  37  THE INPUT FACTOR MARKETS  40  Feeder C a t t l e  40  Number o f f e e d e r c a t t l e  produced  in British  Columbia  41  Number o f c a t t l e  p r o d u c e d and f i n i s h e d  in British  Columbia  43  Sources o f supply w i t h i n B r i t i s h British  Columbia  to the United Feeder c a t t l e  feeder c a t t l e  Time o f s a l e  Columbia  and c a l f  45  exports  States  46  and c a l v e s m a r k e t e d  east of B r i t i s h  Columbia  and p r i c e s  to Provinces  :  47  of feeder c a t t l e  48  Feed G r a i n s  50  Capital  5  4  5  8  Management and L a b o r Availability V.  34  •  of Slaughter F a c i l i t i e s  59  STRUCTURE AND CONDUCT IN THE FRASER VALLEY FED BEEF INDUSTRY  :  Objectives of the Feedlot The  Fraser Valley  Types  61  Entrepreneurs.  Feedlots  and s i z e s o f f e e d l o t s . . .  .  ;  62 64 64  v CHAPTER  PAGE L o c a t i o n o f the f e e d l o t s  66  Supply of f e d beef from the F r a s e r V a l l e y f e d beef i n d u s t r y  ...............  C a t t l e purchase and m a r k e t i n g p o l i c i e s  66 70  F e e d s t u f f s used i n f i n i s h i n g stage o f the feeding process Bedding  VI.-  72  .  74  Types of F e e d l o t and C a t t l e Ownership  75  S p e c i a l Advantages o f the R e g i o n . . . . . .  75  Methods Used t o Reduce R i s k and U n c e r t a i n t y  76  THE PRODUCTIVITY OF CAPITAL INVESTED IN THE FRASER VALLEY FED BEEF INDUSTRY  80  The P r i c e and Feed Margins  80  Income g e n e r a t e d by the p r i c e m a r g i n  82  Income d e r i v e d by the f e e d margin.......  83  Summation of p r i c e and f e e d margins  84  The F e e d l o t A n a l y s e s  86  D e s i r a b i l i t y o f the i n v e s t m e n t p r o j e c t s VII.  SUMMARY AND  CONCLUSIONS  88 98  The Market and Supply of Fed C a t t l e . . .  98  A v a i l a b i l i t y of Resources  99  S t r u c t u r e and Conduct i n the I n d u s t r y  101  D e s i r a b i l i t y o f C a p i t a l Investment i n the I n d u s t r y . .  104  An E v a l u a t i o n o f the F u t u r e I n d u s t r y Growth.........  106  BIBLIOGRAPHY. APPENDIX A.  . C a l c u l a t i o n of Real Canada", 1948-1966  109  Income Per C a p i t a i n 1 1 3  vi CHAPTER APPENDIX B.  PAGE Per C a p i t a  Consumption  and P r i c e s o f  B e e f P o r k and C h i c k e n s i n Canada, 1947-66 APPENDIX C.  114  E s t i m a t e d Consumption Grade  Beef  Vancouver APPENDIX D.  i n t h e Lower M a i n l a n d and Island  Markets  and V a n c o u v e r  117  a t C a l g a r y and 118  E s t i m a t e d Number o f F e e d e r C a t t l e P r o d u c e d i n Columbia  121  E s t i m a t e d Number o f Good and C h o i c e Type  Number o f C a t t l e Provinces  APPENDIX I .  Regional  1962-67  Feeder C a t t l e APPENDIX H.  Island  Monthly Beef C a t t l e P r i c e s  British APPENDIX G.  115  (number o f c a t t l e )  Vancouver, APPENDIX F.  Regions  C h a n n e l s o f S u p p l y o f F e d B e e f t o t h e Lower Mainland  APPENDIX E.  o f C h o i c e and Good  Produced  in British  East of B r i t i s h  Columbia  Columbia.....  f o r the F i s c a l  Years, 124  Movement o f F e e d G r a i n s i n t o t h e Lower M a i n land  and V a n c o u v e r  Fiscal APPENDIX K.  123  Southern  1963-64 and 1964-65 APPENDIX J .  122  and C a l v e s S h i p p e d t o  Movement o f F e e d G r a i n s i n t o British  Columbia...  Analysis  Year  Island  f o rthe  1964-65 ( t o n s )  of Grain Prices  Columbia,  Regions  125  a t Vancouver,  British  1962-67  126  APPENDIX L .  P r i c e Margin A n a l y s i s ,  1962-67  APPENDIX M.  Calculation  F e e d C o s t p e r Hundred  o f Average  ;  128  vii CHAPTER  PAGE Pounds o f B e e f G a i n  APPENDIX N.  ,129  C a l c u l a t i o n o f Summation o f P r i c e  and F e e d  Margins APPENDIX 0.  Feedlot  .......  Example One Income S t a t e m e n t  Six Years Ending A p r i l APPENDIX P.  Feedlot  Example Two  S i x Y e a r s E n d i n g May APPENDIX Q.  Feedlot  Example T h r e e  Feedlot  Feedlot  Feedlot  Example F i v e  Feedlot  Feedlot  f o r the 142 f o r the  31, 1967  145 f o r the  30, 1967  Income S t a t e m e n t  S i x Y e a r s E n d i n g November APPENDIX V.  139  30, 1967  Example S i x Income S t a t e m e n t  Example Seven  f o r the  31, 1967  Income S t a t e m e n t  S i x Y e a r s E n d i n g November APPENDIX U.  137  Example F o u r Income S t a t e m e n t  S i x Y e a r s E n d i n g May APPENDIX T.  f o r the  Income S t a t e m e n t  S i x Y e a r s E n d i n g November APPENDIX S.  136  31, 1967  Six Years Ending October APPENDIX R.  f o r the  30, 1967  Income S t a t e m e n t  148 f o r the  3 0 t h , 1967...  Example E i g h t Income S t a t e m e n t  Six Years Ending J u l y  31,1967  133  151  f o r the 153  viii L I S T OF TABLES TABLE I. II.  PAGE British  Columbia  P o p u l a t i o n by R e g i o n s  -19 65  Number and O r i g i n o f C h o i c e and Good G r a d e Cattle  of B r i t i s h  Columbia  Within  t h e Lower M a i n l a n d and V a n c o u v e r  7  Beef  Origin Slaughtered Island  R e g i o n , 1962-67 III.  British  Columbia  Beef C a t t l e land IV.  V.  Federally  Class  Cattle Beef  States,  45  and C a l v e s E x p o r t e d  1962-67  46 i n the Fraser 65  Cattle  R e c e i v e d by t h e Month  Inspected Plants  i n t h e Lower  Main-  R e g i o n , 19 66-67  68  and S i z e o f F e e d e r A n i m a l P u r c h a s e d by t h e 1966-67  '  Purchasing Policy Industry,  70  o f the F r a s e r V a l l e y Fed  1966-67  71 o f the F r a s e r V a l l e y Fed  Industry  Feedstuffs Valley  XI.  R e g i o n s , 1966-67  Feeder C a t t l e  C a t t l e Marketing P o l i c y Beef  X.  Island  - 1966  Feedlots,  IX.  Main-  and S i z e s o f B e e f F e e d l o t s  land  VIII.  S l a u g h t e r e d W i t h i n t h e Lower  C h o i c e and Good Grade at  VII.  Grade  Columbia  Valley VI.  o f C h o i c e and Good  the United  Types  Origin  and V a n c o u v e r  British to  44  Used  72 i n Finishing  Feedlots,  R a t i o n s o f 28 F r a s e r  1966-67  Diseases Encountered i n the Fraser V a l l e y Industry  73 Fed Beef •  77  ix TABLE XII. XIII. XIV. XV.  PAGE Feedlot  Examples  Operating  Policies  81  of the Feedlot  1967 Income S t a t e m e n t f o r F e e d l o t  Examples Example  Summary o f Income S t a t e m e n t s , 1962-67, Example  XVI.  t o be A n a l y s e d  Discounted Examples  87 One  f o r Feedlot  One Benefit-Cost  92  94 Ratios  f o r the Feedlot 96  X L I S T OF FIGURES FIGURE  PAGE  1.  P e r C a p i t a Meat C o n s u m p t i o n i n C a n a d a , 1948-66  2.  Canada C h o i c e and Good G r a d e B e e f of  T o t a l Graded  Beef  as a  .  Percentage  S l a u g h t e r i n Canada,  1948-66  29  3.  R e a l Income P e r C a p i t a  4.  T r e n d o f Consumer E x p e n d i t u r e s on F e d B e e f ,  5.  T r e n d o f Consumer E x p e n d i t u r e s on Hogs, 1948-66..  6.  T r e n d o f Consumer E x p e n d i t u r e s on C h i c k e n s ,  i n Canada, 1948-66  30 1948-66.... • 32  1948-66 7.  Trend  Trend  i n Monthly  P r i c e s o f Choice Grade S t e e r s a t  i n Monthly  Prices  Trend  i n Monthly  Prices  Peace R i v e r D i s t r i c t 10.  38 Steers at  1962-67......  o f Feed  British  49  G r a i n s from t h e  of B r i t i s h  Columbia,  L o c a t i o n o f F e e d l o t s i n t h e Lower M a i n l a n d of  11.  1962-67  o f Good F e e d e r  C a l g a r y T e r m i n a l Market, 9.  32  33  C a l g a r y T e r m i n a l Market, 8.  28  1962-67.... Region  Columbia  Summation o f P r i c e  and F e e d M a r g i n s ,  55  67 1962-67  85  xi  ACKNOWLEDGEMENTS The  author i s g r e a t l y indebted  to Associate  Professors  Dr.  S.M. O b e r g and Mr. E.R. B l a i n e o f t h e F a c u l t y o f Commerce  and  Business Administration,  Vancouver, B r i t i s h and  criticism  immeasurably  Columbia.  the University of B r i t i s h  T h e i r g u i d a n c e , h e l p f u l comments,  of the preliminary to the preparation  draft of this o f the f i n a l  thesis  and h i s s t a f f  of the Livestock  Production  o f Mr. H.L.  and M a r k e t i n g  B r a n c h , Canada D e p a r t m e n t o f A g r i c u l t u r e a t V a n c o u v e r , C o l u m b i a who made a v a i l a b l e t h e o f f i c e of  the industry  expressed  information.  t o the Fraser  records  f o r the compiling  V a l l e y feedlot operators  who were  and make t h e i r  willing  records  to the writer.  Appreciation  i s expressed  t o t h e Economics Branch,  Department o f A g r i c u l t u r e f o r p e r m i t t i n g data  British  In a d d i t i o n , sincere gratitude i s  t o t a k e t h e t i m e t o answer q u e s t i o n s available  contributed  draft.  S p e c i a l m e n t i o n i s made o f t h e c o o p e r a t i o n Ford  Columbia,  he c o m p i l e d w h i l e  the author  employed by t h e B r a n c h .  Canada  t o use t h e  1  CHAPTER I  THE In cattle  1966  PROBLEM AND  approximately  were b r o u g h t  1  into  THE  REGION UNDER STUDY  32,720 head o f f a t t e n e d s l a u g h t e r  t h e Lower M a i n l a n d  Island  r e g i o n s o f B r i t i s h Columbia  wan .  The  2  cattle  the h i g h q u a l i t y imported  cattle  3  is deficient  t h e Lower M a i n l a n d for  high quality  within The  and  l o c a l consumers.  B r i t i s h Columbia.  That  and  Vancouver  Island  input factors  the p r o v i n c e but  consumer  a large  finished  exportation of feeder c a t t l e  4  of  i s , British  animals  t o meet  requirements  s u p p l y o f one  - feeder c a t t l e  and  The  production*  i n the supply of fed beef  b e e f when, i n f a c t ,  t h e most i m p o r t a n t duced  consumed by  Saskatche-  slaughterhouses  r e p r e s e n t e d the feeder c a t t l e  Saskatchewan, A l b e r t a , Columbia  was  Vancouver  from A l b e r t a . a n d  were s l a u g h t e r e d i n l o c a l beef  and  - i s being  of pro-  o u t s i d e of the p r o v i n c e . and  importation of fed  •'•Fattened s l a u g h t e r c a t t l e i n t h e r e p o r t a r e c a t t l e w h i c h have b e e n f e d t o a w e i g h t and d e g r e e o f f l e s h i n g t h a t d e s i g n a t e s them as f i n i s h e d o r f e d b e e f c a t t l e and w h i c h upon s l a u g h t e r w i l l be g r a d e d as Canada C h o i c e o r Canada Good u n d e r t h e Canada Grading Act. 2  S e e Appendix  D of the  report.  H i g h q u a l i t y b e e f o r f e d b e e f a r e d e f i n e d as t h o s e b e e f c a r c a s s e s w h i c h a r e g r a d e d Canada C h o i c e and Canada Good u n d e r t h e Canada G r a d i n g A c t . 3  ^ F e e d e r c a t t l e a r e b e e f a n i m a l s w h i c h a r e o f t h e age, s i z e , and c o n f o r m a t i o n w h i c h w i l l a l l o w them, a f t e r b e i n g f e d o u t on h i g h e n e r g y r a t i o n s and s l a u g h t e r e d , t o become c l a s s e d as h i g h q u a l i t y b e e f . F e e d e r c a t t l e and c a l v e s a r e t h e main p r o d u c t i o n of the c a t t l e ranch i n d u s t r y .  cattle try  into British  exists  Columbia  in British  and  Columbia  the f a c t  has  raised  extent of the c r o s s t r a n s p o r t a t i o n of beef of the fed beef  industry  in British  that  a f e d beef  indus-  q u e s t i o n s as t o cattle  Columbia,  and  the  the  nature  particularly  in  the F r a s e r V a l l e y r e g i o n .  I. Statement this  THE  PROBLEM  of the problem.  study to i n d i c a t e  the F r a s e r V a l l e y  I t i s the o v e r a l l  the nature of the f e d beef  region of B r i t i s h  objectives  of t h i s  m a r k e t and  channels of supply of f e d beef  Mainland ability  study are  Columbia.  and V a n c o u v e r  Island  (1) t o i n d i c a t e  regions;  cattle  specific  size of i n the  (2) t o i n d i c a t e  of the necessary r e s o u r c e s f o r the f e d beef  the F r a s e r V a l l e y ;  (3) t o e x p l a i n  the F r a s e r V a l l e y Fed ability  of i n v e s t i n g  Fraser Valley;  and,  Beef  the  Industry;  capital  i n beef  structure  indicate  c o l l e c t i o n methods .  t h e n a t u r e and  m a r k e t s was  Lower the  avail-  conduct the  facilities  5  in  in  desiri n the  (5) t o e v a l u a t e t h e p r e s e n t F r a s e r V a l l e y  I n d u s t r y w i t h r e s p e c t t o i t s f u t u r e growth i n  Data  and  the  industry  (4) t o i n d i c a t e feedlot  of  industry i n  The the  purpose  size  a c q u i r e d from  the  The  size.  information required  o f t h e p r o d u c t and secondary  input  to  factor  data sources of  the  F e d Beef I n d u s t r y i s d e f i n e d to c o n t a i n those f i r m s w h i c h f e e d young b e e f c a t t l e on r a t i o n s t h a t w i l l a l l o w t h e f i n i s h e d a n i m a l s , upon s l a u g h t e r , t o be g r a d e d u n d e r t h e Canada G r a d i n g A c t as Canada C h o i c e o r Canada Good. The b e e f p r o d u c e d by t h e i n d u s t r y w i l l be termed f e d b e e f o r h i g h q u a l i t y b e e f i n the r e p o r t . 5  3 provincial The  and f e d e r a l  governments.  information concerning the structure  the F r a s e r V a l l e y  Fed Beef  i n t e r v i e w w i t h t h e beef in  was  procured  Valley.  from  feedlot  The d a t a n e c e s s a r y t o i n d i -  of investing  structured  accounts  Limitations  by p e r s o n a l  operators i n the Fraser Valley  capital  i n feedlot  a random sample o f 17 f e e d l o t s  The w r i t e r  the f e e d l o t  is  I n d u s t r y was c o l l e c t e d  t h e w i n t e r and s p r i n g o f 1967.  cate the d e s i r a b i l i t y  and c o n d u c t i n  i n the Fraser  and s u p e r v i s e d , where  f o r one c o m p l e t e  o f the study.  financial  year  Fed Beef  necessary, i n 1966-67.  The m a j o r c o n c e r n o f t h e s t u d y  t o d e s c r i b e t h e f e d b e e f m a r k e t and s u p p l y f a c t o r s  Fraser Valley  facilities  Industry.  No c o m p a r i s o n s  of the  a r e made w i t h  o t h e r p r o d u c t i o n a r e a s and t h e e v a l u a t i o n o f t h e f u t u r e of  the industry  most l i k e l y Only analyzed  i s made o n l y i n t e r m s o f t h e f a c t o r s  inhibit  t h e growth o f the p r e s e n t  the f e d beef  i n the report.  total  Canadian  product from  industry.  It i s felt  segmentation o f  that  this  f o r a n a l y s i s purposes  s l a u g h t e r e d i n 1966  i s promoted, d i s t r i b u t e d ,  other beef  will  beef market i s  s l a u g h t e r amounted t o o v e r  beef  that  segment o f t h e t o t a l  the t o t a l market i s j u s t i f i a b l e (1) t h e f e d b e e f  growth  6  because  50 p e r c e n t o f t h e  and (2) t h e f e d b e e f  and m e r c h a n d i z e d  differently  products. II.  ORGANIZATION OF THE REPORT  C a n a d a Department o f A g r i c u l t u r e , L i v e s t o c k P r o d u c t i o n and M a r k e t i n g B r a n c h , 19 6 6 A n n u a l R e p o r t , ( V a n c o u v e r : 1966) P.3 Mimeographed. 6  4 The  first  terms, the  p o s i t i o n of  meat s e c t o r inter-firm the  of  the  and  present  sources  are  relevant  section  and  f o r the  Vancouver supply  Fraser  and  facilities  the  industry.  a logical  and  try  Fraser region  because of  Island  of  evaluates  THE  the  the  region  fact  t h a n i n any The  the  Fraser  Beef  of  Valley  sector  of The  indicates  of  the  the  The  fourth  investing capital of  re-  describes  Industry.  possibility  The  necessary and  the  future  in  feed-  growth i n  REGION UNDER STUDY  favourable  other  and  Industry  to analyze with respect  that presently  this  the  i n t o t h i s market.  V a l l e y - Lower M a i n l a n d  the  livestock-  also discusses  regions  present  climate,  sumer m a r k e t , a v a i l a b l e s l a u g h t e r and  i n the  general  f e d beef market i n  availability  desirability  in  fed beef i n d u s t r y .  fed beef  V a l l e y Fed  III. The  to the  conduct i n the  i n d i c a t e s the  lot  industry  s i z e of the  i n d i c a t e s the  structure  discusses,  a g r i c u l t u r a l economy and  channels of  section  report  fed beef  s e c t i o n o u t l i n e s the  Lower M a i n l a n d  third  the  the  intra-firm relationships within  economy t h a t  second  the  s e c t i o n of  and  to the  proximity  are  of B r i t i s h  considered  fed beef  indus-  to a large  con-  facilities  "finished" in  the  Columbia . 7  - Lower M a i n l a n d r e g i o n  southwestern p o r t i o n of B r i t i s h  is  transportation  more c a t t l e  region  region  Columbia  and  i s located extends  in  from  " i n f o r m a t i o n r e g a r d i n g the a v a i l a b i l i t y o f s l a u g h t e r and t r a n s p o r t a t i o n f a c i l i t i e s and t h e number o f c a t t l e " f i n i s h e d " i n the p r o d u c t i o n areas of B r i t i s h Columbia i s p r e s e n t e d i n C h a p t e r IV o f t h e r e p o r t .  5 Hope t o V a n c o u v e r .  I t i s bordered  t h e c o a s t m o u n t a i n r a n g e and States that  to the  I n t e r n a t i o n a l Boundary.  contains a r i c h  alluvial  productive dairy, vegetable,  climate low  temperatures  and  fatten  will  production will  a beef  and  a l s o i n c r e a s e the  other  agricultural  production  i n January  annual  Ashcroft  and  The  importance of a  is self  very  evident.  and  23°  Fahrenheit,  and  a mean a n n u a l  F r a s e r V a l l e y has cultural  July  49°  49°  and  48°  area  i n the  F r a s e r V a l l e y d o e s have a w e t t e r  interior  the  Fahren-  in July  with  temperature of and  71°  25°  Fahrenheit  respectively .  The  8  any  region .  c l i m a t e than  with  In c o n t r a s t ,  a longer growing p e r i o d than  production  Columbia  Fahrenheit  average January  temperature of  conditions  a v e r a g e o f 37°  o f 72°  and  a c o o l e r summer.  Fahrenheit.  temperatures  to  maintain  In c o m p a r i s o n  of B r i t i s h  62°  area  favourable  to  d r y o r v e r y wet  and  United  Severe high  feed necessary  areas  by  are based h i g h l y  industries.  to a high average of  Kamloops have an  flat  agricultural  a warmer w i n t e r  mean t e m p e r a t u r e o f  this  east  t h e Canada -  industries,  t e m p e r a t u r e a t L a d n e r v a r i e s f r o m an  heit an  On  feed requirement.  F r a s e r . V a l l e y r e g i o n has The  and  by  the  small f r u i t  i n c r e a s e the  animal  south  soil.  of the r e g i o n .  in cattle  t h e n o r t h and  It is a relatively  m e n t i o n o n l y t h e more i m p o r t a n t  Climate  on  9  any  other  agri-  However, of the  the  other  B r i t i s h Columbia Department o f A g r i c u l t u r e , C l i m a t e B r i t i s h Columbia, ( V i c t o r i a : Queens P r i n t e r , 1966) P. 6. 8  B u r e a u o f E c o n o m i c s and S t a t i s t i c s , D e p a r t m e n t o f I n d u s t r i a l D e v e l o p m e n t , T r a d e and Commerce, R e g i o n a l Index B r i t i s h Columbia, ( V i c t o r i a : Queens P r i n t e r , 1 9 6 6 ) .  of  9  of  6 agricultural  regions  annual p r e c i p i t a t i o n inches  20.9  and  26.7  inches r e s p e c t i v e l y  seen t h a t the  in  of the  1966  1 1  persons  .  the  British  i n the  concentration  vice i n d u s t r i e s  1 0  of  i n Table  1 2  of  noted t h a t the  regions  of B r i t i s h  the  I.  different  I t can  be  secondary  per  c a p i t a income  i n d u s t r i e s and  through the  acquires agencies  requirements i n t h i s  poses.  The  percent  of B r i t i s h  to  the  associated  ser-  region  population  of the  above two  Columbia's p o p u l a t i o n  the m a j o r i t y  l o c a t e d i n Vancouver. can  be  added t o  f o r the  regions in  of i t s  the  a n a l y s i s pur-  amounted t o  72  1966.  C o l u m b i a D e p a r t m e n t o f A g r i c u l t u r e , op. c i t . ,  30.  d o m i n i o n B u r e a u o f S t a t i s t i c s , 1966 Census o f Canada, Volume I , J u n e 1967, (Ottawa: Queens P r i n t e r , 1967)7" 1  B r i t i s h C o l u m b i a B u r e a u o f E c o n o m i c s and S t a t i s t i c s , D e p a r t m e n t o f I n d u s t r i a l D e v e l o p m e n t , T r a d e and Commerce; S a l a r y and Wage R a t e S u r v e y 1966; (Victoria: Queens P r i n t e r , 1966) . 1 2  of  .  Vancouver I s l a n d r e g i o n  British  54.6  1,873,674 p e r s o n s  C o l u m b i a due  F r a s e r V a l l e y - Lower M a i n l a n d r e q u i r e m e n t s  P.  a snow-  .  population  Columbia p o p u l a t i o n  of  fed beef requirements  1 0  re-  F r a s e r V a l l e y - Lower M a i n l a n d r e g i o n i s  larger  the  66.92  inches  r e s p e c t i v e l y with  i s presented  a l s o be  t h a n most o t h e r  Therefore,  The  33.4  and  mean  F r a s e r V a l l e y - Lower M a i n l a n d r e g i o n c o n t a i n e d  higher  The  region.  Columbia  I t should  living  inches  and  The  Kamloops have a mean a n n u a l  and  in British  percent  and  15.7  7.55  of  9.47  Interior.  C h i l l i w a c k i s 36.9  of  Population regions  Columbia  a snowfall of  In c o n t r a s t A s h c r o f t  precipitation of  British  a t L a d n e r and  r e s p e c t i v e l y with  spectively.  fall  i n the  7  TABLE 1 BRITISH COLUMBIA POPULATION BY REGIONS - 1966  Region  Canada Census Division Number  1966 Population  Percent of Total Population  (persons)  (percent)  Kootenay  1  36,687  2.0  West K o o t e n a y  2  77,866  4.2  Okanagan Similkameen Boundary  3  105,759  5.6  Lower M a i n l a n d  4  1,021,791  54.6  Vancouver  5  333,951  17.8  Shuswap - C h i l c o t i n  6  81,180  4.3  Lower C o a s t  7  23,004  1.2  Central  8  103 ,767  5.5  9  48,265  2.6  10  41,404  2.2  1,873 ,674  100.0  East  Island ,  Interior  N o r t h w e s t e r n B.C. Peace TOTAL  River  Source: D o m i n i o n B u r e a u o f S t a t i s t i c s , 1966 C e n s u s o f C a n a d a , Volume I , J u n e 1967, (Ottawa: Queens P r i n t e r , 1 9 6 7 ) .  8  CHAPTER I I ECONOMICS  The  Fed Beef  stock-Meat  OF THE FED BEEF  INDUSTRY  I n d u s t r y i s an i n t e g r a l  Industry .  The p a s s a g e  1  part  of cattle  of the L i v e -  ownership  through  a typical  beef i n d u s t r y marketing channel i s r e p r e s e n t e d i n the  following  illustration.  Livestock Livestock Producer"" Feeder  Livestock Meat Slaughterer"" R e t a i l e r  C  o  n  s  u  m  e  r  FIGURE I THE  LIVESTOCK-MEAT INDUSTRY MARKETING  The m a j o r i t y of  t h e above m a r k e t i n g c h a n n e l .  young c a l v e s the l i v e s t o c k the  o f beef c a t t l e  pass  CHANNEL  through the f i v e  steps  Some b e e f a n i m a l s s u c h a s  f o r veal or crippled  cows and b u l l s may  f e e d e r and p a s s d i r e c t l y  bypass  from t h e producer t o  slaughterer. The  Fed Beef  " L i v e s t o c k Feeder" firms  Industry contains the firms that i n t h e above d i a g r a m .  i n the industry  i s to fatten  f i r m s a c q u i r e beef type c a t t l e the c a t t l e months.  on a h i g h e n e r g y  The m a j o r i t y  cattle  The f u n c t i o n o f t h e f o r slaughter.  f r o m r a n c h e s and farms  ration  f o r a period  of the feedlot  firms  a r e termed  The  and p l a c e  f r o m two t o s i x  feed y e a r l i n g  t o two  The Livestock-Meat Industry contains those firms that p r o d u c e , s l a u g h t e r , and r e t a i l t h e p r o d u c t s and b y - p r o d u c t s o f s h e e p , h o g s , and c a t t l e . 1  9 year o l d c a t t l e minority  f o r the high q u a l i t y  o f t h e f i r m s f e e d aged cows and  m a r k e t a l t h o u g h t h e s e a n i m a l s may any  beef  be  consumer m a r k e t . bulls  f e d from  A  f o r t h e consumer time  to time i n  feedlot. Historically  the beef  feeding a c t i v i t y  the ranch p r o d u c t i o n a c t i v i t y  was  i n t h e same f i r m  combined  entity  but  with the  change i n t h e consumer p r e f e r e n c e t o demand a l a r g e r p r o p o r t i o n of h i s beef d i e t  as h i g h q u a l i t y  ization  necessary to bring  t h a t was  resulted  The  demand  run f a c t o r s .  The  NATURE OF 2  eating and  prices  factors  the i n c r e a s e d s p e c i a l the i n c r e a s e d supply, Industry.  DEMAND FOR  by many s h o r t and  factors  affecting  The  k n o w l e d g e , and  products.  CHARACTERISTICS OF  real changes  The  THE  changes i n s u p p l i e s  important and  short run  exhibitions .  SUPPLY OF  3  BEEF  s u p p l y o f b e e f d e p e n d s upon t h e a v a i l a b i l i t y  a p p r o p r i a t e q u a n t i t y and quality  the  long  changes i n consumers' p r e f e r e n c e s ,  are h o l i d a y s , Lent, weather, f a i r s , II.  BEEF  i n t h e l o n g r u n , have been  nutritional  of s u b s t i t u t e  Beef  affected  most i m p o r t a n t  income p e r c a p i t a , h a b i t s and  THE  for beef.is  demand f o r b e e f p e r c a p i t a , real  about  i n t h e f o r m a t i o n o f t h e Fed I.  in  b e e f and  quality  of input f a c t o r s  o f b e e f p r o d u c t demanded and  of  the  to produce  the p o s s i b i l i t y  the  f o r the  Demand i s u s e d h e r e t o mean t h e v a r i o u s q u a n t i t i e s o f beef t h a t the consumers w i l l t a k e o f f the market a t a l l p o s s i b l e a l t e r n a t i v e p r i c e s , other things being equal. 2  3  Chicago  W o r k i n g , E l m e r J . , Demand f o r Meat, (The U n i v e r s i t y P r e s s , C h i c a g o , I l l i n o i s , 1954) p. 80.  of  10 beef  feeding  their  entrepreneurs  capital  to acquire  a satisfactory  investment.  S o u r c e s o f Income i n t h e B e e f F e e d i n g  Income t o d e f r a y production process.  are derived One  source  of beef placed  the i n d i r e c t  Process  and f i x e d  f r o m two s o u r c e s  i s the net increase  to finished  multiplying  cattle.  This  o f beef.  value  in  source  source  the f e e d l o t  the  feed  the  selling  called  income s o u r c e  o f income i s d e r i v e d fed to the c a t t l e i s computed  from  i s computed cattle  by t h e  the p r i c e margin.  from t h e i n c r e a s e i n  i n the f e e d l o t .  by t h e d i f f e r e n c e between t h e s e l l i n g  The  income  i n weight p r i c e and  The d i f f e r e n c e between  c o s t per u n i t o f beef g a i n i s  margin.  The f e e d l o t e n t r e p r e n e u r  a n t i c i p a t e s t h a t t h e income  f r o m t h e p r i c e and f e e d m a r g i n s  5  will  be s u f f i c i e n t  T h e g a i n i n w e i g h t i s t h e d i f f e r e n c e between t h e w e i g h t and t h e p u r c h a s e w e i g h t o f t h e c a t t l e . 4  by  p r i c e and t h e  by m u l t i p l y i n g t h e g a i n  p r i c e and t h e f e e d  feeder  p r i c e and t h e p u r c h a s e p r i c e p e r  cost per u n i t of beef g a i n .  the feed  derived  a r e i n t h e f e e d l o t and  The d i f f e r e n c e between t h e s e l l i n g  of the feed  from t h i s  feeding  of the weight  of the animals  purchase p r i c e per u n i t of beef i s c a l l e d The s e c o n d  i n value  the purchase weight o f the feeder  d i f f e r e n c e between t h e s e l l i n g unit  factors of  i n t o t h e f e e d l o t due t o t h e f l u c t u a t i o n s i n t h e  change i n m a r k e t c l a s s i f i c a t i o n  cattle  cost  i n the beef  c a t t l e market over the p e r i o d t h e c a t t l e the  r e t u r n on  to  selling  I n some l o c a l i t i e s t h e v a l u e o f t h e manure and b e d d i n g w i l l be h i g h e r t h a n i t s c o s t and c o n t r i b u t e income t o h e l p d e f r a y production costs. 5  cover  the  return deed  indirect  on  the  i n the  probable  year,  year  to year  i n the  however, as  recovered  and/or feed  a negative  as  negative the  years  supply  beef c a t t l e .  quantity  and/or  p r i c e margin  f o r part of  the  not  negative  at  so  l a r g e as  to  losses occuring  i n one  the  year  than average p r i c e  and  Beef Feeding  feed.  Basic  Process  to the  development o f  e n t e r p r i s e s i n any  geographical  of the  type,  appropriate  size,  In a d d i t i o n a c o n s i s t e n t s u p p l y  f e e d g r a i n s must be  available.  a v a i l a b l e from the  operations  then e f f i c i e n t  available  to t r a n s p o r t the  the  c a t t l e market  cause the  of higher  In-  margins.  feeding  not  satisfactory  f e e d l o t i t i s most  margin i s not  f i r m , the  i n other  Feeder c a t t l e  are  the  both margins are  Necessary Resources f o r the  sistent  of  a  investment p e r i o d .  feedlot operations  long  cause bankruptcy of  cattle  provide  over the  operation  f e e d m a r g i n t o be  be  and  t h a t adverse f l u c t u a t i o n s i n the  same t i m e a n d / o r t h e  can  costs  invested capital  inefficiences or the  operating  I f the  cattle  immediate a r e a  of  area and  age  from the  of  con-  young  o f good q u a l i t y and the  feed  grains  cattle  transportation f a c i l i t i e s resources  i s the  beef  area  feeding  must of  be  supply  to  feedlot.  Management. tence  of c a t t l e  appropriate  Another resource  feeding  management.  posed of  skills  training  and  and  operations This  abilities,  experience.  i s an  that  i s the  is vital  to the  availability  of  i n t a n g i b l e resource,  which are  It is difficult  acquired  existhe com-  through  t o d e f i n e and  identify,  12 and in  the q u a l i t y any  area  and  quantity of t h i s  i s hard  to measure.  management knowledge c a n b u y e r s and  handlers  be  The  the person market  size,  type,  right  type  On  must be  and  the necessary  have t h e  and  s i z e and  age  production  be  is  areas. the  On  feed while  available  existing  hand  existing cattle  existing  purchasing  the  prices.  to bring tomaxi-  f e e d and  cattle  markets  feedlot w i l l  depend  upon  and  The  the  to c a r r y  c a p i t a l must be  feedlot  t h a t many i n d i v i d u a l s  resource  available  to c a r r y the  and  cattle  the  costs of  the  for feedlot  readily  for  for  i s o p e r a t i n g and  are not  undertake  himself.  i s a very necessary  availability  people  production operations or  f o r l o n g t e r m commitments  capital  oper-  one  at the a p p r o p r i a t e  to a c q u i r e the necessary  Capital  enterprises.  evidence  optimal  inputs at costs that w i l l  term i n v e n t o r y requirements  D a t a on  f o r the  operation.  above i n v e s t m e n t  and  knowledge.  o p e r a t i o n , by  o p t i m a l o p e r a t i o n of the  Capital.  cattle  practical  utilize  t h e management o f t h e c o m p l e t e o p e r a t i o n  short  themselves  hand t h e manager must have t h e a b i l i t y  management's a b i l i t y  feeding  producers,  t h o r o u g h knowledge o f beef  of c a t t l e  the  avail  d i v i d e d i n t o two  feed margin g i v e n the  The  necessary  method o f f e e d l o t  method o f f e e d l o t  the  be  livestock  o t h e r s who  able to e f f e c t i v e l y  the necessary  mize the  out  can  by  however, t h a t  can maximize the p r i c e margin; g i v e n . t h e  the other  gether  and  feedlot  i n f o r m a t i o n and  so t h a t he  and  management a b i l i t i e s  a t i o n of the  which i s a v a i l a b l e  It is likely  developed  of c a t t l e ,  of o p p o r t u n i t i e s to develop  resource  capital  facilities.  o b t a i n a b l e but  institutions  must  are  there  interested  in  investing in cattle  cattle  feeding  industry  investment of c a p i t a l inarians,  feed  Whether o r n o t prises  i n any  vestors  cattle  the one  by  capital  i n the  A fifth  feeding  enterprise  machinery, c a t t l e and  pated in  the  are  of  the  the  buyers, banks,  will  the  the  be  l o c a t i o n of  a l s o be  them i f t h e and  into  to  the  availability The  h i g h l y mechto operate  l a b o r must be invested  of  high  i n the  the  because  operating  n e c e s s i t y of a c q u i r i n g  uni-  process.  required region. no  to develop a However,  these  problems are  resources  cattle  are  antici-  available  quality.  economic feeding  to d i f f e r e n t i a t e  between f e e d i n g  local  and  a feeding  enter-  area.  some l a b o r  above f i v e  LOCATION IN  cattle  feeding  important  i s the  feeding  geographical  quantity  businessmen.  f e e d l o t managers  t h a t may  and  i n the  FACTORS OF  resources,  the  requires  veter-  depend upon t h e  s e c o n d a r y i m p o r t a n c e and  appropriate  other  feedlot operation.  feed,  In d i s c u s s i n g the in  of  in a region  still  i n any  in acquiring  III.  come a b o u t t h r o u g h  e n t e r p r i s e i n the  q u a l i t y of  conformity  industry  resources  the  will  amount o f c a p i t a l and  The  a v a i l a b l e to  area  ability  f o r the  Other resources feeding  be  resource  However, t h e  significant  formity  will  operate a feeding  modern o p e r a t i o n  the  growth of  farmers, c a t t l e  Labor.  feedlot. of  i n Canada has  geographical  good q u a l i t y l a b o r anized  i n Canada.  d e a l e r s , meat p a c k e r s , and  confidence  economically  feeding  THE  FED  BEEF INDUSTRY  f a c t o r s that are  important  enterprises, i t is  important  e n t e r p r i s e s b a s e d on  i n d u s t r y which r e q u i r e s  purely an  inter-  14 area  transfer  grain, some  of resources.  Many a r e a s  r o u g h a g e , and f e e d e r c a t t l e  have l o c a l l y  t h a t form a b a s i s f o r f e e d i n g  cattle. The  f e e d i n g i n d u s t r y we a r e c o n c e r n e d  p a r t o f t h e f e e d i n g i n d u s t r y t h a t must r e l y a s u b s t a n t i a l volume o f r e s o u r c e s  w i t h here  areas.  may n o t i n c l u d e t h e o u t s h i p m e n t o f f e d b e e f .  These  cases  An a r e a  has g r a i n b u t i s d e f i c i e n t  therefore, (b)  (c) The largely  imports  An a r e a has c a t t l e therefore  feeder  but i s d e f i c i e n t  alternative  i n c a t t l e , and  i n g r a i n , and  ships i n g r a i n .  An a r e a may  lack cattle  c h o i c e between t h e f i r s t  and g r a i n and i m p o r t two a l t e r n a t i v e s  both.  hinges  on t h e q u e s t i o n o f w h e t h e r i t i s more e c o n o m i c a l  to c a t t l e  or the c a t t l e  to the g r a i n .  by n o t i n g t h a t e v e n an e f f i c i e n t  conversion  in cattle  (total digestible would comprise  finish The  nutrient equivalent)  approximately  T h i s p o i n t may be process  o f feed  p e r pound o f g a i n .  80 p e r c e n t ,  or approximately  Grain 5.6  p e r pound o f g a i n i n  phase o f f a t t e n i n g s t e e r s . third  case  implies that other  f i n a l market, c l i m a t e , o r other the location The  to ship  f e e d i n g r e q u i r e s a b o u t 7 pounds o f f e e d  p o u n d s , o f t h e 7 pounds o f f e e d n e c e s s a r y  than  I t may o r  cattle.  emphasized  as  of  exist: (a)  grain  i s that  on t h e i n s h i p m e n t  from o t h e r  the  produced  of the basic  locational  aspects  f a c t o r s may be more  such  important  resources.  comparison o f t h e r e l a t i v e  economic advantage  u n d e r two g e n e r a l r e l a t i o n s h i p s .  between  areas  c a n be summarized  The  first  i s t h e c o s t p e r one h u n d r e d pounds o f c a r c a s s w e i g h t o f  producing  fed beef,  h u n d r e d pounds o f age,  sex  equal  and  effect  Internal  pounds o f  fed beef  second  source  on  cost of  both  the  i s the v a l u e of t h a t  a t the p o i n t of  w e i g h t , and  factors  affecting  fed beef  feedlot  of the  the  feeding.  of feeder c a t t l e f e e d i n g and  and  feeder  the  the  feeder  cattle  wider area. due  Cost  will  depend somewhat on  to the  of producing  i n weight  of the  the degree of  con-  a l s o the p r o x i m i t y of As  area w i l l  An  higher  to the  i n areas  finishing  of the  area  cattle  will  The  the ex-  from a  tend  to i n -  c o s t o f a hundred and  the c o s t of the  the  availability  in local  of g r a i n .  hereditary feed  mix,  feedlot  and  cost of  the  disadvantage  The  production of  However, t h e  pounds  f e e d mix  will  feed g r a i n production  r o u g h a g e may  feeding w i l l  The  advantage or  of concentrated  produced  areas.  phase o f  feedlot operator.  represent  lacking  locally  somewhat i n c e r t a i n the  fed beef.  i n the areas  abundance o f  an  r e g i o n , the non-feed c o s t s of the  f e e d mix  lowest  feeder c a t t l e  feeder c a t t l e ,  ability  o f t h a t a r e a due  hundred  d e l i v e r e d to  i s i n t u r n a f u n c t i o n o f t h e age  the managerial i n an  one  higher procurement c o s t s .  the c l i m a t e of the  and  value.  cost  supplies of feeder c a t t l e .  Thus, t h e c o s t o f  characteristics  the  an  The  pands i t s f e e d i n g i n d u s t r y , i t must draw f e e d e r  be  quality,  the carcass  c o s t o f a h u n d r e d pounds o f g a i n .  f e e d i n g i n t h e a r e a and  region to a v a i l a b l e  of gain  The  a l l have  cost of producing  are the c o s t of  cattle  centration of  crease  one  Factors  The  the  and  feed g r a i n s .  reduce  cost of  feed  f e e d mix  depend p r i m a r i l y  on  costs in  the  cost  16 of  grain. The  with  an  area. will  cost of  increase As  an  the  i n the  area  expands t h e  r a t e o f g a i n may counter  s i z e of  reflected  of  the  costs  be  cold.  of  i t s feeding  somewhat  feeding  reduced.  in. higher  higher  fixed  effect  the  complete data  hot  cost of gain  facilities,  o v e r h e a d c o s t s and  to r e f l e c t  greater  to other  the  role  in  and  humid w e a t h e r ,  o f c l i m a t e may  appropriate  costs r e l a t i v e  an  industry, i t  A r e a s o f heavy r a i n f a l l The  in  area.  affects  In s e v e r e  c o n s t r u c t i o n of the  is  ately,  region  p r o b l e m s w i t h mud.  the  increase  C a t t l e r e q u i r e more e n e r g y f o r body h e a t  maintenance i n severe  may  en-  be  offset  but  risks  areas.  the  this because  Unfortun-  o f c l i m a t e on  feed  i s not a v a i l a b l e . The  non-feed c o s t s of  considerable cattle  extent  feeding  small  entirely large  probably  degree of c o n c e n t r a t i o n  c l i m a t e of the  v a r i o u s ways.  on  will  have t o draw g r a i n f r o m a l a r g e r The  with  f e e d mix  on  different  of  feeding  to  mechanized  panding the feed  costs  they  are  6  of the  region.  feedlot feeding non-feed c o s t s  scale mechanical with  feedlots w i l l  nature  i n d u s t r y i n the  s c a l e farm  considerably  the  the  the  industry. feeding,  A  feeding operations. feeding  Once t h e  step  feeding operation  feeding  the  industry  enterprises w i l l  scale of  a  organization of  t h a n an  economies o f  depend t o  have  i n d u s t r y based  on  Non-feed c o s t s  i n the mechanized  i s made f r o m s c a l e are  "hand"  feeding  i n favor of  be  triple  i n a large scale f e e d l o t . 6  For  full  d i s c u s s i o n of the matter  see  S.H.  vary  type  ex-  to a s u b s t a n t i a l e n t e r p r i s e .  i n a s m a l l m e c h a n i z e d o p e r a t i o n may  based  Logan,  Non-  o f what  17 The  managerial a b i l i t y  of the feedlot operator  c o u r s e , be a f a c t o r a f f e c t i n g t h e e f f i c i e n c y ation.  Since  ability  and c o s t o f s k i l l e d  oper-  management i s n o t n e c e s s a r i l y industry.  depen-  B u t management  p e r u n i t o f f e d b e e f p r o d u c e d may be d e p e n d e n t on t h e  organization  of the c a t t l e  feeding  industry  Value o f f e d beef a t the f e e d l o t . r e l a t i o n s h i p mentioned above - t h e v a l u e pounds o f f e d b e e f a t t h e p o i n t  o f t h e consuming c e n t e r s  fed beef  industry.  largely  a result  The v a l u e  grade beef carcass  choice  grade carcass value  slaughter  cost  plant,  sets t h e c o s t o f The  large  - i s a f f e c t e d by t h e  Given the value  assuming t h e v a l u e  of a  the value  of  be t h e m a j o r m a r k e t  slaughter  costs  of the  a t the f e e d l o t i s  and h a n d l i n g  and t h e l o c a l  and s e l l i n g  general  one h u n d r e d  a t a major market p o i n t ,  costs  plant  between  l e s s the  between t h e f e e d l o t and t h e  of the by-products  just  off-  slaughtering. scale type of feeding  advantages over the i n d u s t r y feeding..  costs.  l e s s the t r a n s p o r t a t i o n  transportation  of that  of fed cattle  a t the feedlot w i l l  the major market p o i n t  region.  and t h e o r g a n i z a t i o n  of transportation  choice  in a  The s e c o n d  of feeding  location  point  of the feeding  management i s a t r a n s f e r a b l e commodity, t h e a v a i l -  d e n t on t h e l o c a t i o n o f t h e f e e d i n g cost  w i l l , of  The l a r g e  that  industry  h a s some  i s b a s e d on s m a l l  feedlot operator  selling  scale  u s u a l l y has b e t t e r  farm  market  " E c o n o m i c s o f S c a l e i n C a t t l e F e e d i n g " , S u p p l e m e n t No. 3 t o T e c h n i c a l S t u d y No. 1, O r g a n i z a t i o n and C o m p e t i t i o n i n t h e L i v e s t o c k and" Meat I n d u s t r y , N a t i o n a l C o m m i s s i o n on F o o d M a r k e t i n g , J u n e 1966.  18 information  a t the  i n g power o f over the  the  f e e d l o t l o c a t i o n , which i n c r e a s e s  large  p r i c e of at  feeding  therefore  addition yield,  bruise  is  repeatedly  of  the  ered and  less cost  a buyer can  and  a f f o r d t o pay  narrow the  from the  In  important  summary t h e  l o c a t i o n of  because c o s t s  industry has  on  indeed  that  been n o t e d  basis  return  i n the  the  appropriate  f o r the  economic  prices.  industry inputs,  f o r combining  the  and  f a c t o r s a f f e c t i n g the by  looking  The  on  the  to  satisfy  product  i t can  s o u r c e s and  the  a  seen t h a t  the  supply  q u a l i t y of  the  resources  organization  report,  necessary  and  methods o f t e c h n o l o g y u s e d  re-  a satisfactory  feedlot  the  the  ad-  invest-  resources  employment o f t h e s e  b e e f by  beef production,  numerous  a single  necessary  r e l a t e d to the  and  he  consid-  investment over the  As  quantity  grade,  out.  are  s e c t i o n of  i n t e r n a l view p o i n t .  the  to  i s more aware  i s turning  f r o m an  be  as  hopes t o d e v e l o p  feedlot operation.  p a r t i c u l a r region  In  f e e d l o t because  l o c a t i o n , i s to r e a l i z e  s o u r c e s have been d i s c u s s e d  scale  alone.  t o h i s management, l a b o r ,  ment p e r i o d  area  cover  large  f a c t o r s t o be  feeding  i n a previous  entrepreneurs' objective,  sources  economic  i f an  of  f e e d l o t and  a r i s e f r o m a number o f  great  bargaining  uncertainty  feedlot process  a cattle  area  scale  bargain-  Buyers can  higher  range of  damage f r o m a l a r g e  the  As  and  can  in his  buyers.  i n a concentrated  buying c a t t l e  v a n t a g e must be  the  with the  type of c a t t l e  i n the  feeding  feedlot operator  fed c a t t l e  more c a t t l e and  scale  the  the  will  enterprise  supply  demand f o r be  affected  employed  management o f i n the  re-  of  fed  the from  i n the  fed  these  re-  production.  19 External  Factors  In fications  addition, external f o r b e e f and  a l s o a f f e c t the  the  quantity  f a c t o r s s u c h as  of  fed beef supplied  enterprises  i n any  feeding  enterprises  in a region  condition of  region.  to acquire  i n the  Changes i n t h e p r o f o u n d e f f e c t on Since  tage of  an  rates  area  to  the  ability  of  by  the  the  supply the  of  t o r e a l i g n t h e methods of  fed  the  type  be  n e c e s s a r y change i n  depen-  reand  beef.  supply  have  fed  advantage or  a  beef.  under governmental c o n t r o l  thereby changing the  an  ability  consumer w i l l  to economically are  will  cattle  n a t i o n a l a g r i c u l t u r a l p o l i c y may  a region  o b v i o u s example o f on  production  transportation rates  change i n the  the  speci-  t o c o n f o r m t o a change i n  s o u r c e s a t e c o n o m i c a l p r i c e s and t e c h n o l o g y used  by  That i s , the  fed beef r e q u i r e d  d e n t upon i t s a b i l i t y  changing  national agricultural policy  feeding  and  the  a  disadvan-  f e d beef t o a p a r t i c u l a r market i s  an  e f f e c t of n a t i o n a l a g r i c u l t u r a l p o l i c y  area  to  supply  fed beef to the p a r t i c u l a r  markets. The inseparable beef  economic i n the  from c a t t l e  f a c t o r s a f f e c t i n g supply influence  feeding  enterprises  a s p e c i f i e d consumer m a r k e t . the  influences  to the  In  cattle  later  enterprises  supply  sections  above f a c t o r s have on  feeding  the  fed beef of  are fed  i n a p a r t i c u l a r region  Lower B r i t i s h C o l u m b i a M a i n l a n d  m a r k e t s by be  the  t h e y have on  of  the  and  of  the  supply  Vancouver  located  i n the  of  to  report fed  beef  Island region  will  discussed. The  f a c t o r s a f f e c t i n g demand and  supply  of  fed beef  have  20 been p u t  f o r t h i n t h i s chapter.  p r o c e s s by  which the  d u c t p r o d u c e d by tutional  prices  the  It  s h o u l d be  determined  at  any  opposing p a r t i e s  to  noted  the  can  indifference  indeterminate, the  actual  be  but  Historically  of  bulk of  transportation  the  central  ters.  The  the  be  THE the  central  the  slaughter  for  concentration  cattle.  the  of  regarded  Recently the  proinsti-  actual  s e q u e n c e between  barter .  actual the  final  contract  opposing  crux  price  being contingent  two  to  The  7  two  price  is  curve,  on  the  parties.  terminal  markets r e c e i v e d  cattle.  The  few  g e n e r a l use  large  as  the  development  central firms.  m a r k e t s t o p u r c h a s e most o f These c e n t r a l s u p p l y and  terminal  termThe their  markets,  demand f o r c a t t l e came  major p r i c e - d e t e r m i n i n g  developments of  of  r a i l r o a d cen-  c a t t l e through commission  both  and  hard  surfaced  points roads,  R.H. L e f t w i c h , The P r i c e System and R e s o u r c e A l l o c a t i o n , E d i t i o n , (New Y o r k , H o l t , R i n e h a r t & W i n s t o n , 1 9 6 6 ) , P. 75. 7  Third  the  t h e i r c a t t l e i n t o the  c a t t l e requirements.  t o be  of  the  markets a t the  buyers used the  generally  through the  t o move c a t t l e b r o u g h t a b o u t t h e  terminal  beef  PRICE MAKING PROCESS  majority  w i t h the  fed  i n a manner a n a l o g o u s  contract,  sold  slaughter  that  marketing  i s that  i n a l m a r k e t and the  outset,  somewhere a l o n g  the  the  the  consumer.  curve a n a l y s i s  producers brought  of  final  power between t h e  IV.  rail  is transferred  analyzed  will  bargaining  handled the  at  analysis  l o c a t i o n on  balance of  the  remains to d i s c u s s  d e t e r m i n e d as  l o c a t i o n i n the  Edgeworth's i n d i f f e r e n c e of  are  feedlots,  intermediaries  I t now  21 large  trucks,  and  expanded m a r k e t news s e r v i c e s have  about a d e c e n t r a l i z a t i o n of A recent of  the  while  feeder  study  cattle  slaughter  the marketing of  in Alberta  8  i n d i c a t e d t h a t the  were more g e n e r a l l y  Central Terminal  market a t C a l g a r y .  cated  i s an  that  there  cattle direct the  auction It  tive  as  to the  or  feeder  or  i t was  longer  felt  previously  that  in  to the  changes i n the  most p u b l i c i z e d and vailing of  importance of widely  volume now  m a r k e t s t o be whether the  as  as  whether the  t h a t do formerly  study  indi-  i n the marketing thereby  of  by-passing  the  true r e l a t i o n s h i p  f e d b e e f a t any marketing of the  p a r t i c u l a r point  f e d b e e f and  t e r m i n a l market.  quoted c a t t l e  p r i c e s are  terminals  i n " p r i c e m a k i n g " as  terminals  of the  of  run  the  pre-  proportion for  formerly,  move t h r o u g h t h e  the  Still  those  Whether a s u f f i c i e n t  total  effec-  are  slaughter  these and as cattle  t e r m i n a l m a r k e t s e v e r were as d o m i n a n t i n p r i c e  making as  t h e y were w i d e l y  Today t h e  transactions  of p r i c e s are  the  t e r m i n a l m a r k e t i s as  c l e a r s through the  effective  cattle  representative and  demand o f  a t the major t e r m i n a l s .  slaughter  the  i n determining  and  d e c l i n e of  auctions  market.  supply  relative  country  In a d d i t i o n the  slaughterer  between t h e t i m e due  majority  sold through  increasing incidence  central terminal  i s no  cattle.  are marketed through l o c a l  cattle  brought  t h o u g h t t o be  a t the  considered  a r e moot  wholesale l e v e l  more e f f e c t i v e  questions.  i n the  structure  i n i n d i c a t i n g the  T r a v e s W. M a n n i n g , C o u n t r y L i v e s t o c k A u c t i o n s and M a r k e t P e r f o r m a n c e , A g r i c u l t u r a l E x t e n s i o n T e c h n i c a l B u l l e t i n 1, (Edmonton: U n i v e r s i t y o f A l b e r t a , 1 9 6 7 ) , P. 17. 8  22 relationship  between s u p p l y and d e m a n d .  change a p p e a r the p r i c e  t o be b e s t d i s c u s s e d i n t h e p r o c e s s o f  any p o i n t  ultimately  allocates  i n time  determined  the r e t a i l  are  by t h e p u r c h a s i n g a c t i o n s  outlet.  The r e t a i l  the supply o f f e d beef  The  price  pay  t o be d i s t r i b u t e d  back t h r o u g h  performed,  including  dominant p r i c e  t o t a l market s u p p l i e s supply,  and  spend  they  so t h a t  a l l who  desire.  by t h e a v e r a g e  retail  number o f d o l l a r s  the marketing  system t o  payments t o t h e p r o -  determining forces  schedule  f o r f e d beef  f e d beef  beef  9  Edition, VII.  are f i x e d ,  i s determined  pay t o j u s t c l e a r just clear  represents  (a) t h e  willingness  income f o r f e d b e e f .  i t i s assumed f o r t h e moment, t h a t  will  are thus:  and component q u a l i t i e s m a k i n g up t h e  both t h e supply schedule o f f e d beef  fed  o f t h e consumer  (b) t h e incomes o f c o n s u m e r s and t h e i r  their  If  that  f e d beef i s  f o r the c a t t l e . The  for  explaining  be s u c h t h a t i t  among b u y e r s ,  supply o f f e d beef m u l t i p l i e d  f o r a l l services  ducers  to  will  p e r pound, i s t h e o r i g i n o f t h e a g g r e g a t e  available  to  t h e market p r i c e . o f  w i l l i n g t o buy, s e c u r e t h e q u a n t i t i e s  price  f o r the  making p r o c e s s .  At  in  The r e a s o n s  9  and t h e c o n s u m e r s ' demand  then c l e a r l y the r e t a i l  price  by how much t h e c o n s u m e r s a r e w i l l i n g  the market o f e x i s t i n g t h e market  the equilibrium  a t any one t i m e  supplies.  i s the e q u i l i b r i u m  The  price.  price It  between t h e s u p p l y and t h e demand f o r  a t t h e p a r t i c u l a r moment.  H . F . D e g r a f f , B e e f P r o d u c t i o n and D i s t r i b u t i o n , (First Norman, U n i v e r s i t y o f Oklahoma P r e s s 1960) , C h a p t e r  23 The  p r i c e of c a t t l e  come f e d b e e f e v e n t u a l l y brium p r i c e  a t any  accordingly the  cattle  case.  for  (a)  from the  Therefore,  ter  will  sell,  ing  system,  a t any  t r a n s a c t i o n has be  f o r the  tail. the  Each p a r t y  s e r v i c e he  t i m e f a c t o r and s a l e on  point  sequence  (b)  the  i n t o the  from the  largely  ranch  a derived  i n question bargains  when t h e y  to acquire  t o day.  feeding,  processing and  t h a t many c a t t l e  case, tors the  the add  and  the  sales are negotiated  P r i c e making  to the  Agreement w i l l  realizes  can  pay  no  bargaining will  high  s u p p l i e s nor Both are  will re-  prices reflect  or  be  i n the  changing  the  At  the fact  retail  display These  fac-  a n t i c i p a t i o n s o f what  a t some l a t e r  date.  f u n c t i o n between  each stage  function occurs.  i n the  The  bargain  over whether the  too  relative  low  plus  come a b o u t o n l y when t h e  less.  consumer  changes i n g r a z i n g ,  p r i c e making p r o c e s s .  i s a bargaining  interests.  beef i s too  the  d a y s , weeks, o r months  become f e d b e e f  equilibrium price w i l l  counter  to  g r e a t e s t revenue f o r  m a r k e t i n g c o s t s ; p l u s changes i n  indicate that cattle  retail  market-  demand f o r c o m p e t i n g p r o d u c t s ;  complexities  sequence the  through the  become f e d b e e f a t  These changes, p l u s o t h e r  animals w i l l  he  slaugh-  Each p a r t y  f a c t o r s except momentarily.  f r o m day  before  for  performs.  fixed  availability  display  equilibrium price  In a c t u a l p r a c t i c e , n e i t h e r f e d beef demand a r e  equili-  cost of getting  destined  on  be-  adjusted  retail  price.  i d e a o f what t h e  to  r e l a t e d to t h i s  p r i c e f o r which c a t t l e  h i s own  cattle  be  i n the marketing  point of  the  i s very  - always w i l l  point the  - a l l ages o f c a t t l e d e s t i n e d  opposing seller  marketing  consumer a t existing  the  p r i c e of  t o p o r k , p o u l t r y , and  other  24 substitutes.  Her  thus expressed,  p r e f e r e n c e and  t o g e t h e r w i t h the responses  sumers o f f e d b e e f , buyer his  add  t a k e s w i t h him  up  into  she  of a l l other  to i n s t r u c t i o n s which the  has  con-  retail-  t h e w h o l e s a l e m a r k e t where he r e p l a c e s  stock. It  i s at wholesale,  well-informed  retailers  i n today's marketing  reflecting  informed packers  reflecting  what now  t o be  in  the p r i c e w i l l i n g n e s s  appears  The sale  sector  industry central sales  two  are; f i r s t ,  from  the one  however, t h a t  transactions.  the d i s p e r s i o n of l i v e  tended  every t r a n s a c t i o n  p r i c e m a k i n g by h e l p i n g t o a r r i v e  of  what t h e e q u i l i b r i u m p r i c e w i l l become b e e f  trading  in live  formation  at r e t a i l .  cattle  g r e a t e r degree  in live  whole-  cattle amongst  and  t o weaken t h e  direct  effective-  It is  still  animals c o n t r i b u t e s  at the c u r r e n t e s t i m a t i o n  be when t h e c a t t l e  But now  a l l buyers  i n seeking every p o s s i b l e  to help i n t h e i r  the  marketings  i n price-making.  to  finally  i n the  auctions, country dealers,  of these o u t l e t s  well-  bargaining point  f o r t h e p r e s e n t f o c u s on  farm o r r a n c h has  that  come t o g e t h e r i n  single  " p r i c e making" l o c a t i o n  t e r m i n a l markets,  n e s s o f any true,  the  supplies  t h e most e f f e c t i v e  main r e a s o n s  t o be  consumer demand and  wholesale  t h e whole sequence o f market  system,  in question  and  sellers  source of i n -  d e c i s i o n - m a k i n g , have t u r n e d t o a  t o t h e common d e n o m i n a t o r  available  to a l l of  them - t h e w h o l e s a l e m a r k e t q u o t a t i o n s . The of  second  reason  i s that  t h e r e i s now  packers, averaging smaller i n s i z e  formerly,  and  much l a r g e r  a much r e d u c e d  and  and  an  i n c r e a s e d number  l e s s dominant  number o f r e t a i l e r - b u y e r s ,  more d o m i n a n t t h a n  formerly.  Ultimately  than averaging whether  25 the l o c a t i o n o f t h e p r i c e making p r o c e s s i s a t t h e c e n t r a l i n a l market o r a t t h e w h o l e s a l e the b a s i c  price  determinant  level  either  one m e r e l y  term-  reflects  - the e q u i l i b r i u m p r i c e o f the con-  sumers .  V. The and  NATURE  OF THE NORTH AMERICAN  similarity  CATTLE MARKET  i n standards o f l i v i n g  and consumer  p r e f e r e n c e s between Canada and t h e U n i t e d S t a t e s h a s g i v e n  rise  t o t h e demand f o r s i m i l a r  majority  qualities  o f beef products.  o f the beef products a r e s u p p l i e d  from  year beef ported  p r o d u c t i o n r e s o u r c e s and f e d b e e f p r o d u c t s a r e t r a n s t o t h e n e i g h b o u r i n g country..  It  that  cannot  North America  be s a i d  because  to separate Canadian  similar  t h e demand f o r b e e f  the d i f f e r e n c e s  transportation policies,  climate factors  rise  t h e r e e x i s t s one c a t t l e m a r k e t i n  even though  both c o u n t r i e s i s s i m i l a r ,  and  throughout the  across the border  lations,  The  the resources of  t h e r e s p e c t i v e c o u n t r y however, a t v a r i o u s t i m e s  in  trends  tariff  i n grading  structure,  and t h e d i s s i m i l a r i t y  product  i n market  regu-  geographic size,  give  markets. and U n i t e d S t a t e s c a t t l e  prices usually  trends over time but the marginal p r i c e  show  differences  c h a n g e s f r o m month t o month and y e a r t o y e a r due t o t h e above factors. in  The c o n t i n u e d c h a n g i n g  the flow of feeder c a t t l e  the Canada-United numbers.  of the marginal p r i c e  or fed c a t t l e  States border  back and f o r t h  in significantly  The f l o w o f r e s o u r c e s and f e d c a t t l e  across  the border  i n turn  cattle  a t any p o i n t  effects  across  fluctuating  b a c k and f o r t h  the equilibrium  i n t h e two c o u n t r i e s .  results  price of  26 In any in  region  summary,  i t c a n be s a i d  that the e q u i l i b r i u m p r i c e i n  i n Canada depends upon t h e demand and s u p p l y  the p a r t i c u l a r  region, the neighbouring  within  Canada and t h e r e l a t i v e p o s i t i o n  United  States  cattle  markets.  geographical  situation regions  o f t h e Canada and t h e  27  CHAPTER I I I THE FED BEEF MARKET IN THE SOUTHERN COASTAL REGION OF BRITISH COLUMBIA Beef has always c o n s t i t u t e d a s i g n i f i c a n t the  C a n a d i a n c o n s u m e r s ' meat d i e t .  its  share  but  i n a d d i t i o n the percentage o f high  Not o n l y has beef  o f t h e c o n s u m e r s ' r e d meat d i e t ,  significantly  proportion of increased  as i n d i c a t e d i n F i g . 1,  q u a l i t y beef has i n c r e a s e d  s i n c e t h e end o f W o r l d War I I , as i n d i c a t e d i n F i g .  2. The  increased  penetration  f r o m 1948 t o 1966 i s i l l u s t r a t e d trend of  lines  i n F i g . 1.  the slope  value  indicates  line  of the trend  f o r beef line  place  i n per c a p i t a  i n per c a p i t a  rate of increase  con-  i n per only  by t h e d e c l i n i n g r a t e o f  i n p e r c a p i t a c o n s u m p t i o n o f p o r k and o t h e r  r e d meats.  FACTORS AFFECTING FED BEEF CONSUMPTION IN  in  consumption  a t t h e expense o f t h e p e r c a p i t a consumption o f o t h e r  I.  THE REGION  The value o f the slope o f the t r e n d t h e e q u a t i o n y = a + bx. 1  than the  t o a l l r e d meats c o u l d  r e d meats, a f a c t w h i c h i s i l l u s t r a t e d increase  i s greater  f o r a l l r e d meats, which  The h i g h e r  consumption o f beef r e l a t i v e  slopes o f the  t o note t h a t the value  than the r a t e of i n c r e a s e  sumption o f a l l r e d meats.  take  1  that the r a t e of increase  o f b e e f was g r e a t e r  capita  by t h e r e l a t i v e  I t i s interesting  of the trend  of the slope  o f t h e r e d meat m a r k e t , by b e e f  line  is.the b  value  1 6 0  -P (d 0) S  10 0  m o  o  o  !  1948  ,  1  50  ,  ,  52  ,  ,  1  54  .  .  56  1  58  .  .  60  .  62  6H  Years FIGURE 1 PER CAPITA MEAT CONSUMPTION IN CANADA (Canada A v e r a g e )  1948-66  a  Dominion Bureau o f S t a t i s t i c s , A g r i c u l t u r e D i v i s i o n , A p p a r e n t Food C o n s u m p t i o n i n Canada, (Ottawa: Queens P r i n t e r 1966). Trend l i n e c a l c u l a t e d using Squares R e g r e s s i o n t e c h n i q u e .  the Simple L i n e a r  Least  66  29  Years  FIGURE 2 CHOICE AND GOOD GRADE BEEF AS A PERCENTAGE TOTAL GRADED BEEF SLAUGHTER IN CANADA  OF  a  M a r k e t s I n f o r m a t i o n S e c t i o n , L i v e s t o c k P r o d u c t i o n and M a r k e t i n g B r a n c h , Canada D e p a r t m e n t o f A g r i c u l t u r e , L i v e s t o c k M a r k e t Review, (Ottawa: Queens p r i n t e r ) . a  The two  grades  i n c r e a s e d share o f the beef market enjoyed of beef  (high q u a l i t y  the i n c r e a s e d share o f beef a number o f f a c t o r s . major  quality  in real beef  knowledge. i n 1965  2  and  indicated  income p e r c a p i t a ,  increase i n real  ( i n c o n s t a n t 1949  W o r k i n g , op. c i t .  top  i n F i g . 2,  and  findings,  to  the  i n the i n -  i n the consumers' d i e t  are  the  increased preference for high  c h a n g e s i n consumer e a t i n g  The  2  t o have r e s u l t e d  beef  the  t o a l l r e d meats i s due  In l i n e with Working's  share of high q u a l i t y  increase  $1165  relative  f a c t o r s which are contended  creased  al  beef),  by  h a b i t s and  income f r o m  dollars)  as  $815  indicated  nutrition-  i n 1948  to  in Fig. 3  30 has  p u t more d i s c r e t i o n a r y  for  the purchase of b e t t e r q u a l i t y  spent  some o f t h i s  quality  beef.  The  t o measure  products.  i n c r e a s e d income on measurement o f t h e  increased preference hard  income i n t h e hands o f t h e  the  The  beef  consumer  consumption of  factors  f o r high q u a l i t y  consumers  are  has higher  c o n t r i b u t i n g to i n t a n g i b l e and  objectively.  120 0  19 4 8  50  54  52  .5 6  58  60  ,6 4  62  Years FIGURE 3 REAL INCOME PER CAPITA IN CANADA CONSTANT DOLLARS - 194 9 a  a  See  The t u r e s on crease the  Appendix A f o r  w i l l i n g n e s s of the  beef  her  calculations.  i s evidenced  expenditures  s l o p e of the  consumer t o i n c r e a s e h e r  i n F i g . 4.  fitted  p e r pound o f c h o i c e g r a d e b e e f  curve  r e p r e s e n t i n g the per f r o m 1948  t o 1966;  capita to the  by  the p o s i t i v e v a l u e  to a curve  price  period  This willingness to i n -  is illustrated  trend l i n e  expendi-  indicating  the  a t C a l g a r y , A l b e r t a and  consumption of beef b a s e 1947-49 = 100.  over In  of  a  the  other  31 words t h e consumer quality  was  at higher prices In c o n t r a s t ,  willingness  t o p u r c h a s e more b e e f o f h i g h e r  i n 1966  t h e consumer  as c o n t r a s t e d  to  1948.  has o n l y r e c e n t l y  indicated  t o i n c r e a s e h e r e x p e n d i t u r e s on p o r k , a f t e r  i n g her e x p e n d i t u r e s The c o n s u m e r s ' trated  willing  f r o m 1948  t o 1956  e x p e n d i t u r e s on b r o i l e r  as i n d i c a t e d chickens  i n F i g . 6 i s e v e n g r e a t e r on c o n t r a s t  willingness  3  decreas-  i n F i g . 5.  which  of the  a  is illus-  consumers'  to i n c r e a s e her consumption o f c h i c k e n s a t  signifi-  c a n t l y tower p r i c e s . The  statistics  sections of this within mix  Canada  the graphs i n the  c h a p t e r a r e a v e r a g e s f o r Canada.  the Dominion  relative  used t o d e r i v e  differs  i n economic  to other areas.  average f i g u r e s w i l l  status  and  for  the assumption i s the l a c k o f a b e t t e r  mix w i t h i n  i n economic  the d i f f e r e n t  It w i l l  area  demographic the  be u s e d as i n d i c a t i v e o f t h e p e r c a p -  c o n s u m p t i o n o f meat i n t h e a r e a u n d e r s t u d y .  variations  Each  For the purposes o f the r e p o r t  ita  significant  earlier  status  communities  The main r e a s o n  alternative and t h e  and t h e  demographic  o f t h e a r e a under s t u d y .  be assumed, f o r t h e p u r p o s e o f t h e a n a l y s i s ,  that  t h e c o n s u m p t i o n o f b e e f t h r o u g h o u t t h e y e a r i s more o r l e s s  uni-  form w i t h due No  short durations of increased  to holidays,  fairs,  doubt the t o u r i s t  effect  on t h e t o t a l  time t h e r e  exhibitions  trade  and u n s e a s o n a b l e w e a t h e r .  i n t h e summer months does have  some  f e d b e e f r e q u i r e m e n t s , however, a t t h e same  i s a reduction  of province t r i p s .  and d e c r e a s e d c o n s u m p t i o n  The  i n the r e s i d e n t  effect  Chickens are c l a s s i f i e d  o f t h e two  as p o u l t r y  p o p u l a t i o n due changes w i l l  to out  be  and n o t r e d m e a t s .  32  FIGURE 5 TREND IN CONSUMER EXPENDITURE ON PORK 1 9 4 8 - 6 6 ER E> (1947-49 = 100) S e e Appendix B f o r s o u r c e s o f i n f o r m a t i o n and calculations, a  a  33 considered  to cancel  — .  .  1948  50  one a n o t h e r .  .  1  52  5h  ,  .  5  .  6  -  , — — .  .  5  8  . 60  Years  FIGURE 6 TREND OF CONSUMER EXPENDITURES ON CHICKENS 1 9 4 8 - 6 6 a  See  Appendix B f o r c a l c u l a t i o n s .  II.  LOWER MAINLAND AND  VANCOUVER  ISLAND FED BEEF MARKET  .  .  62  .  .  64  .  ,  66  34 Size of the  The  Market  number o f f e d b e e f  sumer r e q u i r e m e n t s  animals r e q u i r e d  o f t h e a r e a u n d e r s t u d y has  970  very  i n c r e a s e i n t h e number o f f e d c a t t l e  to  meet t h e consumer r e q u i r e m e n t s  increase capita  i n t h e p o p u l a t i o n and  consumption  C h o i c e and from  1951  t o 1966  consumption  Sources  At  due  of beef  of Supply  beef  and  number o f f e d c a t t l e  supplied  be  significant  city  and  capita  total the  the v a r i o u s channels of supply. indicate  the approximate  t h e c h a n n e l s and  from  1962 sold  f o r i n s p e c t i o n and However, b e e f  to  The  number o f  cattle  the trends i n  1966.  i n c a r c a s s f o r m need  as t o q u a l i t y  grading d i f f e r with  cattle  each  or c a r c a s s e s cannot  S e e A p p e n d i x C f o r t h e s o u r c e s o f i n f o r m a t i o n and culations . See Appendix C f o r the p o p u l a t i o n f i g u r e s lations .  to  i n Canada.  H  5  of  4 0 percent  a r e consumed o r t r a n s p o r t e d t o  a l l o f the beef c a t t l e  province.  consumption  Beef  the channels  requirements  The  per  5  i n s p e c t e d f o r d i s e a s e s or graded  The  significant  i n c r e a s e i n the  increased approximately  t o the market through  Not  to the very  a 58 p e r c e n t i n c r e a s e i n p o p u l a t i o n .  that  analysis w i l l  supply through  i s due  required  s t a t i s t i c s a r e r e p o r t e d as t o t h e  a r e a under study through  The  4  t o a 66 p e r c e n t i n c r e a s e i n p e r  o f Fed  p r e s e n t no  following  t o 106,123 head i n 1 9 6 6 .  of the fed beef product.  Good g r a d e  con-  i n c r e a s e d from  an e s t i m a t e d 20, significant  head i n 1951  t o meet t h e  and  be  cal-  calcu-  35 transported  i n t o o r o u t o f Canada o r i n t e r p r o v i n c i a l l y  t h e y have been i n s p e c t e d of  and  graded  t h e Meat I n s p e c t i o n A c t . 6  palities  and  sold within graded  districts their  a c c o r d i n g to the  In a d d i t i o n  i n accordance  regulations  some c i t i e s ,  have s e t r e g u l a t i o n s  b o u n d a r i e s must be  unless  such t h a t  inspected  municia l l beef  f o r d i s e a s e and  with the g r a d i n g r e g u l a t i o n s of the pro-  vince. The couver;  cities  of Vancouver,  the m u n i c i p a l i t i e s  the d i s t r i c t  New  Westminster,  and N o r t h  o f B u r n a b y and West V a n c o u v e r ;  o f North Vancouver  have r e g u l a t i o n s  to the  Vanand  effect  that; No p e r s o n s h a l l , s e l l , o f f e r f o r s a l e o r have i n h i s p o s s e s s i o n , a c a r c a s s o r any p o r t i o n o f a c a r c a s s t h a t has n o t been g r a d e d and b r a n d e d i n a c c o r d a n c e w i t h t h i s r e g u l a t i o n . 7  I n 1965  a p p r o x i m a t e l y 65 p e r c e n t o f t h e Lower M a i n l a n d  r e g i o n p o p u l a t i o n o r 5 0 p e r c e n t o f t h e Lower M a i n l a n d couver by  Island  t h e above The  inspected few  region  8  populace  and  uninspected slaughterhouses. have p r o d u c e d  information i s available  C a n a d a Meat I n s p e c t i o n A c t . (Queens P r i n t e r : Ottawa). British  and  In a d d i t i o n ,  from  very  s l a u g h t e r e d i t s own  purposes.  6  7  encompassed  o t h e r 50 p e r c e n t o f t h e p o p u l a t i o n a c q u i r e d b e e f  f o r consumption No  i n the area  Van-  regulation.  o f the populace w i l l  beef  resided  and  Columbia,  as t o t h e number o f Good  Section  Beef Grading  79,  Paragraph  and  1  Regulations, Division  7.05. B r i t i s h Columbia, Bureau c i t . , pp. 154 and 268. 8  op.  of Economics  and  Statistics,  36 Choice grade spected  t y p e b e e f a n i m a l s w h i c h were s l a u g h t e r e d i n u n i n -  slaughterhouses . 9  Thus, f o r the purposes ed t h a t  of t h i s  the c o n t r i b u t i o n of f e d beef  report  i t will  t o t h e consumer m a r k e t  the uninspected slaughterhouses i s i n s i g n i f i c a n t the t o t a l  requirements  Vancouver  Island  considered  t o be  regions.  The  satisfied  from  w i t h i n B r i t i s h Columbia slaughterhouses,  of f e d beef  and  f o r t h e Lower M a i n l a n d  consumer r e q u i r e m e n t s the  fed beef  from  in relation  animals  will  to  and be  produced  slaughtered i n l o c a l inspected  t h e i m p o r t a t i o n o f s l a u g h t e r a n i m a l s from  s i d e o f t h e p r o v i n c e t o be t e r h o u s e s and  be c o n s i d e r -  slaughtered i n l o c a l  t h e i m p o r t a t i o n o f i n s p e c t e d and  out-  inspected slaughgraded  beef  car-  c a s s e s from o u t s i d e o f the p r o v i n c e . An  a n a l y s i s o f t h e number o f f e d c a t t l e m a r k e t e d  the v a r i o u s supply channels  indicates  animals  origin  from  of B r i t i s h Columbia  1962  ported  t o 1966  and  t h e number o f f e d b e e f  time  1 0  .  t h e number o f f e d  i n c r e a s e d some 5,7 63  head  w h i l e t h e number o f f e d s l a u g h t e r a n i m a l s  from A l b e r t a  increased  that  through  im-  S a s k a t c h e w a n i n c r e a s e d o n l y 7 07 head c a r c a s s e s imported  some 24,239 head o f c a t t l e  from  t h e same p r o v i n c e s  i n t h e same p e r i o d  I f t h e number o f c a t t l e m a r k e t e d  and  through  of  the v a r i o u s  T h e R e c o r d e r o f B r a n d s f o r B.C., Mr. K i r k b y , r e p o r t s t h a t 3654 s t e e r s and 4438 h e i f e r s were s l a u g h t e r e d i n u n i n s p e c t ed' s l a u g h t e r h o u s e s i n t h e Lower M a i n l a n d and V a n c o u v e r I s l a n d r e g i o n s i n 19 66. I t i s contended t h a t the m a j o r i t y o f the beef a n i m a l s r e p r e s e n t e d i n t h e above f i g u r e s were o f d a i r y c a t t l e o r i g i n and b e e f c a t t l e o f l o w e r q u a l i t y w h i c h d i d n o t have t h e d e g r e e o f f l e s h y o r c o n f o r m a t i o n t o be g r a d e d i n t h e t o p two beef grades. 9  See A p p e n d i x D f o r t h e s o u r c e s o f i n f o r m a t i o n and calculations. 1 0  the  37 supply channels are expressed sumer r e q u i r e m e n t s , number  cattle  i t i s interesting  of fed cattle  percent of t o t a l  as p e r c e n t a g e s  origin  amounted t o 31 p e r c e n t and f e d b e e f  Columbia  origin  cattle,  that  con-  i n 1966 t h e  amounted t o 22  while the imported  47 p e r c e n t o f t o t a l r e q u i r e m e n t s .  ter  to note  o f B r i t i s h Columbia  requirements  of the t o t a l  fed slaughter  c a r c a s s imports  In c o n t r a s t  cattle  amounted t o 2 3 p e r c e n t , t h e i m p o r t e d  were  of B r i t i s h fed slaugh-  43 p e r c e n t , and f e d b e e f c a r c a s s e s , 34 p e r c e n t i n  1962.  Fed C a t t l e  Prices  The p r i c e  of fed c a t t l e  a t any t i m e o f t h e y e a r w i l l be  d e p e n d e n t upon t h e s u p p l y and demand s i t u a t i o n sale.  I t c a n be s e e n  in Figure 7 that f r o m month price  from  the p r i c e  t o month  The p r i c e  fluctuation  to year.  for Choice  o f Good  of the graphs  of f e d c a t t l e  and y e a r  p e r hundred weight  weight) .  examination  1 1  a t the time o f  vary  significantly  Figure 7 presents the slaughter steers  (live-  s l a u g h t e r s t e e r s w i l l f o l l o w t h e same  o v e r t i m e b u t w i l l be s l i g h t l y l o w e r point  Good p r i c e  w i l l depend upon t h e s u p p l y and demand f o r b o t h  of cattle In  The i n t e r v a l  i n price  particular  grades  i n time.  presented  at the p a r t i c u l a r  point  between t h e C h o i c e and  i n time.  summary, a t p r e s e n t B r i t i s h C o l u m b i a  the p r o d u c t i o n of h i g h q u a l i t y  beef  a t any  i s deficient  t o meet t h e Lower  in  Mainland  C h o i c e and Good t y p e s l a u g h t e r c a t t l e a r e j u d g e d as s u c h by t h e o c u l a r o b s e r v a t i o n o f t h e b u y e r s and s e l l e r s a t t h e time o f s a l e . The f i n a l g r a d e w i l l n o t be d e t e r m i n e d u n t i l after slaughter. 1  Dollars  CD fl>  >  SO  M  CD  2  ,  QJ H-  O  CO  H  CO  01  >  X  H  O O  Hi O  h  > a » >-3 •< t-a 1  HI  H  0  3 H  h-  1  n  H-  o ft) oi 0)  OJ 01  0  c H  o CD 01  0 Hi H-  K;  1—  1  CD CD jr  » H  O > M t" CO 2  1  2  >  O  « O W W i-3 O H  1— 1  O M  H  O G  W  K CD OJ 01 t—  1  CD  CT) cn  K> cn 1  i-3  cn M -J W  cn  >i-3  1—'  CD cn cr>  a  Hi  0  H 3 01  rt P-  0 •  iCO cn 1  per Hundredweight  of Beef  (liveweight)  and V a n c o u v e r I s l a n d consumer Mainland cattle  requirements.  environment i s not a b a r r i e r  and t h e r e  c a t t l e market  i s no b a r r i e r  p r o p r i a t e q u a l i t y and q u a n t i t y whether  the input  economically  the a v a i l a b i l i t y  of input  market.  of fed  i n t o the l o c a l fed  f a c t o r s and  f a c t o r s c a n be combined  i n the e x i s t i n g  t h e Lower  to the production  of entry  i t r e m a i n s t o examine  Since  o f t h e apsubstantiate  to produce f e d beef  40  CHAPTER THE Every appropriate take the  q u a n t i t y and  must be  of  the  of p r o d u c t i o n  grains,  over the  quantity  so  t h a t the  full  is  equal  weight a t the It primary  the  prises, and  the  q u a l i t y and  purpose of  other  other  this  allow the  feeder  the  full  other  at the per  cattle,  resources  costs  feed of  the  appropriate  prices  u n i t of carcass  weight  per  u n i t of  carcass  be  to the  Fraser  resources  i n some o f  assumed t o be  the  the  V a l l e y Fed  f o r the other  not  five Beef  exist  fed beef  industry  appropriate  hinder  the  quan-  development  area.  I. feeder  FEEDER CATTLE animal placed  in  a g r i c u l t u r e enter-  a v a i l a b l e i n the  a t p r i c e s t h a t do  i n d u s t r y i n the  size of  Chapter to evaluate  a g r i c u l t u r e enterprises already  necessary  q u a l i t y and  The  cover  entity,  period.  than the market value  also required  will  a viable  to  feedlot.  Since  which are  of  and  i n p u t markets r e l a t i v e  area,  tity  investment  that w i l l  cost of production  less  i s the  Industry. the  at costs  the  economic a c t i v i t y  i n d u s t r y r e q u i r e s the  appropriate  f a c t o r s of  i n d u s t r y t o be  c a p i t a l , management, l a b o r , and  to or  input  a v a i l a b l e at p r i c e s that w i l l  product  f e d beef  of  q u a l i t y f o r the  In a d d i t i o n , f o r the  resources  The  INPUT FACTOR MARKETS  i n d u s t r y r e q u i r e s a host  place.  production  IV  i n the  feedlot varies  according ity, the  to the  c a t t l e market  o b j e c t i v e s of particular  the  other  operators  a n i m a l s and feeders one  entrepreneur  feedlot.  month o l d c a l v e s and  situation, and  Some o p e r a t o r s  feed  them f o r up  them f o r s i x t y  fifty  feed  of  production  in British  feeder areas  cattle  f o r the  of B r i t i s h  number o f  d e r i v e d by preceding cattle  feeder  statistic  basing year.  acquire  necessary Appendix  present  number o f  c a l c u l a t i o n s and  The  year  old  majority  be  to  the  are  an  i n d u s t r y i n any  one  of the  i s substracted  appropriate  of one  i t i s postulated  a calf  feeder  Divi-  estimate  year  can  beef-cow p o p u l a t i o n  statistic year  industry  crop  be of  number o f  calf  calves available. are  the  feeder  i s estimated  from t h e  criteria  that  and  esti-  The  presented  a l l of the  beef  a v a i l a b l e to the  See Table  feeder  c a l v e s as  in  i n d i c a t e d i n Appendix  f e e d l o t i n d u s t r y which i s endeavouring  V I I I , page  70.  D o m i n i o n Bureau of S t a t i s t i c s , Census o f A g r i c u l t u r e , Volume 5, P a r t 3, (Ottawa: Queens P r i n t e r 1 9 6 8 ) . 2  of  F.  Not  2  acquire  reported,  on  the  replacement estimate  mate t o i n d i c a t e t h e  F will  estimate  a v a i l a b l e i n the  a heifer  i s not  To  a n i m a l s a v a i l a b l e i n any  the To  2  cattle  feeder  two  while  Columbia Census  a v a i l a b l e to the  the  o r more  Columbia  the  s i n c e the  year  eight  1  Eight .  year,  six to  them from n i n e t y  s i o n Number T h r e e , S i x , and number o f  facil-  days .  main source  i n the  purchase  to e i g h t y days.  Number o f F e e d e r C a t t l e P r o d u c e d  located  feedlot  available feedstuffs for  t o one  p u r c h a s e y e a r l i n g a n i m a l s and  The  of  p u r c h a s e heavy, l o n g y e a r l i n g s o r  feed  h u n d r e d and  type  42 to produce Choice the  ability  lack  the  and  Good g r a d e b e e f .  to e f f i c i e n t l y  appropriate  feeder  a c o n d i t i o n of top  two  of Standard estimate n o t be and  and  and  percent  slaughtered  when t h e y  I t i s assumed t h a t t h e Canada a v e r a g e  feeder  the beef  fed beef  cattle  are  calf  industry.  population The  and/or  are  in  in  the  a  Choice  G.  o f A p p e n d i x G i n d i c a t e s t h a t t h e number o f  s i n c e 1960  t o an  statistics  as  feeder  estimated  c a l v e s has  total  of  fair  t h a t would  number o f  i n d i c a t e d i n Appendix  choice  have  percentage  C o m m e r c i a l Number I g r a d e c a t t l e w o u l d be  C o l u m b i a p r o d u c e d good and 58  i n t o beef  below t h a t r e q u i r e d f o r i n c l u s i o n  a v a i l a b l e f o r the  A review  not  s l a u g h t e r a l t e r n a t i v e s cause  t o be  of the percentage of  Good t y p e  feeds  do  i n a d d i t i o n , p o o r management,  other  population  fleshing  grades.  energy  conformation;  disease, physical injury some o f t h e  convert  Some a n i m a l s  British  increased  90,900 head  some  in  1967. The feeder  cattle  difficult  production  period  the  i n any  grade c a t t l e as  two  slaughtered  by  year's  I t w o u l d be  very  i s , the  year.  That  although  i n any  calf  the  one  length of  the c a l v i n g  number o f C h o i c e y e a r may  and  represent  three years  old before the bulk  w o u l d r a n g e f r o m one  following tables indicating  animal  he  was  of the  t o two the  Good  as much  because the beef  in a l l probability  slaughtered  Therefore,  the  production  over  mar-  i n d u s t r y , t h e p r e s e n t methods o f  one  slaughtered  being  the  and  upon s l a u g h t e r c o u l d be  age.  reported.  s a l e of c a t t l e ,  to three years  animals  are not  one  to r e p o r t the d i s p e r s i o n because o f the p r e s e n t  k e t i n g methods u t i l i z e d reporting  t o t h e d i s p e r s i o n o f any  fed  years  of  number  of  43 fed  cattle  p r o d u c e d and  number of f e e d e r c a t t l e or to the p r o v i n c e s m a g n i t u d e and sion.  The  and  o f the  feeder c a t t l e  divergence  i n marketing  finished  The  feeder  as  feeder  cattle  and  available  one  year  i n any  methods and produced  t o be  and  to Ontario  Columbia  t o the O n t a r i o  t o h e l p meet t h e  Number o f B e e f C a t t l e The  and be has  one  and  on  being  Columbia. they w i l l are  finished,  and  cattle  of  are  the  exported the  I f they be  are  finished  transported they  area.  will  to  be British  requirements.  Finished in British  which are produced  I s l a n d markets are r e p o r t e d  s e e n t h a t t h e number o f  of  consumer m a r k e t o r back i n t o consumer  the  either  i n some o t h e r  c o n s u m p t i o n o r on  f i n i s h e d w i t h i n the p r o v i n c e  Vancouver  total  because of  hand t h e y  However, i f t h e y  Produced  number o f b e e f  C o l u m b i a and  On  i t i s most l i k e l y  in a l l probability  transported  to the  t r a n s p o r t e d out  east of B r i t i s h  consumed i n O n t a r i o .  Alberta,  up  Columbia are  finished  c a l v e s t h a t are  for finishing  transported  cattle disper-  i n the p r o v i n c e or t r a n s p o r t e d out  animals  hand t o p r o v i n c e s  the  season.  in British  to the other  calving  the  States  indicate only  add  directions.  States  Columbia  United  f l u c t u a t i o n s of the  p r o v i n c e move i n two United  to the  not  slaughtered  the p r o v i n c e  Columbia, or  dispersions w i l l  feeder c a t t l e  and  c a l v e s shipped  to year  number o f  The  in British  east of B r i t i s h  the y e a r  total  slaughtered  fed c a t t l e  in  British  f o r t h e Lower  Mainland  i n Table  It  produced  i n c r e a s e d some 8500 head s i n c e 1962  Columbia  II.  i n the  to a t o t a l  of  can  province 26,042  head i n 1 9 6 7 . 3  3  It  s h o u l d be  noted  t h a t i n a d d i t i o n an  estimated  3000  TABLE I I ESTIMATED  NUMBER OF CHOICE AND GOOD GRADE BEEF CATTLE OF B.C. THAT WERE SLAUGHTERED WITHIN THE LOWER MAINLAND AND VANCOUVER ISLAND REGION  ORIGIN  1962  1963  1964  F e d e r a l l y Inspected Slaughterhouses steers heifers Sub T o t a l "  14,885 4 .430 19,315  14,113 3 .852 17,965  18,422 4 .334 2 2,7 56  19,307 17,764 6.261 7.146 25,568 24,910^  E s t i m a t e d No. o f S t a n d a r d & Commerce? c i a l Grade Animals Sub T o t a l  3,669 15,646  3,413 14,552  4,323 18,433  4 ,857 4,904 20,711 20,006  23 ,457  Prov. Inspected Slaughterhouses Total  1,889 17,535  2,256 16,808  2,715 21,148  2,314 3,292 23,025 23,298  2,585 26,042  Source: Market Information D i v i s i o n , M a r k e t i n g B r a n c h , op. c i t .  1965  1966  1967  L i v e s t o c k P r o d u c t i o n and  Some o f t h e c a t t l e r e p o r t e d i n t h e s e s t a t i s t i c s a r e o u t o f p r o v i n c e b e e f f e e d e r c a t t l e t h a t a r e f i n i s h e d i n B.C. f e e d l o t s . The number o f c a t t l e so r e p o r t e d i s c o n s i d e r e d t o be i n s i g n i f i c a n t . ^One F e d e r a l l y , i n s p e c t e d p l a n t was l o c a t e d o u t s i d e o f t h e a r e a u n d e r s t u d y and i t was assumed t h a t t h e 1299 B.C.. p r o d u c e d f e e d e r c a t t l e t h a t were s l a u g h t e r e d i n t h i s f a c i l i t y were consumed i n o t h e r areas of the p r o v i n c e . T h e p e r c e n t a g e o f S t a n d a r d and C o m m e r c i a l No. 1 G r a d e c a t t l e s l a u g h t e r e d i n F e d e r a l l y I n s p e c t e d S l a u g h t e r h o u s e s l o c a t e d i n B.C. was e s t i m a t e d f o r t h e y e a r s 1962-65 by a s s u m i n g t h e same p e r c e n t a g e o f S t a n d a r d and C o m m e r c i a l 1 g r a d e c a t t l e were s l a u g h t e r e d a s was c a l c u l a t e d from a c t u a l r e c o r d s f o r 1966. c  45 Sources importance lumbia  o f the d i f f e r e n t  III.  were a v a i l a b l e  and t h e f i g u r e s  received at federally  British  t o t h e c o a s t a l market  I t s h o u l d be n o t e d  a r e a under study.  Columbia.  The r e l a t i v e  p r o d u c t i o n a r e a s w i t h i n B r i t i s h Co-  i n s u p p l y i n g f e d beef  in Table  cattle  of supply w i t h i n B r i t i s h  i s. indicated  t h a t o n l y 1966 and 1967 f i g u r e s  as r e p o r t e d i n d i c a t e  only  inspected slaughterhouses  I n 1966 a n o t h e r  those  i n the  2,314 head o f f e d c a t t l e o f  C o l u m b i a o r i g i n were s l a u g h t e r e d i n P r o v i n c i a l l y i n s p e c t -  ed  slaughterhouses  in  o t h e r r e g i o n s , and a n unknown  shipped  o u t s i d e o f t h e a r e a under study number  o u t o f t h e Peace R i v e r B l o c k  Southern  British  Columbia  and consumed  of fed cattle  were  and t h e e a s t e r n s e c t i o n o f  t o A l b e r t a l i v e s t o c k markets o r slaugh-  terhouses .  TABLE I I I BRITISH COLUMBIA ORIGIN OF CHOICE AND GOOD GRADE CATTLE SLAUGHTERED IN THE LOWER MAINLAND AND VANCOUVER ISLAND REGIONS  CO  u >-, u <fl  cu  1966 1967  <U  CD  Cu  o  0 0 •H  0  03  i-l  rH  u  m  fo  m  IH  >  15,723 2,214 19,000 1,641  U  m u  c  rH  nj  (0 c  cu  o  ft «  o  u  cu  (0 >  CU - H  872 522 616 457 1,071 1, 268  u  O  u  cu  >  fU -H 3 13  U U  O fi -P CU O (tf C -P C r H CU G fO W H > H  U  —  59 20  a  rH  (0 X! -P  0 O  CO £H  3: O  C  C  -H • tri  X U -r)  C • M DPQ O  rH  (0 -P 0  20,006 3,292 23,298 23,457 2,585 26,042  Source: L i v e s t o c k P r o d u c t i o n and M a r k e t i n g B r a n c h Rec o r d s , Canada D e p a r t m e n t o f A g r i c u l t u r e , V a n c o u v e r , B.C. Chapter  "For V.  a full  d i s c u s s i o n of the figures  see Table VI i n  head were f i n i s h e d w i t h i n t h e p r o v i n c e f o r c o n s u m p t i o n a r e a s i n 19 67.  i n other  British  Columbia  Feeder  Cattle  and  Calf  Exports t o the U n i t e d  States Each i n g t o n and of t h e i r  year various feedlot Idaho S t a t e s , f i n d  feeder requirements  the Canadian  closely  to purchase  located mainly  i t economical from B r i t i s h  c a t t l e market p a r a l l e l s  markets f a i r l y profitable  firms,  to purchase  Columbia.  the U n i t e d S t a t e s  Canadian  feeder c a t t l e  than  feeder  States.  Whether o r n o t B.C.  feeder c a t t l e  t h e U n i t e d S t a t e s d e p e n d s upon t h e  It of  the American  c a n be  feeder c a t t l e  significantly price  s e e n on and  4  cattle  will  relative  cattle  the United  be e x p o r t e d  price  between  to the  markets.  examination  of Table  IV t h a t  t h e number  c a l v e s exported to the U n i t e d S t a t e s v a r i e s  f r o m y e a r t o y e a r due  relationships  cattle  t h e r e a r e p e r i o d s o f t i m e when i t i s more  i n the n e i g h b o u r i n g p r o d u c t i o n areas w i t h i n  and  a number  Although  produced  Canadian  i n Wash-  between t h e two  TABLE  to the f l u c t u a t i o n s  i n the  Markets.  IV  BRITISH COLUMBIA FEEDER CATTLE AND CALVES EXPORTED TO THE U.S.A. 1962-67 1963  1964  1965  1966  15,341  8,539  3,338  19,870  8,868  1,251  3,766  942  769  5,559  4 ,632  485  19,107  9,481  4,107  25,429 13,500  1,736  1962  ITEM Grade beef  steers  Grade beef  heifers  Sub- • T o t a l Grade beef c a l v e s  a  4,469  3,385  866  6,176  1967  4,404  1,069  S o u r c e : Canada D e p a r t m e n t o f A g r i c u l t u r e , L i v e s t o c k P r o d u c t i o n and M a r k e t i n g D i v i s i o n B r a n c h , V a n c o u v e r , B r i t i s h Columbia. A n n u a l R e p o r t s 1962-67, mimeographed. alncludes  The  k  some g r a d e  dairy  number o f Good and  steers  and  heifers.  Choice type animals  are  not  47 Feeder C a t t l e  and  Calves  Marketed  to Provinces  East of  British  Columbia  Each year ity,  a number o f f e e d l o t  i n A l b e r t a and  British  Columbia  f i r m s , l o c a t e d , i n the  Ontario, purchase a s i g n i f i c a n t  feeder  cattle  and  calves.  f i r m s p u r c h a s e c h o i c e and  animals.  no  derived  f r o m an The  the  ed by  seller  a local  Royal  mented a p p o i n t e d transported spection,  cattle  livestock  Inspector  between d i s t r i c t s .  and  1966  in British  livestock  before The  e s t i m a t i o n can  shipment i n s p e c t -  the  the  f o r the B r i t i s h east , 5  total  p e r c e n t were s t e e r s and  heifers,  and  bulls.  breakdown o f o t h e r y e a r s '  F i g u r e s : f o r the  available.  tination  of the c a t t l e  indicated that very 5  However, t h e and  i n the a v a i l a b l e few s t a n d a r d and  governbe  of the i n -  information  province.  of the  not  33 p e r c e n t  or  l i v e s t o c k may  a source* o f  throughout  Brand C e r t i f i c a t e s  be  Columbia r e q u i r e s  written receipt  provide  total  Certificates.  c a l v e s t r a n s p o r t e d to provinces  approximately  an  feeder  to the  C a n a d i a n Mounted P o l i c e O f f i c e r  Brand C e r t i f i c a t e s ,  of the  animals  as  t o have t h e o w n e r s h i p o f t h e  Brand  t o t h e movement o f sis  c h o i c e type  a n a l y s i s of the Brand  movement o f  buyer or  good g r a d e  information i s available  m a r k e t i n g s o f good and  of  I t i s assumed t h a t i n  the m a j o r i t y these Although  number  major-  An  as  analy-  Columbia indicates that  s h i p m e n t s were c a l v e s , 4 2 25  significant  percent  were cows  shipments  y e a r l y changes o f  calves i s evidenced  by  and  the year  are desto  s t a t i s t i c s , however", i t i s p o s t u l a t e d commercial type animals are exported.  See Appendix H f o r Brand C e r t i f i c a t e  analysis.  48 year  fluctuations  i n movement t o t h e e a s t , t o t h e  changes i n the p r o v i n c e ' s Time o f S a l e and The  time  l y marketed to  inventory of c a t t l e  P r i c e s of Feeder of year  the  i s important  feedlot  operate  a l l year  he w i l l  throughout  the year  or a l t e r n a t i v e l y  p a r t of the year,the  time  tant.  In a d d i t i o n the  cattle  i s important No  of  lot  operators,  fluctuations  t h e w r i t e r on  from the  tapers o f f u n t i l It are  buyers,  and  and  i n the  the  wishes of  supply  can  be  significant  late  only  p r i c e of  t h e p r i c e s by  no  feeder  the  marketings  However, f r o m t h e  infor-  interviews held with  cattle  feed-  auction personnel, i t a r e p l a c e d on  then  falls  again  of March t o the middle  the The a short  to r i s e  in  the  o f May,  then  summer.  s e e n f r o m an price  cattle  i s impor-  t o t a l monthly  feeder c a t t l e  of January,  latter half  month t o month and of  supply  t h e m a r k e t t a p e r s o f f i n December w i t h  i n the beginning  period  I f he  i n t h e p e r i o d o f September t o November e a c h y e a r .  number p l a c e d on rise  operator.  present-  operator.  appears t h a t the bulk of the market  c a l v e s are  of feeder c a t t l e marketings  t o the  cattle  calves.  i f he w i s h e s t o f e e d  i n B r i t i s h Columbia.  m a t i o n a c q u i r e d by  and  r e q u i r e a continuous  s t a t i s t i c s a r e r e p o r t e d on  feeder c a t t l e  and  or  6  Cattle  feeder c a t t l e  to the  south  examination  of Figure  f l u c t u a t i o n s of feeder  year  to year.  cattle  8 that  p r i c e s from  In a d d i t i o n the r i s e  means a p p e a r a t t h e  same t i m e  each  "Canada D e p a r t m e n t o f A g r i c u l t u r e , L i v e s t o c k M a r k e t i n g B r a n c h , op. c i t .  there  and  fall  year.  Production  D o l l a r s  i—< cn N>  ft RE  Cn CD fD  >  13 13 CD 3  D H  Z  &  >  Hi  0  s  ON TH  M  CA LG  X  cn cu  Hi  K  3 o  M  f+ tr  H  ^<  >  M  cr>  H  n H cn  H  O  o  Q  H  CJ  K3  CD CU  H  ET  o CD cn  O O D  *1  a M M  cn 0 3  cn  oo cn  DE  cu 3  CO  i-l  M W  RS  o (D cn  cn  AT  0  H) H-  H3  Hi  W  0 h  3  OJ  cn  rt H-  O 13  6P  per  Hundredweight  of  Beef  ( l i v e w e i g h t )  50 I n summary, i t a p p e a r s t h a t t h e r e e x i s t s number o f f e e d e r c a t t l e bia  f e d beef  the  United  the  i n d u s t r y , i f the  S t a t e s and  fluctuation  available  of feeder  out  that w i l l  economic  cattle  have t o be  taken  present  Feed g r a i n s w i l l  sist  feed r a t i o n .  of approximately  protein  and  feedstuff  mineral  i n the  5-10  balance  supplements.  finishing  effect  feedstuffs,  fed  and  the  the year  and  important  in evaluating  of the  operator, the  exact  the  size  finishing  of the p a r t i c u l a r  the year  will  c o s t per  unit  be  facthe  10-15  time  of  and  of the  animals  out  of energy . 7  on The  a t any  ex-  prices of  r e q u i r e d to maximize  f e e d g r a i n t o use  carried  each  depend upon t h e  age  con-  percent  percentage  availability and  total  feed r a t i o n w i l l  r o u g h a g e and The  of  p r i c e margin g i v e n the c a t t l e market c o n d i t i o n s .  selection  with  of  t o 80 p e r c e n t  feed r a t i o n w i l l  alternative  anticipated  account  compete  industry.  percent  the  and  into  are  Colum-  FEED GRAINS  The  feedlot  feed  The  the year  c o n s t i t u t e up  p e r i e n c e of the  the  buyer can  c a t t l e marketings throughout  s t a t u s of the  finishing  significant  increased B r i t i s h  of p r o v i n c e buyer.  II.  and  local  f l u c t u a t i o n of p r i c e s throughout  tors  in  f o r an  a  one  being the The  period  the c r i t e r i a  of  feedlot  can a l t e r n a t e  firm  availability  f e e d g r a i n s when e c o n o m i c a d v a n t a g e s w a r r a n t i t . The  Lower M a i n l a n d  and  Vancouver  I s l a n d areas  are  deficient  T h e h i s t o r i c a l measure i s T o t a l D i g e s t i b l e N u t r i e n t s , however, a d v a n c e s i n t h e n u t r i t i o n f i e l d have b r o u g h t i n more e x a c t measures o f p r o d u c t i v e energy. Some a u t h o r s p r e f e r t o use gross energy, m e t a b o l i z a b l e energy, or p r o d u c t i v e energy. 7  51 in  the  production  available that  the It  any  should  be  area  utilized  noted at t h i s  expressed  has  deciding  significant  at present  formity  the  stuff.  f o r the  The and  two  duction  are  and  factors feed  from  continuing  The  corn  corn  per  being  acre  silage  i n the  between y e a r s  are  feed  to a l a r g e extent  feed-  still  Lower M a i n -  wheat.  existing  The  total  i n d u s t r y i s from Canadian  from the  Prairie  re-  ration.  I s l a n d f e d beef i n d u s t r y under the  f e e d s t u f f s to the  present-  important  will  r e l e v a n t to the  g r a d e b a r l e y and  uni-  q u a l i t y of t h i s  feedgrains  of these  and  factors  finishing  how-  stalk,  silo  c o n s t i t u e n t s i n the  feed  a  feeding,  s i l a g e d o e s become an  that are  Columbia,  g r a i n to corn  placed  feed  out,  c o u l d be  of  the  the  carried  British  concentration  being  grown i n  some o f  i n d u s t r y , feed grains probably  Vancouver  and  research  Farm a t A g a s s i z ,  benefit.  i s increasing  silage  to replace  f u r t h e r t o improve t h e  market c o n d i t i o n s are supply  of corn  ration  However, e v e n i f c o r n  main i m p o r t a n t  land  of the  researched  feedstuff  land  r e q u i r e d energy  percentage of corn  in production  being  arable  point that there  use  f a c t o r i n i n c r e a s i n g the  moisture content  ly  The  feed  Dominion E x p e r i m e n t a l  been o f  ever,  i n the  i n the  grain requirement. the  weather c o n d i t i o n s  area.  being  by  The  hope o f p r o v i d i n g t h e  interest and  feed g r a i n s .  economic a l t e r n a t i v e s f o r the  inhibit  within  of  regions  of  pro-  the  Dominion. Although  the  statistics  as  to the  grains  i n the  fed beef i n d u s t r y are  not  of  supply  of  area  the  derived  from the  feed grains records  to the  of the  disappearance of a v a i l a b l e , an under study  Canada L i v e s t o c k F e e d  feed  indication can  be  Board.  52 Feed g r a i n s or  transported  by  that are rail  the  feed  elevator  the  of a p r e s c r i b e d  i s administered  by  the  Most  of  areas  i n the  except  Canada Wheat B o a r d . provinces  does n o t  The analyzed  from the  represented  supply.  A l l grain that i s  f o r some d e s i g n a t e d The  feed g r a i n that  areas, is  comes  transported  come u n d e r t h e Wheat B o a r d . Peace R i v e r  Prairie  Block  The  to the  area  grain transported  into  provinces  under the  Canada  jurisdiction. movement o f by  using  of the  into  grains  into  tonnage o f  provided.  figures.  the  Columbia west of the  area  The  the  Fraser  f e e d g r a i n on  It i s considered  f e e d g r a i n moving  i n these  b a r l e y moving  feed  the  a s s i s t a n c e was  percent  B.C.  of  i s lower p r i c e d than feed  Columbia  Wheat P o o l  100  for  facilities  study  freight  f o r a subsidy policy  Columbia  w i t h i n B.C.  8  f e e d g r a i n moved f r o m t h e  be  areas  British  t h r o u g h c o m p a n i e s t h a t have g r a i n  the  British  The  into  g r a i n i s marketed  under the  under  rail  Canada L i v e s t o c k F e e d B o a r d .  moved i n t e r p r o v i n c i a l l y ,  within  eligible  ton of m a t e r i a l .  Crown C o r p o r a t i o n ,  by  from d e s i g n a t e d  domestic consumption are amount p e r  shipped  into  the  area  Valley which that would  can  feed almost be  t o n n a g e o f wheat, o a t s ,  under study  Rocky M o u n t a i n s a r e  9  and  that area  reported  of  and  British  i n Appendix  I  T h e Canada L i v e s t o c k F e e d B o a r d was i n c o r p o r a t e d i n 1966, for a comprehensive d i s c u s s i o n of feed f r e i g h t a s s i s t a n c e i n Canada; see T.C. K e r r , An E c o n o m i c A n a l y s i s o f t h e F e e d F r e i g h t Assistance Policy. A g r i c u l t u r a l Economics Research C o u n c i l of Canada, O t t a w a , 1966. 8  O a t s i s i n c l u d e d i n the Table because i t i s of importance i n the p r e l i m i n a r y f e e d i n g p e r i o d . I t i s n o t u s e d commonly i n the l a t t e r p a r t o f the f e e d i n g p e r i o d because of i t s lower energy value. 9  and  Appendix It  J.  is interesting  domestic requirements bia  increased  the  British  percent.of was  by  consumes 98 percent  percent  imported  was  2.8  from the  percent  percent  Prairie  o f t h e wheat, 83  b a r l e y on  which feed  Canada F e e d L i v e s t o c k  able  freight  Board  to provide o f the  area  percent  Colum-  1963-64,  I t can  under  of the  9.8  increase  Provinces.  the  the  British  i n 1964-65 o v e r  Peace R i v e r B l o c k only  I that while  i n southern  f i g u r e s i n Appendix J t h a t  of the  under the  grains  12.6  increase while  needed t o be  seen from the  f o r feed  at least  Columbia the  to note i n Appendix  be  study  oats,  and  95  s u b s i d i e s were p a i d  i n the  fiscal  year  1964-  65. Relative feed  to the  fed beef  g r a i n requirements w i l l  grains production  i n the  is  personnel  a n t i c i p a t e d by  of A g r i c u l t u r e t h a t the area w i l l ficiency only  increase  feed grains feedlot  and  as  ments t h a t a r e transported  British  the  p r o p o r t i o n of the  British  of grains  i n the  feed  Columbia  years  grains  i n the  from the  area total  by  ahead  feed g r a i n s to the  Prairie  s i n c e the  feed  feed  Provinces  Block.  1 0  .  It  River  The  occur  deis  p r i c e of  grain require-  can  be  efficiently  p o r t of  small  Vancouver.  A . J . A l l a n , Second A p p r o x i m a t i o n Report - Peace R i v e r D i s t r i c t , B r i t i s h Columbia Department o f A g r i c u l t u r e , V i c t o r i a 1966, mimeographed. 1 0  the  Lower M a i n l a n d  g r a i n movement i s a  g r a i n movement t o t h e  the  feed  Peace  d i s c o n t i n u i t y i t causes i n the of  that  Department  that could  I t i s a n t i c i p a t e d t h a t any  needed  to the  of the  of the  i n the m a j o r i t y ,  Columbia Peace R i v e r  production  availability  operator.  be met,  significantly  or oversupply  important  i n d u s t r y i t i s expected  54 The  availability  of protein  and  mineral  industry.  Relative  conditions  i t does n o t  of  to  the  should  in size,  industry in  the  are  present An  9 would tuate the  only  these  a part  it  over the  greatest  oats  decline  level  the  oats  a higher  grain  feedlot assets  classes  firm.  s u c h an  and  (2)  cattle  and  in  beef  in  Figure  not  flucfall  barley  1962.  oats  to  that  the  Peace signifi-  It is  inter-  prices  and  of  barley has  feed  have  shown  grade  in contrast  The  prices  Columbia  i n d i c a t e d by  of  barley to  1963,  1967.  CAPITAL are  needed feed  and  British  relative  p r i c e than b a r l e y  fed  i n the  Feed grade o a t s  extent  these  months e v e r y y e a r .  pellets,  i n p r i c e and  industry  economy.  a c t u a l d o l l a r s the  1963-67 p e r i o d .  an  commodities  f e e d s t u f f s do  to August  screening  Funds a r e  local  grade oats  is clearly  of c a p i t a l  these  season although  feed  III. Two  the  f o r a few  i n terms o f  r i s e n i n p r i c e to  had  of  the  the  beef  Island  that handle  needs o f  u n a v a i l a b i l i t y of  and  increase  quality fed  e x i s t i f the  grain p r i c e s presented  i n p r i c e s f r o m May  screenings,  has  total  from season t o  p r i c e s do  to note that  increased the  the  p r i c e s of  barley  to the  requirements of  the  increases  grain  the  indicate that  i n the  and  Vancouver  facilities  feed  region  esting  of  the  a g r i c u l t u r a l sector of  w h i c h i s c a u s e d by  cant  since  the  discontinuity  and  supplements w i l l  a n a l y s i s of  year the  River  Lower M a i n l a n d  e x i s t and  significantly  quantity  a p p e a r u n r e a s o n a b l e t o assume t h a t  of  commodities a l r e a d y  appropriate  supplements i s important  adequate supply increase  the  required  i n the  f o r investment during  the  in  period  operation (1) of  long  feedlot  of term  a  P r i c e o f Number One G r a d e G r a i n S c r e e n i n g s P r i c e o f Number One G r a d e F e e d O a t s P r i c e o f Number One Grade F e e d B a r l e y 1962  63  64  65  66  Years FIGURE 9 J  TREND IN MONTHLY FEED GRAIN PRICES AT BRITISH COLUMBIA 1 9 6 2 - 6 7 a  See A p p e n d i x K f o r s o u r c e s o f i n f o r m a t i o n .  VANCOUVER  67  operation capital one  within  year  i n the  form o f  The  capital  produced.  icantly barns, ticular  with  be  storage  barns,  i n the  the  s h e d s , and  higher  center  will  Bank.  financial long  cost of  cheaper than the  to assets will  the  not  of on  utilize  pasture  the  sheds, a l l o w s  constructed investment and  prosignif-  the  assets  par-  to  a  feedlot structures s u c h as  "overhead  facilities  "slotted feed  lane"  feeding.  term l o a n  field and  funds from the  funds from from o t h e r  priority  which funds w i l l  be  policies  his indi-  the  Crown  Industrial  to the  Development  Farm C r e d i t C o r p o r a t i o n  differ  as  loaned. of  the  two  b r e v i t y the  institutions  are  the  to e l i g i b i l i t y For  feed-  Corporations  D e v e l o p m e n t Bank, however,  institutions  summarize t h e  the  new  firms.  top  are  the  or c o n s t r u c t  loans  lending  i n t e r m e d i a r i e s of  Industrial two  u n i t of  o f unused d a i r y  in capital  funds through  Farm C r e d i t C o r p o r a t i o n  policies  direct  land, buildings,  f o r beef c a t t l e  or e s t a b l i s h e d f i n a n c i a l  The  than  investment v a r i e s  have t o e i t h e r p r o v i d e  acquire  f i r m i n the  the  the  i n d i v i d u a l wishes to purchase e s t a b l i s h e d  he  -  of  less  other  existence  lanes"  facilities,  lot  The  capital  increase h i s present  Two  and  of  flax drying  facilities,  viduals  nature  capital  under study.  "enclosed  Whether t h e  or  feed  small or q u i t e l a r g e per  have b e e n c o n s t r u c t e d  source  f o r a p e r i o d of  cattle,  Alternatively specially  structures  own  up  t o keep h i s i n v e s t m e n t  significantly  floor"  very  s i z e of  area  operator  minimum.  tied  f e e d l o t w h i c h does n o t  required  The  i n the hay  be  60-70 p e r c e n t  program.  equipment can  duct  Approximately  feeder  expenses i n the  i t s feeding  and  year.  requirements w i l l  operating in  the  and writer  because  easy access person  to o f f i c e r s  these  institutions  interested in acquiring financial  nancial  institutions  d e p e n d i n g upon t h e  will  loan  policies  Whether o r n o t the  of  the  requirements of the  i s afforded  information.  funds f o r long  of the  particular  existing  industry  term  to  any  Other f i -  commitment  institution.  institutions  are  adequate f o r  i s a d i f f i c u l t question  to  answer. The  importance o f the  noted e a r l i e r the  short  i n the  short  chapter.  term requirements of  veterinary  s u p p l i e s and  penses through  i t s own  funds through loans  ies  and/or i n d i v i d u a l  feed  finance  feeder  cattle,  labor,  medicines,  from the  and  cattle  and  Chartered the  The  feed  then i t w i l l vendors,  i s to acquire  balance  feed  company.  The  feed  companies v a r y  feed account payable without  the  funds to  occasion, The  particular  worthiness of  intermediar-  finance  feeder  feeder  in their  a penalty.  seven to t h i r t y  c a r r y the  of the  expense t h a t w i l l  feed  penalty.  financial  acquire  days but  a c c o u n t f o r up  cattle not  policy The the  be  of  feeder of  the  expense  and  b o r n by  the  company and  the  f e e d l o t f i r m and  of  companies  will  t o n i n e t y days w i t h o u t  volume o f b u s i n e s s , the  the  non-penalty  l e n g t h o f r e p a y m e n t p e r i o d a p p e a r s t o depend feed  and  repayment  usual feed  a l l the  cattle  a c h a t t e l m o r t g a g e f r o m one  respective  on  have t o  ex-  investors.  Banks f o r t h e  i s from  hired  common p r a c t i c e i n f i n a n c i n g t h e  p r o p o r t i o n of the  period  feed,  equipment o p e r a t i n g  expenses except a p r o p o r t i o n of the  expenses.  was  f e e d l o t f i r m cannot  Most f e e d l o t f i r m s have s u f f i c e n t variable  requirements  I f the  resources,  the  term c a p i t a l  a  upon  credit  a s s o c i a t i o n of the  feed-  58 lot  firm with  the  feed  Alternatively feeding  cattle  which feeder the  on  cattle  pound o f b e e f g a i n  f e e d l o t f i r m charges the  charges the  cost of  of time the  cattle  short  e x i s t s an  of r i s k  feed plus being  fed  i n the  to other  firms of  equal  The  question  requires  f u r t h e r study  further  evaluated  status of  the  and  i n d u s t r y so t h e  risk  outside  the  investor,  f o r the  i n the  duration  field  firm given  fed beef  relative  of  i n d u s t r y , i s whether  the  quan-  degree  i n the  to the the  the  f i r m i n compari-  uncertainty  economy.  fed beef i n -  question  i s r e q u i r e d as and  fee  feedlot firm  economy and  C o l u m b i a ; however, b e f o r e more i n f o r m a t i o n  by  feedlot.  fed beef  funds a v a i l a b l e i n the  in British  (b)  funds to the  risk  the  investor a contracted  i n the  term funds t o the  operation  common methods, i n  o f paramount i m p o r t a n c e  uncertainty present  the  a yardage fee  son  dustry  two  f e e d l o t , or  optimum f l o w o f  loanable and  i n the  the are  question  adequacy of  of  The  o w n e r s h i p i s r e t a i n e d by  per  tity  feedlot firm finances  a custom b a s i s .  (a)  there  1 1  the  are  The  company .  to the  u n c e r t a i n t y can  be  can  be  economic evalu-  ated.  IV.  The t i o n o f the report.  type  MANAGEMENT AND  o f management and  LABOR  labor required  f o r the  f e e d l o t f i r m were c h a r a c t e r i z e d i n C h a p t e r  It will  management and  be  assumed t h a t t h e  labor w i l l  not  be  opera-  II of  the  a d e q u a c y o f good q u a l i t y  a d e t e r r e n t t o the  increase  of  I n f o r m a t i o n acquired through personal conversation with t h e C r e d i t Managers o f t h e t h r e e l a r g e s t f e e d c o m p a n i e s d o i n g business i n t h i s area. 1 1  59 the  local  with  the  Alberta  fed beef area  and  from a d j a c e n t  provided  dustry w i l l to  or  the  use  A and  that  1966  THE  areas  i n the  i s e q u i t a b l e to the  capacity cant  fed beef i n -  hired labor a return alternatives available  resources.  A V A I L A B I L I T Y OF  report  1 2  by  Mr.  SLAUGHTER F A C I L I T I E S  H.L.  Ford,  i n d i c a t e s that at present  i n the  local  proportion of  packing  Supervisor,  the  local  slaughter  from o u t s i d e  appear u n r e a l i s t i c  t o assume t h a t t h e  ties  will  industry present  be  s i z e or  future should increase  in  In r e t r o s p e c t , t h e r e deficiency  i n the  i n c r e a s e of the  vided  the  their  fed beef  the  Production  fed beef  In a d d i t i o n , a  slaughter signifi-  c o n s t i t u t e s animals  province.  that  Thus i t d o e s  necessary  fed c a t t l e  slaughter  produced  by  not  facilithe  local  fed beef i n d u s t r y remain at i t s  does n o t  a p p e a r t o be  q u a l i t y of  input  i n d u s t r y i n the  feeding process  Before  i s excess  size.  q u a n t i t y and  opportunity  ment p e r i o d .  the  a v a i l a b l e to process  i n the  there  industry.  h a v e been i m p o r t e d  at  local  or  M a r k e t i n g B r a n c h , Canada D e p a r t m e n t o f A g r i c u l t u r e , a t Van-  c o u v e r , B.C.,  an  facilities  o f Washington S t a t e  t h e manager a n d / o r t h e  of h i s  V.  adequate e d u c a t i o n  t h a t employment  provide  his resources  for  industry given  can  p r i c e s and  cover  evaluating  the  serious  f a c t o r s to  deter  Lower M a i n l a n d  employ t h e full  any  factor  c o s t s over the  financial  aspects  pro-  inputs invest-  i t is  F e e d Q u a l i t y Sub-Committee R e p o r t , Ruminant N u t r i t i o n Committee M e e t i n g O c t o b e r 2 6 t h , 1966, P e n t i c t o n , B.C., P. 37, mimeographed. 1 2  60 deemed i m p o r t a n t t o d i s c u s s present  f e d beef  t h e s t r u c t u r e and c o n d u c t  industry within  t h e Lower  Mainland.  i n the  61  CHAPTER V STRUCTURE AND  CONDUCT IN THE  FED  It  i s the  structure that can  the  and  financial  which e x p l a i n the  Valley  to the  Although the  heifer  and  when a s i g n i f i c a n t tory,  the  t o be  due  grazing  the  Industry  chapter  causal  factors  population  on  were k e p t  above  of c a t t l e  number o f  kept  i n the to  low  beef  June 1st  15,289 i n 1 9 6 6  increase  i n the  farms to produce f e e d e r  operators  who  2  cattle  indiyear  inven-  beef  heifer  i s contended  number o f  firms  for their  f e e d l o t s or a c t u a l l y f i n i s h i n g  supplemented with  the  in cattle  s t e e r and  Fraser  for milking  a t a time w i t h i n  f e e d l o t s are  increase  i n the  the  own  cattle  on  dry f e e d s t u f f s .  purchase feeder  cattle  only  to graze  Canada Y e a r b o o k  D o m i n i o n B u r e a u o f S t a t i s t i c s , 1966 C e n s u s o f Volume 5, P a r t 3 (Ottawa: Queens P r i n t e r 1968) . 2  so  next  i n d u s t r y i n the  beef c a t t l e  Dominion Bureau of S t a t i s t i c s , Printer).  1  to the  c e n s u s f i g u r e s t a k e n on  significant  f o r other  The  few  2938 head i n 1951  to the  grass  Queens  from  cattle  feedlot,  of the  steer population  significant  population  Beef  present  region.  in proportion  the  i n d i c a t e the  i n d u s t r y i n the  in relation  characteristics  very  1  to  F r a s e r V a l l e y Fed  conceived  Historically,  purposes . cate  i n the  chapter  a n a l y s i s of the  be m e a n i n g f u l l y  geographical  BEEF INDUSTRY  purpose of t h i s  conduct  FRASER VALLEY  the  (Ottawa: Canada,  cattle  on  included  grass  and  sell  the  i n the  analysis.  young c a t t l e on  g r a s s and  the  i n a dry  I. The  the  that  are  at  his two  single  of  the  polar  i s o n l y one  the  the  the  centered  the  in all  In  firm.  the  the  part  on  the the  price  economic a c t i v i t i e s  f i r m may  of  the  when t h e  to  of  the  the  explained,  fattening  in  the  largely,  complement o f  resulting  polar  feedlot  resources  on the  extremes of  one is  to  firm  the  hand the  beef  i n which  activities  to p r o f i t  maximization of Thus t h e  activity  beef the  the  maximization of  the  feedlot  feeding firm  profit  within  emphasis o f  from  re-  multi-enterfirm's  i n the  different  types are  are  from  complement o f  same r e s o u r c e s  of  total profits  margins i n the  firm.  i n an  feed  s u b - a c t i v i t i e s of  the  on  case a l l s u b - a c t i v i t i e s  contribution  feed  the  are  economic a c t i v i t y  maximization of  and  to  of  t o t a l economic  first  feedlot  contribute  firm;  two  the  be  multi-enterprise  i n a d i f f e r e n t manner t h a n t h e  enterprise  purchase  operation  conversion of  largest  a l l p r o b a b i l i t y centered  prise  types of  can  and  the  second case the  sources a v a i l a b l e  fit  operator  In  creating  summation o f  program.  industry  o t h e r hand t h e  p e r f o r m e d by  f i r m by  and  f i r m whose o n l y  the  the  or  be  fatten  then complete the  extremes i n s i z e s  on  of  feedstuffs  who  not  disposal.  p r o d u c t and  are  firms  will  FEEDLOT ENTREPRENEURS  i n f e e d e r c a t t l e and  feedlot  the  firms  discussed.  THE  feedlot  enterprise  investment  firm  be  great d i v e r s i t y i n sizes  The the  balance of  p a s t u r e and  OBJECTIVES OF  objectives  feedlot  supplemented  lot will  Lower M a i n l a n d b e e f by  The  c a t t l e , g r a z e them on  process  c a t t l e to  pro-  single objectives  contrasted.  63 The  commercial  feedlot will  l a b o r , management, b u i l d i n g and posal the  Within  the  t o have t h e i r  f i r m , the  highest  eration.  There w i l l  resources  at d i f f e r e n t  lot  type  within  a t the  the  capital, use  l a b o r and  i n cash  crop  the winter  of the  other  use  capital,  at i t s d i s -  i n the  year.  p o l a r e x t r e m e has f o r the  find  one  year.  This  type  and  thus the  their  summer  only  be  and  cattle  is self  during not  the  labor, evident,  growing  have  the seasons  feedlot i s confined  and  the  silage  hay  Another  silage  can  i n the  be  utilize  firm.  used along  Cull  in  the  impressed heavier  by-  feeding  potatoes  with  the  grown f o r b e e f p r o d u c t i o n ,  r a t i o n of  f a c t o r was  the  income o f t h e  silage,  feed  operators  They e m p h a s i z e d  net  or  or corn  b a s i s of the  feedlot  e n t e r p r i s e s which i t can  i n c r e a s e the  t u r n i p s , pea  grass  to  period.  from o t h e r  to  the  entertained  I n a d d i t i o n , t h e m u l t i - e n t e r p r i s e f i r m u s u a l l y has products  term  season of  t h r o u g h o u t t h e wet  of the  feed-  best  s h o r t term c a p i t a l ,  o f o p e r a t i o n may cattle  the  Short  highest  growing  feedlot only  operation  for  op-  o r more e n t e r p r i s e s  Another case t h a t  pasture  consid-  feeding  same r e s o u r c e s .  months when s u r p l u s  of the  beef  be  In c o n t r a s t the  throughout the  available.  will  within  e n t e r p r i s e s competing  times of the  buildings for feeding  year  drier  best  fed beef e n t e r p r i s e w i l l  operation  season of the  the  land  above r e s o u r c e s  management may  management a r e  necessary  no  production  during  the  and  f i r m t h a t compete  Thus t h e  is  be  other  year.  and  e q u i p m e n t , and  the  i n t h e most e f f i c i e n t manner t o m a x i m i z e p r o f i t s  year.  ered  endeavor t o use  hay,  to  form  the  farm  fed beef e n t e r p r i s e . upon t h e w r i t e r by  soil  zones w i t h i n t h e  i m p o r t a n c e o f t h e ' c a t t l e manure,  valley.  produced  64 in  the f e e d l o t , f o r crop land.  that  The o p e r a t o r s  expressed  t h e view  t h e m a j o r b e n e f i t o f t h e a d d i t i o n o f t h e manure t o t h e l a n d  was  i n t h e b e t t e r m e n t o f t h e p h y s i c a l s t r u c t u r e o f t h e heavy  for  cash crop production  nutrients,  and p a s t u r e r a t h e r  w h i c h w o u l d a l s o be r e a l i z e d .  far  as t o e x p r e s s t h e view t h a t  ing  cattle  for  the cash crops,  farm  was t o i n s u r e  Some o p e r a t o r s  ing" .  operators  t h e m a j o r r e a s o n t h e y were  feed-  o f manure  w h i c h i n most c a s e s f o r m e d t h e b a s i s  varied  Some o p e r a t o r s  of their  extremes t h e o b j e c t i v e s  f r o m hobby f e e d i n g  expressed  of the  to "retirement  the view t h a t  their  feed-  cattle  feed-  e n t e r p r i s e was more o f a hobby t o them t h a n a b u s i n e s s  prise per se. enterprise  Other operators  felt  that  the feeding  they f e l t  i t advisable  the market value increased  The  until  from a c t i v e l i f e  forindustrial  such  time  altogether or  or housing  purposes,  THE FRASER VALLEY FEEDLOTS  of Feedlots  s i z e s and t y p e s o f f e e d l o t s a r e i n d i c a t e d i n T a b l e V:. ,  commercial  feedlot i s defined  of the firm e n t i t y while  on p a r t It  o f b e e f was  significantly.  T y p e s and S i z e s  being  to retire  o f the land,  II.  activity  enter-  t h a t was most s u i t a b l e t o t h e u s e o f t h e i r o l d  d a i r y b a r n s and l a n d w h i c h t h e y were m a i n t a i n i n g  The  went a s  operation.  feedlot  an  than the a d d i t i o n o f  t h e y had an a d e q u a t e s u p p l y  I n b e t w e e n t h e two p o l a r  ing  soil  as b e i n g  the only  economic  t h e f a r m f e e d l o t i s d e f i n e d as  of a multi-enterprise  firm entity.  i s i n t e r e s t i n g t o note that only  twelve percent  of the  TABLE V TYPES AND  SIZES-OF BEEF FEEDLOTS IN THE FRASER VALLEY - 1966-67 ESTIMATED  TYPE  UNIT CAPACITY  20-50 51-100 101- 250 251Commercial d r y l o t  1  3  2  C o m m e r c i a l d r y l o t and p a s t u r e  1  6  2  6  2  Farm d r y l o t  1  (NO. OF HEAD -- YEARLINGS) 5  0  0  12001000 2500 2  Total Lots  Percent of Total Lots  10  18  9  16  1  10  18 48  2  Farm d r y l o t and g r a s s  12  8  2  3  1  1  27  Total  13  10  17  9  3  4  56  23  18  31  16  5  7  feedlots  Percent  of total  Source:  feedlots  Primary  d a t a c o l l e c t e d by  100  writer.  un  estimated greater  total  than  number o f f e e d l o t s  500  head.  It i s also  percent of the estimated t o t a l an  integral part  source  i n the  preparation estimate  the t o t a l  sizes of feedlots,  addition  from  w e a t h e r and  Location  season  market  of the  Figure  capacity  i n any  one  and  on  indicates  the l o c a t i o n of fed beef  i n 1966-67.  operating  I t c a n be  feedlots  seen t h a t  are s i t u a t e d  that  are located  Valley  located  in  to  that changing  except  f o r 2 commercial  i n t h e Haney a r e a .  the commercial  feedlot  in  23 o f t h e  The  and  56 and  balance  southern  feedlots  In a d d i t i o n ,  feedlots  i n the Delta  on t h e more f e r t i l e  feedlot  to  types  feed  y e a r t o y e a r due  of  the F r a s e r  in  year f o r  of the d i v e r s i t y of  i n number o f c a t t l e  as  feedstuff  indeed d i f f i c u l t  a d j a c e n t t o Vancouver.  feedlots  pasture  as e v i d e n c e d by t h e above t a b l e ,  to season  64  out" c a t t l e  Richmond a r e a s , i m m e d i a t e l y the  that  Feedlots  10  total  for  "growing It.is  use  of  conditions.  t h e Lower M a i n l a n d estimated  stage.  because  to the f l u c t u a t i o n s  can occur  process either  estimated unit industry  i n t e r e s t i n g t o note  phase o r  f o r the f i n i s h i n g  t h e Lower M a i n l a n d and  finishing  capacity  number o f f e e d l o t s  of the feeding  final  have a u n i t  side  of  one  farm  i t c a n be  seen  o p e r a t i o n s are spread throughout  the  Valley. Supply try. from  An  from  the Fraser  i n d i c a t i o n of the s e a s o n a l i t y  the l o c a l  tained  of f e d beef  from  f e d beef  an a n a l y s i s  industry  Valley  fed beef  indus-  of the supply of fed beef  t o t h e l o c a l m a r k e t c a n be  of the o r i g i n  of f e d beef to the  ob-  federal-  FIGURE 10 LOCATION The a b o v e s k e t c h  OF BEEF FEEDLOTS IN THE FRASER VALLEY REGION i s n o t drawn t o s c a l e .  1966-67  68 ly  inspected  slaughter  of  the l o c a l  supply.  plants.  Table  V I i n d i c a t e s a breakdown  A l t h o u g h t h e f i g u r e s do n o t g i v e  summation o f t h e f e d c a t t l e  produced  by t h e l o c a l  t a b l e does i n d i c a t e t h e time o f year t h e m a j o r i t y are marketed. cially  The o r i g i n  inspected  plants  of the fedc a t t l e  a complete  industry, the of the cattle  received  at provin-  are not a v a i l a b l e .  TABLE V I CHOICE AND GOOD GRADE CATTLE RECEIVED BY THE MONTH AT FEDERALLY INSPECTED PLANTS IN THE LOWER MAINLAND REGION - 1966-67 1966  PRODUCTION AREA  Month  Fraser Valley  Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.  1600 1529 1827 1288 1492 1316 610 406 1051 1039 14 70 2095  7 3 4 3 10 2 3 1 11  Total  a  Vancouver Okanagan Kamioops C a r i b o o Island  2 13  112 94 129 131 83 127 43 13 45 29 20 46  133 263 349 200 164 84 20 84 275 115 366 161  15723  59  872  1929 1990 2539 2697 1232 1026 580 633 782 1182 2254 2156  10 1 5  19000  20  Peace , Total River  50 52 1 27 52 67 21 28 99 110 63 46  153 79 13 17 35 20 18 60 0 24 103 0  2055 2020 2323 1666 1836 1616 715 592 1481 1317 2024 2361  2214  616  522  20006  158 52 85 158 121 43 59 103 24 44 88 136  176 161 309 71 97 73 8 93 78 46 349 180  16 5 37 11 30 22 23 1 52 41 77 142  139 204 183 111 119 93 36 100 80 51 44 108  2428 2413 3128 3048 1599 1257 707 930 1018 1365 2812 2722  1071  1641  457  1268  23457  c  1967 Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Total  1 2 1  &  e  69  TABLE V I  (continued)  Source: L i v e s t o c k P r o d u c t i o n and M a r k e t i n g Canada D e p a r t m e n t o f A g r i c u l t u r e , V a n c o u v e r , B.C.  Branch  Records,  Some o f t h e f e d c a t t l e w i l l have been f i n i s h e d i n o t h e r a r e a s o f B r i t i s h C o l u m b i a a n d s h i p p e d t o t h e Lower M a i n l a n d t o be s o l d by p u b l i c a u c t i o n . The number o f f e d c a t t l e o r i g i n a t i n g f r o m o t h e r a r e a s a n d s o l d i n t h e Lower M a i n l a n d a r e a i s n o t available. a  ^The f e d c a t t l e s l a u g h t e r e d i n t h e Okanagan a r e assumed t o be consumed i n t h e a r e a and a r e n o t i n c l u d e d i n t h e f i g u r e s . The r e p o r t e d number o f Canada C h o i c e and Canada Good g r a d e c a t t l e s l a u g h t e r e d i n t h e Okanagan i s n i l f o r 1966 and 109 h e a d i n 1967. T h e r e l a t i v e l y h i g h f i g u r e i n November i s due t o t h e Kamloops F a t s t o c k show. Some o f t h e c a t t l e r e p r e s e n t e d i n t h i s f i g u r e w o u l d have been f i n i s h e d elsewhere. c  The f e d c a t t l e s l a u g h t e r e d i n t h e P e a c e R i v e r a r e a a r e assumed t o be consumed i n t h e a r e a and a r e n o t i n c l u d e d i n t h e figures. The r e p o r t e d number o f Canada C h o i c e a n d Canada Good g r a d e c a t t l e s l a u g h t e r e d i n t h e P e a c e R i v e r a r e a was 225 h e a d i n 1966 and 280 head i n 1967. T h e f e d c a t t l e s l a u g h t e r e d i n Lower M a i n l a n d provincially inspected slaughterhouses are not reported i n the f i g u r e s . A l t h o u g h t h e o r i g i n o f these f e d c a t t l e a r e n o t a v a i l a b l e , t h e numb e r o f Canada C h o i c e and Canada Good g r a d e c a r c a s s e s amounted t o 3292 h e a d i n 1966 and 2585 head i n 1967. The d e c r e a s e i n number of f e d c a t t l e slaughtered i n p r o v i n c i a l l y i n s p e c t e d p l a n t s i n 1967 as c o n t r a s t e d t o 1966 i s a r e s u l t o f some o f t h e 1966 p r o v i n c i a l l y i n s p e c t e d p l a n t s coming under F e d e r a l i n s p e c t i o n i n 1967. e  70 Cattle  P u r c h a s i n g and M a r k e t i n g  The firms It  size  and c l a s s  Policies  of feeder animal purchased  i n t h e Lower M a i n l a n d r e g i o n  i s noted  chased  that  yearlings  purchased  are indicated  by  feedlot  i n Table V I I .  approximately 82 percent of the f e e d l o t s  pur-  as c o n t r a s t e d  which  t o 18 p e r c e n t o f t h e f i r m s  calves. TABLE V I I CLASS AND  S I Z E OF FEEDER ANIMAL PURCHASED BY THE FEEDLOTS* 1966-67 2  CALF  YEARLING Steer  Heifer  9%  Heifer Steer 500700800 l b s 400700850 l b s 700 l b s 850 l b s and o v e r 700 l b s 800 l b s and o v e r 24%  9%  8%  18%  The  The  feedlots  op. c i t .  with the s i z e o f the feed-  It i s interesting  t o note t h a t the  cattle  through  auction  t e n d t o do more o f t h e p u r -  ranches.  l e n g t h o f t i m e t h a t e l a p s e s between t h e t i m e o f p u r -  and t h e t i m e o f s a l e v a r i e s  feedlots period  from  differs  operators purchase  However, t h e l a r g e r  chasing d i r e c t  chase  Questionnaire Analysis,  i n Table VIII.  majority of the feedlot  5%  48%  method o f p u r c h a s e  as n o t e d  sales.  10%  34%  G e n e r a l Management  lot  33%  2%  and s i z e s o f c a t t l e  significantly  purchased.  within  The a v e r a g e  types o f  feeding  i s e s t i m a t e d t o be between 100 and 150 d a y s a l t h o u g h some  heavy c a t t l e w i l l  o n l y be f e d f o r 60 d a y s and some l i g h t e r  f e d on p a s t u r e , and/or  s i l a g e may  be k e p t f o r up t o 340  cattle  days.  71  TABLE  VIII  CATTLE PURCHASING POLICY OF THE FRASER FED BEEF INDUSTRY 1966-67  Size Group (capacity of l o t )  CATTLE PLACE OF PURCHASER PURCHASE Oper - Commis- D i r e c t ator sion from Auction Agent Ranch Sales  No. o f Feedlots Sampled  VALLEY  No. i n Sample Size as a % of Group Total" 2  20-50  50  50  12  88  4  13  31  51-100  37  63  10  90  6  10  60  101-250  52  48  24  76  10  17  59  251-500  43  57  14  86  6  9  67  800-2500  59  41  49  51  6  7  86  Average  47  53  22  78  32  56  57  Source:  G e n e r a l Management  Questionnaire Analysis,  op.  cit.  is  The p e r c e n t a g e o f f e e d l o t s t o t o t a l r e p r e s e n t a t i v e f o r T a b l e s IX and X I .  estimated  feedlots  72 The  method o f  as  indicated  to  the  will  i n T a b l e IX.  p a c k e r , the  mined a t the be  sale of  the  I f the  p r i c e per  fed  cattle varies significantly  fed  animal  pound, i n most c a s e s , w i l l  f e e d l o t whereas i f i t i s s o l d  determined  at  the  i s sold d i r e c t l y  l o c a t i o n of TABLE  the  by  auction,  auction  be  deter-  the  price  sale.  IX  CATTLE MARKETING POLICY OF THE FRASER VALLEY FED BEEF INDUSTRY 1966-67 M e t Auction  h o d o f S a l e D i r e c t to Packer L i v e basis Dressed basis percent percent  S i z e Group (unit capacity)  Total percent  20  -  50  50  25  25  100  51  -  100  54  23  23  100  101  -  250  17  22  61  100  251  -  500  4  15  81  100  800  -  2500  17  17  66  100  28  20  52  100  •  Average  Source: G e n e r a l Management Q u e s t i o n n a i r e , op. c i t . In caseswhere the f e e d l o t o p e r a t o r s e l l s d i r e c t l y t o the packer on a d r e s s e d b a s i s ; t h e g r a d e s , on w h i c h t h e p r i c e was determ i n e d a t t h e f e e d l o t , w i l l be d e t e r m i n e d by a Government Grader a f t e r the s l a u g h t e r o f the a n i m a l i n the s l a u g h t e r h o u s e . Feedstuffs An  Used I n  the  Finishing  i n d i c a t i o n of  in  the  finishing rations  in  the  rations  at  l e a s t three  s o u r c e - and and  mineral  are  the  indicated  feedstuffs  a few  and  sources.  Two  variability the  Feeding  Process  feedstuffs  percentages of  Most r a t i o n s  fifteen  used  feedstuffs  energy, a p r o t e i n  as many as  feed  the  i n the  i n T a b l e X.  - an  included  Stage of  and  included  a mineral  different  c o m p a n i e s were s e l l i n g  used  a  nutrient prepared  73 TABLE X FEEDSTUFFS USED IN FINISHING RATIONS BY 28 VALLEY CATTLE FEEDLOTS 1 9 6 6 - 6 7  FRASER  a  Feed  Number o f O p e r a t o r s Feeding t h i s Percent of Total Ration Ingredient Range Average  Ingredient  Feed G r a i n s Barley Oats Screening Protein  pellets  28 1 7  40 -  85  10 -  45  68 .1 45. 30.1  Supp.  Commercial s u p p . Chicken l i t t e r Other  c  4 - 5  4.8 40. 5.  -  15  20 8 ;  40 20  12.1 30. 30 . 12.5 25.  17 1 2  Roughages L o c a l g r a s s hay Potatoes ^ Corn s i l a g e Pea hay Grass s i l a g e Other Other Energy Beet pulp Molasses Other Source:  7 3 3 3 7 1  !  i I  1  0  1  Feeds 11 12 2 G e n e r a l Management  6 - 10 3 - 5 4 - 7  9.3 4.7 5.5  Questionnaire, ibid.  ing  F e e d l o t s which used p a s t u r e i n t h e l a s t p e r i o d t h e c a t t l e were n o t i n c l u d e d i n t h e r a t i o n .  the  ^The f e e d i n g r e d i e n t s were c a l c u l a t e d t o t a l r a t i o n on a i r d r y b a s i s .  a  of  finish-  as a p e r c e n t a g e o f  Most o f t h e o p e r a t o r s t h a t u s e d a c o m m e r c i a l supplement u s e d t h e 32 p e r c e n t p r o t e i n s u p p l e m e n t w h i c h u s u a l l y c o n t a i n e d not o v e r 10 p e r c e n t e q u i v a l e n t c r u d e p r o t e i n f r o m u r e a . ^One o p e r a t o r had added 10 pounds o f U r e a #28 2 p e r t o n o f c o r n m a t e r i a l a t t h e t i m e t h e s i l o was f i l l e d i n t h e f a l l o f t h e year.  "complete" f i n i s h i n g r a t i o n which was f i n d i n g i n c r e a s i n g popul a r i t y i n the i n d u s t r y .  Most of the o p e r a t i o n s produced a l a r g e  p e r c e n t a g e o f t h e i r roughage r e q u i r e m e n t s and purchased the energy f e e d s , p r o t e i n and m i n e r a l supplements.  A few o f the  l a r g e r f e e d l o t s purchased t h e i r f e e d r e q u i r e m e n t s i n c a r l o a d l o t s e a r l y i n the h a r v e s t i n g season and i n as l a r g e a q u a n t i t y for  w h i c h they had s t o r a g e space.  None o f the f e e d l o t s had  s u f f i c i e n t s t o r a g e space t o purchase a l l t h e i r energy f o o d r e quirements i n the f a l l o f the y e a r , a l t h o u g h a s i g n i f i c a n t p r o p o r t i o n o f the f e e d l o t s purchased t h e i r roughage r e q u i r e m e n t s i n the  summer and f a l l o f the y e a r . L o c a l l y produced b y - p r o d u c t s such as c u l l p o t a t o e s , pea  hay, and s t i l l a g e a r e used by some o p e r a t o r s as i m p o r t a n t p a r t s of  the f i n i s h i n g  rations.  The degree o f v a r i a b i l i t y i n f e e d s t u f f s used i s no doubt due t o the v a r i a b i l i t y i n o b j e c t i v e s o f the e n t r e p r e n e u r s and the  available resources.  Bedding All for  of t h e f e e d l o t s u t i l i z e d wood s h a v i n g s and  bedding m a t e r i a l i n the f e e d l o t .  was wood s h a v i n g s . ly  sawdust  The m a j o r i t y o f the bedding  The p r i c e o f the s h a v i n g s v a r i e d  significant-  from season t o season and a l s o upon g e o g r a p h i c a l l o c a t i o n .  There appears t o be a s u r p l u s i n the s u p p l y o f s h a v i n g s i n the summer months and a s h o r t a g e d u r i n g t h e w i n t e r .  The p r i c e v a r i e d  i n the w i n t e r from $9.00 per 3 u n i t l o a d i n Ladner t o $24.00 per 3 u n i t l o a d i n the C h i l l i w a c k a r e a . no s h a v i n g s a r e a v a i l a b l e a t a l l .  At times during the winter  Most f e e d l o t s endeavoured  to  75 keep a s u p p l y and  of shavings  i n reserve  some f e e d l o t s e n d e a v o u r e d  tion of their  requirements  III.  The operating  f o r such  times  o f low  t o purchase a s i g n i f i c a n t  during  CATTLE OWNERSHIP  m a j o r i t y o f t h e f e e d l o t s were owned by t h e f i r m s the f a c i l i t i e s .  Only  four feedlot  operators.  facilities  s a l e o r use o f t h e p r o p e r t y  vidual sources  The f o u r t h r e n t e d t o be r e n t e d to operate The  the  feedlot  cattle  f o r a contracted price  indi-  had t h e n e c e s s a r y r e -  were p u r c h a s e d  i n t h e name o f  purchased  the feedlot operator p e r pound o f b e e f  advantages o f the area  by a  to  finish  gain.  for finishing  cattle,  regions o f the p r o v i n c e , are con-  t o be i t s p r o x i m i t y t o t h e l a r g e consumer m a r k e t and  slaughtering  facilities  or not these  special  necessary  capital  and t h e f a v o u r a b l e t e m p e r a t u r e s .  advantages a r e s u f f i c i e n t  resources  will  depend on t h e i r  beef  produced  areas.  by a p r i v a t e  pur-  SPECIAL ADVANTAGES OF THE REGION  as c o n t r a s t e d t o t h e i n t e r i o r sidered  pending  or i n d u s t r i a l  A few c a t t l e were b e i n g  contracted with  special  built  facili-  the f e e d l o t .  operator.  IV. The  f i r m s who  majority of the c a t t l e  s e c o n d p a r t y who the  f o r housing  f e e d l o t was  to other  were  Three o f the rented  t i e s were o l d d a i r y b a r n s w h i c h were i n t e m p o r a r y u s e  poses.  propor-  t h e summer months.  TYPES OF FEEDLOT AND  r e n t e d by t h e p r i n c i p a l  the  supply  effect  i n the area  These q u e s t i o n s  to a t t r a c t the  to increase the s i z e of the industry on t h e c o s t and v a l u e p e r u n i t o f  as c o n t r a s t e d t o o t h e r  will  Whether  be f u r t h e r e v a l u a t e d  alternative i n the next  76 two  chapters. V.  METHODS USED TO REDUCE RISK AND  The  risk  o f two t y p e s . cal  injury  and u n c e r t a i n t y One t y p e  UNCERTAINTY  i n the fed c a t t l e  i s that associated with  o f the animal  industry are  disease  i n t h e f e e d l o t and t h e o t h e r  t h a t due t o t h e f l u c t u a t i o n s o f t h e f e e d e r  cattle,  and  period.  f e e d s t u f f markets d u r i n g The  risk  of the f i r s t  livestock  insurance.  operators  are using  losses during  type  the feeding  The r e a s o n  process.  Table  t a b u l a t i o n o f the average expected c a t t l e  lot  and t h e d i s e a s e s  that are present  uncertainty  i s to vaccinate  p u r c h a s e o r upon a r r i v a l  is XI. low  do n o t  XI i n d i c a t e s  l o s s e s i n the feed-  i n the area  i n varying  from f e e d l o t t o f e e d l o t . A n o t h e r method o f r e d u c i n g  disease  they  i s no d o u b t due t o t h e i r low  the  extent  t h e use o f  t o note t h a t not a l l the  l i v e s t o c k insurance. coverage  type i s  fed cattle  c a n be hedged w i t h  I t i s interesting  have l i v e s t o c k i n s u r a n c e cattle  the operating  or physi-  f o r which there  sickness  the c a t t l e  type  o f r i s k and  e i t h e r at the place of  a t t h e f e e d l o t f o r t h e most are vaccines  by no means p r e d o m i n a n t The r e a s o n s g i v e n  the f i r s t  available.  prevalent  This practice  i n the V a l l e y as i n d i c a t e d i n Table  f o r not vaccinating p r i o r  or death losses or i f the p o l i c y  to feeding are  i s infrequent,  good w e a t h e r and t r a n s p o r t a t i o n c o n d i t i o n s a t t h e t i m e t h e c a t t l e were s h i p p e d  t o t h e f e e d l o t from i n t e r i o r  operators  have f o u n d  prevalent  with  problem with  from e x p e r i e n c e  poor t r a v e l l i n g  good t r a v e l l i n g  that  regions.  That  shipping  fever  c o n d i t i o n s and o f v e r y  conditions to the extent  i s , some i s more  little that  they  TABLE XI DISEASES ENCOUNTERED IN THE FRASER VALLEY FED BEEF INDUSTRY Number Number o f F i r m s R e p o r t i n g t h e F o l l o w i n g in Diseases Present^ f o o t p i n k lump Size shipping pneumonia rot eye jaw I B R Group fever  Size Group unit capacity  0 1  C  Average Death Losses (percentage o f yearly total cattle)  Shipping fever t r e a t ment b e f o r e shipping o r o n a r r i v a l (no. o f firms)  20-50  13  -  -  3  1  2  -  1.7  1  51-100  10  5  1  4  2  -  -  1.1  4  101-250  17  6  2  3  6  1  1  251-500  9  3  2  5  5  1  3  1.0  2  800-2500  7  3  3  6  4  -  1  1.0  5  56  17  8  21  18  4  4  5.65  16  30  14  37  32  7  7  1.0  28  Totals  Average f o r Total Feedlots(%)  Ringworm, w a r b l e s , ^ I n most c a s e s future  f o u n d e r and b a r l e y  .85  t o x i c i t y were a l s o p r e s e n t  t h e e x i s t i n g m e d i c i n e s were s u f f i c i e n t  This r e l a t i v e l y years.  new d i s e a s e  may  4  be on t h e i n c r e a s e  to cure  to a minor  extent.  the i l l n e s s .  and become more o f a p r o b l e m i n  ct Some o f t h e l a r g e r f e e d l o t s s h i p any c a t t l e t h a t become s i c k t h u s t h e i r d e a t h l o s s e s w i l l be v e r y l o w . The o p e r a t o r ' s e s t i m a t e o f t h e number o f c a t t l e t h a t w o u l d have been d e a t h l o s s e s was u s e d f o r t h e above t a b u l a t i o n s . -J  only vaccinate Risk purchasing year  and u n c e r t a i n t y o f t h e s e c o n d t y p e the required  balance  of their  facilities  i n the chapter  i tto their  o f the  until  i t is  the majority of  advantage t o purchase t h e  r o u g h a g e r e q u i r e m e n t s i n t h e summer and  have n o t f o u n d  rent  f e e d s t u f f s i n t h e summer o r f a l l  As i n d i c a t e d e a r l i e r  f e e d l o t s have f o u n d  but  c a n be hedged by  when t h e p r i c e s a r e l o w e r and s t o r i n g t h e f e e d  required. the  when c o n d i t i o n s a r e a d v e r s e .  i tof sufficient  fall  advantage t o c o n s t r u c t o r  t o s t o r e the e n t i r e requirements o f energy  feed-  stuffs. In t h e case o f adverse r e l a t i v e cattle of  and f e d c a t t l e m a r k e t s d u r i n g  the c a t t l e  ducing  the r i s k The  the  f u t u r e s market c o u l d o f a severe  hedge i n v o l v e s  C h i c a g o o r West C o a s t U n i t e d  time the feeder chasing the  futures contracts  selling involved futures  at  in re-  States  f u t u r e s c o n t r a c t s on Commodity M a r k e t s a t t h e  i n t h e f e e d l o t and t h e n  a t t h e time t h e c a t t l e  them  contracts are quite  i n purchasing  and s e l l i n g  separate cattle,  c o n t r a c t s a t the time the feeder  f e e d l o t guarantee the p r i c e margin the estimated  are finished  The  use o f t h e c a t t l e  cattle  are placed i n  be r e a d y  cattle  f o r market.  f u t u r e s m a r k e t t o hedge r i s k  g r e a t e s t b e n e f i t t o the f e e d l o t o p e r a t i o n which  and  sells  only  a few t i m e s a y e a r  and  the sale o f c a t t l e  the  cattle  i nthe  from the t r a n s a c t i o n s  f o r the f e d beef  time the f e d c a t t l e w i l l  puragainst  Although the transactions involved i n purchasing cattle  t h e use  p r i c e margin.  cattle  are placed  process,  c o n t r a c t s on t h e s p o t m a r k e t and d e l i v e r i n g  feedlot.  the  cattle  the feeding  a t t i m e s be o f m e r i t  negative  selling  f l u c t u a t i o n s i n the feeder  i sof  purchases  since the r i s k  of loss  of  income i s h i g h  transactions. to capacity  because o f the l e n g t h  In c o n t r a s t  a l l year w i l l  o f t i m e between m a r k e t  the feedlot operation be p u r c h a s i n g  which  and s e l l i n g  operates  cattle  almost  e v e r y week w h i c h w i l l  m i n i m i z e t h e income l o s s due t o f l u c t u a t i n g  cattle  most o f t h e F r a s e r  prices.  Since  operate a t capacity  a l l year,  Valley  i t i s possible  m a r k e t m i g h t be o f b e n e f i t t o them i n h e d g i n g of  adverse c a t t l e  f e e d l o t s do n o t  the c a t t l e against  futures  the r i s k  p r i c e f l u c t u a t i o n s w h i l e t h e f e e d l o t was i n  operation. In d i s c u s s i o n w i t h t h e f e e d l o t o p e r a t o r s tative  of a large  contracted interest  stock  many o f t h e f e e d l o t o p e r a t o r s  i n the V a l l e y , there i s  i n t h e u s e o f t h e f u t u r e s m a r k e t , however, few c o n t r a c t s Some r e a s o n s  s a l e s amongst t h e f e e d l o t o p e r a t o r s newness o f t h e c a t t l e  f o r low c o n t r a c t  i s contended  the necessary  opportunity feedlot  t o be due t o  f u t u r e s market, the absence o f a c a t t l e  f u t u r e s m a r k e t i n Canada, l a c k o f a v a i l a b l e s h o r t to c a r r y  represen-  b r o k e r a g e f i r m i n V a n c o u v e r , who has  have b e e n t a k e n o u t a s o f y e t .  the  and a  transactions,  term  capital  and p e r h a p s l a c k o f an  o f t h e f u t u r e s m a r k e t t o a c t a s a hedge f o r t h e  operator  i n t h e Lower M a i n l a n d .  80  CHAPTER V I THE PRODUCTIVITY FRASER The is  OF CAPITAL INVESTED  IN THE  VALLEY FED BEEF INDUSTRY  d i v e r s i t y i n s i z e s and t y p e s o f f e e d l o t  evidenced  i n Table V of the report.  It is difficult,  s u c h a d i v e r s i t y i n s i z e s and t y p e s o f o p e r a t i o n , a  financial  feedlots. ity  analyses  The w r i t e r w i l l  of capital  stitute  that w i l l  only  information  feedlots that w i l l Since  that  could  be a c q u i r e d  feeding  be a n a l y z e d  i t was n o t p o s s i b l e  were made by t h e w r i t e r  supervised tors.  The f i g u r e s t h a t  period.  The t y p e s and s i z e  to acquire  financial  subjective  a s t o what c o n s t i t u t e d  records.  by t h e w r i t e r  from t h e f e e d l o t  for  informatio  acquired  a realistic  mea-  f r o m t h e a n a l y s i s o f 17  The c o l l e c t i o n  i n cooperation are generated  feed  evaluations  of the records  with the feedlot  i n the following  do n o t p e r t a i n t o any one f e e d l o t i n e x i s t e n c e Valley  con-  o f t h e d i f f e r e n t t y p e s and s i z e s o f  s u r e b a s e d on t h e i n f o r m a t i o n financial  productiv-  are indicated i n Table XII.  to i n d i c a t e average parameters,  feedlot  f o r a l l the  b a s e d on t h e a n a l y s i s o f T a b l e V and t h e  f r o m an a d e q u a t e number lots  to structure  endeavour t o i n d i c a t e t h e  c o o p e r a t o r s o v e r t h e 1966-67 of  be r e p r e s e n t a t i v e  with  i n t h e t y p e s and s i z e s o f f e e d l o t s t h a t  the majority;  financial  facilities  was opera-  analyses  i n the Fraser  b u t a r e an i n d i c a t i o n o f t h e m a g n i t u d e o f t h e measurement  the s i z e o f f e e d l o t under a n a l y s i s .  I.  THE PRICE AND  FEED MARGINS  81  TABLE X I I FEEDLOT EXAMPLES TO BE ANALYZED Feedlot Example Number  Feedlot unit capacity (no. o f y e a r l i n g s )  Feedlot Type  Type o f Facilities  1  50  Farm  drylot  Converted  2  250  Farm  drylot  Specially constructed facilities  3  100  Farm d r y l o t and g r a s s  Converted d a i r y barn and p a s t u r e u s e d a s part of cash crop rotation  4  100  Farm d r y l o t and g r a s s  Converted d a i r y barn and p a s t u r e u s e d a s part o f cash crop rotation  5  500  Farm  drylot  Specially constructed facilities  6  500  Farm d r y l o t and g r a s s  Specially constructed facilities  7  See 5 and 6  See 5 and 6  See 5 and 6  Commercial drylot  Specially constructed facilities  8  1500  dairy  barn  82 I t was fed  illustrated  b e e f c a t t l e and  t o month and  year  conditions.  The  to  a large  be  generated  To  indicate  feed  to  i n the the  the  multiplying the  of  the  Since and  are  net  any  and  feedlot.  period  the The  cattle  the  price  paid  the  price  received  feedlot the  net  is  weight of  to  indicate  for  the  differ-  per by  unit the  calculated beef is  price  is  c a t t l e by  by  operator  the  o u t s i d e the  the  s m a l l o p e r a t o r can  p u r c h a s e and  sell  sis  and  lot  operator  for  placed  lagged_by margin.  subtracted  of  the  p u r c h a s i n g and  the for  control  feedlot the of  finished the  i n most c a s e s  c a t t l e on  s i m i l a r c a t t l e as  a common a n a l y s i s  the  the  feeder  probable  review of  report.  I I as  costs  i t i s highly  A  price  price.  forces  same p r i c e  will  year.  a  income g e n e r a t e d  since  1  the  will  feedlot  purchase p r i c e  o p e r a t o r and  1  i n the  of  feeder c a t t l e p r i c e  fed  the  time i n the  i n Chapter  lot  at  income t h a t  feeder c a t t l e purchase p r i c e  d e t e r m i n e d by  supply  Margin  defined  October  of  series,  six year period  in this section  price  feeding  prices  above p r i c e  income g e n e r a t e d over the  Price  the  The  the  February  operator  the  the  c h a n g i n g demand and  amount o f  p r i c e m a r g i n by  In o t h e r words t h e from the  the  a s s i s t in defraying  feedlot.  length  cattle  of  y e a r and  selling  into  p r i c e margin to  the  to  8 that  s i g n i f i c a n t l y f r o m month  operation at  p r i c e m a r g i n was  beef placed  into  feedlot  variability  e n c e between t h e  by  y e a r due  e x t e n t , determine the  Income G e n e r a t e d by  of  feeder c a t t l e vary  margin i s tabulated  The  7 and  r e l a t i v e changes i n the  operation during and  in Figures  the  difference  the  feedthat  same  larger between  bafeedthe  marketing p o l i c i e s of  the  83 the  selling  p r i c e and t h e p u r c h a s e p r i c e w i l l  be u s e d .  The  p r i c e margin a n a l y s i s f o r F r a s e r V a l l e y f e e d l o t s i s i l l u s t r a t e d i n Appendix L.  Income D e r i v e d To lots The  by t h e F e e d  illustrate  Margin  the feed margin t h a t e x i s t e d f o r the feed-  f r o m 1962-67 i t i s n e c e s s a r y assumptions  t o make a number o f a s s u m p t i o n s .  a r e b a s e d on t h e w r i t e r ' s e v a l u a t i o n o f t h e f e e d  c o s t s p e r h u n d r e d pounds o f b e e f g a i n lot  record The  the  analysis carried average feed  1966-67 w i n t e r  hundred weight  as c a l c u l a t e d i n t h e f e e d -  o u t o v e r t h e 1966-67 f e e d i n g  period . 2  c o s t p e r hundred weight o f beef g a i n i n  feeding  period  f o r the small  i s estimated  t o be $ 2 4 . 7 5  3  per  f e e d l o t and $20.00 p e r h u n d r e d  f e e d l o t s p r e s e n t e d i n T a b l e s V I I I and IX i n d i c a t e s t h a t t h e l a r g e o p e r a t o r s f a v o r d i r e c t p u r c h a s i n g and m a r k e t i n g o f t h e i r c a t t l e whereas t h e s m a l l e r o p e r a t o r s f a v o r s e l l i n g t h e i r c a t t l e by p u b l i c a u c t i o n . In a d d i t i o n there i s not a s i g n i f i c a n t d i f f e r e n c e between s i z e s o f f e e d l o t and w h e t h e r t h e p u r c h a s i n g o f t h e c a t t l e i s done by t h e f e e d l o t o p e r a t o r o r a c o m m i s s i o n a g e n t . I t i s f e l t t h a t any d i f f e r e n c e s t h a t e x i s t i n t h e p u r h c a s i n g and m a r k e t i n g p o l i c i e s a r e due more t o o t h e r c o n s i d e r a t i o n s t h a n a d v a n t a g e s i n p r i c e d i f f e r e n c e s i n volume p u r c h a s i n g by t h e l a r g e feedlot. No r e s u l t s o f t h e f e e d l o t r e c o r d a n a l y s i s a r e presented i n t a b u l a r f o r m b e c a u s e t h e v a r i a b i l i t y i n t h e i n d u s t r y made i t u n r e a l i s t i c t o c r e a t e a v e r a g e s f o r t h e v a r i o u s t y p e s and s i z e s of f e e d l o t s . 2  Includes a l l the feed required to f a t t e n the c a t t l e to the f i n i s h weight. The home grown f e e d i s v a l u e d a t m a r k e t prices. The f e e d c o s t p e r h u n d r e d w e i g h t o f g a i n i s c a l c u l a t e d by d i v i d i n g t h e t o t a l f e e d c o s t by t h e n e t g a i n i n w e i g h t i n t h e f e e d l o t , t h a t i s , the i n v o i c e n e t s e l l i n g weight i n c l u d i n g c l o s i n g c a t t l e i n v e n t o r y and w e i g h t o f c a t t l e l o s s i s s u b t r a c t e d from t h e i n v o i c e n e t p u r c h a s i n g weight. No p a s t u r e i s u s e d f o r the f e e d i n g p r o c e s s . 3  84 weight f o r the average feed  large  c o s t per  summer f e e d i n g weight of  period  be  35  The  pellet-s,  percent  by  feed  the  r a t i o n according  by  the  the  feed margin  p r i c e and  sections  of  ure  I t can  11.  price  and  the  feed  year to year.  hundred  beef g a i n ,  f o u r month  i n the  percent and  be  feed  feeding  period  20  protein  supplement  years p r i o r to  method o f  percent and  to the  1967  are  calculated  and  the  feed  feeding  s i x year period  and  p r i c e s of  Feed  are  ration  s e c o n d l y by  the  costing  feedstuffs The  i s i n d i c a t e d i n Appendix  that  income  de-  M.  Margins  added t o g e t h e r  seen t h a t  margins v a r i e s In  feeding  barley,  feed margins generated  report  there-  following  r a t i o n over the  p a r t i c u l a r y e a r under a n a l y s i s .  Summation o f P r i c e and The  40  1967  mineral  c o s t s for the  the  rived  1967  hay.  change o v e r  i n the  to A p r i l  5 percent  does n o t  existed  $24.75 f o r t h e  c o n s i s t of  assuming t h a t  feed  $17.0 0 p e r  hundred weight of  average feed  good q u a l i t y  The first  per  assumed t o be  assumed t o  screening  t o be  i n the  4  f r o m December 1966  be  beef g a i n  The  gain .  margin a n a l y s i s . will  i s estimated  average c o s t  fore, w i l l  following analysis.  hundred weight o f  period  beef  The  f e e d l o t i n the  the  total  and  the  last  two  presented  in  Fig-  income g e n e r a t e d  by  the  significantly  some i n s t a n c e s  i n the  within  the  year  p o s i t i v e feed margin  and was  I n c l u d e s t h e s u p p l e m e n t a l f e e d t h a t was r e q u i r e d t o f i n i s h t h e c a t t l e f o r m a r k e t on p a s t u r e b u t d o e s n o t i n c l u d e t h e p a s t u r e management o r o p e r a t i n g c o s t s . A pasture period o f f i v e months i s assumed i n t h e a n a l y s i s . 4  Years FIGURE 11 SUMMATION OF PRICE AND FEED MARGINS FOR FED BEEF C A T T L E 1 9 6 2 - 6 7 a  See  Appendix N f o r c a l c u l a t i o n s . CO  Ln  86 s u f f i c i e n t l y l a r g e t o m i n i m i z e t h e l o s s i n c u r r e d from a n e g a t i v e p r i c e margin b u t - i n s e v e r a l cases t h e n e g a t i v e p r i c e and feed margins caused a s u b s t a n t i a l income l o s s f o r some p e r i o d s . Whether o r n o t t h e n e t margin i s s u f f i c i e n t t o a l l o w f o r a p r o f i t a b l e f e e d l o t b u s i n e s s w i l l depend upon t h e s t r u c t u r e and magnitude o f t h e f e e d l o t nonfeed o p e r a t i n g  c o s t s and t h e s i z e  of t h e f e e d l o t . The  above a n a l y s i s i s o n l y a c c u r a t e f o r t h e f e e d l o t f i r m  t h a t conforms t o t h e assumptions p u t f o r t h i n t h e b e g i n n i n g o f the a n a l y s i s .  I t can be a p p r e c i a t e d  that the longer or shorter  f e e d i n g p e r i o d , d i f f e r e n c e i n s e x , s i z e and type o f c a t t l e placed  i n t o t h e f e e d l o t and magnitude o f t h e feed c o s t s  a l t e r t h e magnitude o f t h e n e t margins a c c o r d i n g l y .  will  However,  the above a n a l y s i s does i n d i c a t e t h e v a r i a t i o n i n n e t margins t h a t d i d o c c u r w i t h i n t h e y e a r s from 1962-67 and which d i d o c c u r , a l t h o u g h o f d i f f e r e n t magnitude, f o r d i f f e r e n t t y p e s and s i z e s of f e e d l o t .  The f e e d l o t a n a l y s i s t o f o l l o w w i l l use a s i m i l a r  type o f a n a l y s i s as t h a t i l l u s t r a t e d above, b u t w i l l c a r r y o u t a complete a n a l y s i s a c c o r d i n g  to set operating  p o l i c i e s f o r the  d i f f e r e n t s i z e s and t y p e s o f f e e d l o t . II. The  operating  THE FEEDLOT ANALYSES  p o l i c i e s o f t h e f e e d l o t examples t o be  a n a l y s e d a r e i n d i c a t e d i n Table X I I I . l a t e d by t h e w r i t e r a c c o r d i n g  The p o l i c i e s were formu-  t o t h e m a j o r i t y o f t y p e s o f oper-  a t i o n t h a t e x i s t i n t h e F r a s e r V a l l e y r e g i o n and a c c o r d i n g t o the amount o f f i n a n c i a l i n f o r m a t i o n .that was a v a i l a b l e t o c a r r y ;  out m e a n i n g f u l  analyses.  TABLE X I I I OPERATING P O L I C I E S OF THE FEEDLOT EXAMPLES Purchase weight (lbs per animal)  Selling weight (lbs per animal)  Size No. o f . Yearlings  Average feeding period days  No. o f t i m e s feedlot filled  Purchasing date  Selling date  1  50  150  1  Oct-Nov  Mar-Apr  700  2  250  150  1  Oct-Nov  Mar-AprMay  700  3  100  335  1  Sept-OctNov  Aug-SeptOct  500  4  100  210  1  Mar-Apr  Sept-OctNov  500  a  5  500  150  1  Oct-Nov  Mar-AprMay  700  a  6  500  210  1  Mar-Apr  Sept-OctNov  550  a  7  500  See 5 and 6  2  See 5 and 6  See 5 and 6  See 5 and 6  See 5 and 6  Feedlot type & size  1050  a  a  1050 1050  b  950 1050 950  8a  1500  90  1  Sept-OctNov  Dec-JanFeb  750  a  1000  8b  1500  9  1  Feb-MarApr  May-JuneJuly  750  a  1000  Good F e e d e r  0  Yearling  Steers  Good S t o c k e r S t e e r C a l v e s  88 The sizes  and  feedlot types of  represented t o be  t o be  realistic  Desirability  The of  of  next  investment  examples a r e  not  represented  feedlots  the  operating  the  Projects  Investment  step of  i n the  i n the  feedlot.  is  deemed t o be  capital ratio  the  the  for  The  the  appropriate  i s the  at a s p e c i f i e d  p r e s e n t and 5  criterion  the  ratio  analysis  income and  future  The the  of  on  of  hand.  i t s timing  the The  the  criterion  with appropriate  can  effectively  be  criterion  also  of  the  future  present  value  other costs,  at  benefit-cost criteria  to  use -  takes account of a l l  f l u c t u a t i o n i n income l e v e l  of- r e t u r n  criteria  benefit-cost  and  weights.  t a k e n i n t o a c c o u n t by  analysis.  productivity  the  most a p p r o p r i a t e  significant  rate  to  discounted  the  internal  the  present value of  discount,  invest-  criterion  i n the  the  Ex-  capital  of  discounted  investment outlays  It i s f e l t that i s one  i s one  f o r measuring  of  rate  ratio  deemed  desirability  ratio  t o use  not  Feedlot  of  benefit-cost  benefit-cost process  the  feedlots.  criterion  are  examples a r e  productivity  discounted  optimum  policies  indicates  types of  indicate  evaluation  same r a t e .  ratio  analysis  i n investment p r o j e c t s .  benefits, of  the  the  different  discounted  criterion  the  the  ed  i n the  but  conditions.  i s used to  used  best p o l i c i e s  under e x i s t i n g  ample One  The  and  t o be  the  could  In  addition,  from year t o  year  criterion.  The  be  the  used  for  F o r a f u l l d i s c u s s i o n of the e v a l u a t i o n p r o c e s s c r i t e r i a f o r m e a s u r i n g d e s i r a b i l i t y see - G. D a v i d Q u i r i n , The C a p i t a l Expenditure Decision, ( R i c h a r d D. I r w i n I n c . , Homewood, I l l i n o i s , 1967). 5  89 a n a l y s i s w i t h e q u a l l y good r e s u l t s . rate  of return  priate count and  and  payback c r i t e r i a  evaluation c r i t e r i a  a r e n o t deemed t o be t h e y do  by  not take  a project  appro-  into  over  ac-  its life  t h e t i m i n g o f t h e income w i t h a p p r o p r i a t e w e i g h t s . 6  use  of the d i s c o u n t e d b e n e f i t - c o s t  that  the b e n e f i t  life  of the p r o j e c t  terest  rate.  because  streams  ment p e r i o d .  in forecasting  arbitrarily  then the f i r s t the t o t a l  selected  tax annual  t o be  over  n e t income s t r e a m  calculated  the f i r s t  Ibid.,  by  invest-  n o t be t a b u l a t e d  the behaviour to f o r t y year  of  the  period i n the  7  assumed t b be  indicative  invest-  r a t e o f 10  percent  f o r the purposes  a t hand  r e p r e s e n t s 51 p e r c e n t year p e r i o d .  2 0 year  The  investment  period  the discounted net cash  income  the r e c i p r o c a l  of the  above  32.  T h e y e a r l y o p e r a t i n g expenses a r e s u b t r a c t e d from o p e r a t i n g income t o a c q u i r e a n e t c a s h income.  The percentage of by t h e f i r s t s i x y e a r s i s v a l u e o f an a n n u i t y f o r 6 a n n u i t y f o r 20 y e a r s a t a 8  of  8  esti-  the  7  yearly  of  20 y e a r  interest  the twenty f o r the  and  income , g e n e r a t e d  realistic  by m u l t i p l y i n g  s i x year p e r i o d  P.  the a p p r o p r i a t e i n -  be d e r i v e d o v e r t h e  s i x y e a r income s t r e a m  income s t r e a m  mated t o t a l  6  that w i l l  be  requires  formulated f o r the  o f the f e e d l o t w i l l  Instead the net cash  I f an a f t e r  criterion  a t hand, t h e b e n e f i t  i n p u t markets o v e r a twenty  stream  be  t h e n d i s c o u n t e d by  s i x years of operation w i l l  the b e n e f i t  can. be  and  for- t h e l i f e  the f u t u r e .  first  investment  of the d i f f i c u l t y  p r o d u c t and into  and  For the purposes  ment s t r e a m s  for  because  a l l o f t h e income g e n e r a t e d  The  is  However, t h e a c c o u n t i n g  t h e t o t a l income s t r e a m r e p r e s e n t e d c a l c u l a t e d by d i v i d i n g t h e p r e s e n t y e a r s by t h e p r e s e n t v a l u e o f an 10 p e r c e n t d i s c o u n t r a t e .4.355 8.514 (  X  1  U  90 percentage. operation, ation land year  a d d i t i o n to the  i n the  i n land value  9  In  value  will  f o r the The  case of  be  dairy  (or t h e  barn  necessary  operation  and  the  equipment w i l l feedlot  Example E i g h t ,  of  total  ing  and  feed  m a c h i n e r y use land  invested beginning percent fed  of the  until  cattle  the  i s treated  ating year.  The  cost  feeder  net  and  cattle  cash To  the  be  the  appreci-  per  acre  in per  the  period  and  .  The  feedlot  general  as  a capital  farm for  percentage  in cattle  each year.  The  buildand  capital  outflow at  period.  end  invoice cost  assumed t o o c c u r a t t h e total  The  s a l e of  end  of the  of year  end  net  of  year. the  opercattle  t o be  All  the  other  operating  discounted  10  the  feeder  i s represented  operating  The appreciation i n land value f a r m e r s and r e a l e s t a t e p e r s o n n e l  cattle  year.. invest-  i s b a s e d upon d i s c u s s i o n s i n the F r a s e r V a l l e y .  ° T h e 1961 m a r k e t v a l u e o f t h e l a n d i s assumed t o be $700.00per a c r e b a s e d upon d i s c u s s i o n s w i t h f a r m e r s and r e a l e s t a t e p e r s o n n e l i n the r e g i o n . 1  the  i s compounded m o n t h l y a t  i n f l o w a t the  f o r the  facilities)  f o r the  investment  d i f f e r e n c e between t h e  the  1 0  new  oper-  converted  In a d d i t i o n t o t h e  period  feeding  a cash  correct conceptually  the  the  insignificant  feedlot.  i s treated  cattle  of  c a l c u l a t i o n s , except  inventory  of the as  of  land  i n the  feeding  investment cost  flows are  9  with  i n the  cattle  end  of  because of  feeding  an  t o commence f e e d l o t  equipment r e q u i r e d  included  f o r the  i n feeder  dollars  the market v a l u e  i n v e s t m e n t , an  i s required  fifty  i n 1961  market v a l u e be  feedlot  annual a p p r e c i a t i o n  of c o n s t r u c t i o n  special  not  the  period.  assumed t o be cost  by  Valley region,  The  assumed t o be  investment required be  the  Fraser  occur.  investment  ation w i l l  plus  will  the  income d e r i v e d  91 ment c o s t s h o u l d be  added t o t h e b u i l d i n g  However, i n t h e p r e s e n t  analysis  will  the annual  be  s u b t r a c t e d from  benefits  are  The  the annual  ratio  f l o w and  dividing  summation o f t h e  of  sum  by  l a n d , and  the b u i l d i n g  and  the  of  i s used  development of the  i n T a b l e XIV.  t h e method o f c a l c u l a t i o n  received  illustrated  and  ending  and  the  salvage  value  t h e method  the  April  30,  1967  XIV  is  indicate The  using the  revenue  same p r o -  are reported i n Table  taxes from  indicates  the  feedlot  c o s t i s s u b t r a c t e d from  XV.  the b e n e f i t s operation.  t h e above  flow f o r the o p e r a t i n g y e a r .  to give a t o t a l  the  The  yearly  at a discount r a t e of  discounted benefit  -$660.00 i s - m u l t i p l i e d  vide b e n e f i t s of -$1287 . 1 1  1 1  See  page  The  by  the  The  figure  o f -$660.00.  a c q u i r e a measure o f the d i s c o u n t e d b e n e f i t s f o r the twenty period  of  derivation  of reference.  t o 1967,  income a f t e r  investment  indicates  f l o w s a r e d i s c o u n t e d back t o 1961  percent  value of  to i l l u s t r a t e  sources  i n Table  a c q u i r e the net cash  net cash 10  net cash  adding  land value  f o o t n o t e s to the t a b l e  f o r the o p e r a t i n g year  net c a t t l e to  The  expenses f o r the years p r i o r  The  1961  by  income measurement f o r F e e d l o t  illustrated  as  net  ratio.  f o r the o p e r a t i n g year  cedure  i s calculated  the d i s c o u n t e d  o f t h e y e a r l y income and  Example One  and  investment  machinery.  the d i s c o u n t e d b e n e f i t - c o s t The  net c a t t l e  the d i s c o u n t e d  equipment l e s s  F e e d l o t Example One calculation  investments.  net b e n e f i t s before the  the d i s c o u n t e d net cash  building,  land  discounted.  discounted benefit-cost  the  and  factor  o f 1.95„to  n e t b e n e f i t s t o be  8 9 f o r the e x p l a n a t i o n of the  used  To year pro-  i n the  calculations.  92 TABLE  XIV  1967 INCOME STATEMENT FOR FEEDLOT EXAMPLE ONE ( F o r t h e O p e r a t i n g Y e a r E n d i n g A p r i l 30, 1967) Net C a t t l e  Sales  Cost of c a t t l e  (50 head  a  Gross  4340 .00  Margin  Direct  cash  expenses 187 .00  Net oyer d i r e c t  Land  25 .00  e  13 .00  & oil-f  Allocated  cash operating  operating  300 .00 75 .00  Administration loss*  495 .00  100 .00  7  k Net o v e r o p e r a t i n g  expenses  I  3  $  -737 .00  revenue manure and  Net  -242 .00  expenses 20 .00  Labor^  Other  225 . 00  expenses  & Building, taxes^  Cattle  -17 .00  Expenses  Veterinary Gas  13,247 .00 $  Bedding^  B/  $13,230 .00  8907 .00  (50 head)  c  Less Operating A/  cattle)  sold  feeder c a t t l e * feed  of  bedding  m  " c a s h " : income b e f o r e t a x e s  405 .00 -332 .00  C a l c u l a t e d by m u l t i p l y i n g A v e r a g e M a r c h - A p r i l 1967 f e d c a t t l e p r i c e a t t h e f e e d l o t (Appendix E) by w e i g h t o f f e d b e e f (50 head a t 1050 pounds p e r h e a d ) . (10.50 x 50 x $25.20/cwt) ^ C a l c u l a t e d by m u l t i p l y i n g A v e r a g e October-November 1966 f e e d e r c a t t l e p r i c e a t t h e f e e d l o t (Appendix E) by t h e w e i g h t o f c a t t l e p l a c e d i n t h e f e e d l o t (50 head a t 700 pounds p e r h e a d ) . (7.00 x 50 x $25.45/cwt) C a l c u l a t e d by m u l t i p l y i n g t h e a v e r a g e f e e d c o s t f o r t h e l a s t 120 d a y s o f f e e d i n g (Appendix M) by t h e w e i g h t o f b e e f p r o d u c e d i n t h e f e e d l o t (3.50 cwt x 50 head x $ 2 4 . 8 0 / c w t ) .  93  TABLE XIV  C o s t o f s h a v i n g s i s e s t i m a t e d t o be $.75.per head ($.75 p e r head x 50 head x 5 months)  month,  t o be  (continued)  - C o s t o f v e t e r i n a r y and m e d i c i n e e x p e n s e s $.50 p e r h e a d . (50 head x $.50 p e r head)  per  i s estimated  f I n c l u d e s t h e gas and o i l e x p e n s e o f e q u i p m e n t u s e d s p r e a d i n g t h e s h a v i n g s and c l e a n i n g t h e f e e d l o t . J  ^Estimated  l a n d and  building  taxes  f o r one  acre  in  of  land.  h estimate  I n c l u d e s d a i l y f e e d i n g and h a n d l i n g l a b o r p l u s an f o r l a b o r requirement f o r c l e a n i n g out the f e e d l o t .  •£  Includes c l e r i c a l , expenses.  laneous  accounting  and  other related miscel-  ^ C a l c u l a t e d on t h e b a s i s o f a 1 p e r c e n t c a t t l e an a v e r a g e v a l u e o f $200.00 p e r h e a d .  loss  and  k discount  The management c o s t . i s c o n s i d e r e d t o be i n c l u d e d i n t h e r a t e used i n the b e n e f i t - c o s t r a t i o a n a l y s i s .  I The c o s t o f c a t t l e i n v e s t m e n t i s i n c l u d e d i n t h e c a p i t a l investment. The a n n u a l n e t c a t t l e i n v e s t m e n t c o s t as an i n t e r e s t r a t e o f 10 p e r c e n t compounded m o n t h l y i s f o u n d i n T a b l e XV-IB. T h e v a l u e o f manure and b e d d i n g i s c a l c u l a t e d on t h e b a s i s o f an e s t i m a t e d v a l u e ( c l e a n e d o u t o f t h e f e e d l o t and s t o r e d on t h e f e e d l o t p r e m i s e s ) a t $2.50 p e r t o n and a r e c o v e r y o f .65 t o n s o f manure and b e d d i n g p e r head p e r month. m  TABLE SUMMARY OF  Net Cash Income Before Taxes  XV  INCOME STATEMENTS 1962-1967 FOR  FEEDLOT EXAMPLE ONE  a  Year  Gross Margin  1962  $694  $452  Capital Cost Allowance  Net Income Before Tax  Income Tax  $352  $-70  $100  1963  -1263  -1511  100  -1611  1964  859  604  100  504  1965  1034  762  100  662  1966  1870  1580  100  1480  100  -432  1967  -17. 00  a  -332  S e e Appendix 0 f o r d e t a i l e d  13  Net Cash Net Income Income After After Tax Tax $282  $382  Net^ Cattle Investment Cost  1 Net ; Cash i Flow  $323  $59 '  37 3  -1541  -1441  0  504  604  316  0  662  762  297  -1814 j j 288 • 465  -277  1203  1303  334  969 |  +86  -346  -246  374  +70  calculations.  -620  !  f  C a p i t a l C o s t A l l o w a n c e i s c a l c u l a t e d on t h e b a s i s o f a 1961 b u i l d i n g v a l u e o f $2000 and no s a l v a g e v a l u e i n 20 y e a r s . The s t r a i g h t l i n e method o f c a l c u l a t i o n i s u s e d i n the a n a l y s i s . Income t a x p r o v i s i o n f o r c a r r y b a c k and c a r r y f o r w a r d o f income l o s s u t i l i z e d calculations. Reference: D e p a r t m e n t o f N a t i o n a l Revenue, T a x a t i o n : F a r m e r s ' and mans ' Income Tax G u i d e , (Ottawa; Queens P r i n t e r 1 9 6 7 ) , P. 13. ^The n e t c a t t l e i n v e s t m e n t c o s t i s c a l c u l a t e d by c o s t f r o m end o f t h e y e a r f e e d e r c a t t l e c o s t . The end l a t e d by compounding t h e f e e d e r c a t t l e i n v o i c e c o s t by period.  in Fisher-  s u b t r a c t i n g the feeder c a t t l e i n v o i c e of year feeder c a t t l e c o s t i s c a l c u 10 p e r c e n t monthly., f o r t h e f e e d i n g  4^  benefit-cost  ratio  counted  value  a total  of  and  illustrated The  in  selling  used  existing balance  pasture  i n Table  yearling  them as  to provide  of the  for  f o r a l l the  is still  of  the  investment . 1 3  c a n n o t be  feeder animals  f e d beef  are  nega-  calculated.  feedlot  The  examples  Two,  feedlot  still less  i n the  fall  of the  the  f o l l o w i n g s p r i n g as  and  F i v e are u n d e s i r a b l e  are  and  are  policy year  illustrated investment  i n c l u d e d i n the a n a l y s i s  discounted  a t 10  percent.  p o l i c i e s w h i c h i n c o r p o r a t e use  feeding process they  salvage value  a n a l y s i s i n d i c a t e s t h a t the  opportunity values  i n the  ratio  dis-  XVI.  benefit-cost ratio  ance, a l t h o u g h cost  the  benefit-cost analysis  original  benefit-cost ratio  F e e d l o t Examples One,  The  adding  above f i g u r e  i n the  p r o j e c t s when a l l i n p u t r e s o u r c e s at  by  b e n e f i t s f o r F e e d l o t Example One  benefit-cost ratios  purchasing  and  t o be  equipment from the  a discounted  discounted  of  to the  1 2  s u b t r a c t i n g the d i s c o u n t e d  Since the net tive  land  investment  d e r i v e d by  buildings  of the  are c a l c u l a t e d  -$1034.00.  The is  analyses  have a b e t t e r r e c o r d o f  of  perform-  appear u n d e s i r a b l e i n t h a t the b e n e f i t than  one.  However, t h e p o l i c i e s  of  the  T h e d i s c o u n t e d l a n d v a l u e o f $253.00 i s c a l c u l a t e d by a d d i n g t h e 1961 l a n d v a l u e o f $700.00 p e r a c r e and t h e t o t a l 20 y e a r a p p r e c i a t i o n i n l a n d v a l u e ($1000 p e r a c r e ) and d i s c o u n t i n g t h e v a l u e b a c k t o 1961 a t 10 p e r c e n t . 1 2  T h e o r i g i n a l i n v e s t m e n t i s c a l c u l a t e d by a d d i n g t h e 1961 v a l u e o f t h e l a n d , b u i l d i n g , and e q u i p m e n t . The q u a n t i t y of l a n d f o r t h e f e e d l o t examples i s f o u n d i n t h e f o o t n o t e t o t h e income s t a t e m e n t f o r t h e f e e d l o t example i n t h e A p p e n d i x and t h e v a l u e o f t h e b u i l d i n g and e q u i p m e n t i s f o u n d i n t h e f o o t n o t e s t o t h e summary o f income s t a t e m e n t s f o r t h e f e e d l o t example i n t h e A p p e n d i x . 1 3  TABLE XVI  l  EXAMPLES  Net Investment  BenefitCost Ratio  Less Discounted Salvage Value  Net Benefits  INVESTMENT Land, Buildings and Equipment  Discounted Land Value  Net Discounted Cash Flow 20 Years  Net Discounted Cash Flow 6 Years  Feedlot Example  DISCOUNTED BENEFIT-COST RATIOS FOR THE FEEDLOT  a  -660  -1,287  253  -1,034  2,700  0  2,700  2  b  1,476  2,878  507  3,385  20,000  750  19,250  0. 18  3° ,d  7,710  15,034  12,918  27,952  40,700  0  40,700  0. 69  9,488  18 ,502  12,918  31,420  40,700  0  40,700  0. 77  5  2,422  4,723  507  5,230  51,400  1490  49,910  0. 15  6? 9  53,287  103,910  63,832  167,742  226,400  1490  224,910  0. 75  54,502  106,280  63,832  170,112  226,400  1490  224,910  0. 76  h  38 ,584  75,240  1,520  76,760  104,200  1490  102,710  0. 75  ,See See ^See See ^.See ^See ^See See  Appendix Appendix Appendix Appendix Appendix Appendix Appendix Appendix  e  7  Q  0 P Q R S_ T U V  for for for for for for for for  detailed detailed detailed detailed detailed detailed detailed detailed  calculations. calculations. calculations. calculations. calculations. calculations. calculations. calculations.  97 latter to  examples  and t h e s i z e o f t h e examples a r e n o t deemed  be n e c e s s a r i l y  optimal thus there e x i s t s  a possibility  t h e s e t y p e s o f o p e r a t i o n s .might be d e s i r a b l e ment.  The b e n e f i t - c o s t  indicate basis  that  this  r a t i o f o r Feedlot  size of feedlot  a l l y e a r may be d e s i r a b l e Specifically  facilities  benefit-cost  Example  Six.  ratio analysis  Further is left  "drylot"  p o l i c i e s i n t h e same  Three i s l e s s Example  interpretation until  would  management.  F o u r and t h e p o l i c y o f F e e d l o t  t h a n Example  Eight  which f e e d s on a  alternative  the p o l i c y of feedlot  t h a n Example desirable  discussing  u n d e r g o o d manage-  Example  u n d e r good  that  the next  desirable  Five  i s less  o f the chapter.  98  CHAPTER V I I SUMMARY AND The area  lies  conducive  Columbia's p o p u l a t i o n .  i n c r e a s e d per  of l i v i n g  high q u a l i t y  beef  has  Canada C h o i c e  cent  percent  t o 52  f r o m 1948  willing the  would  i n the  and  real  the  supply  estimated  72  percent  beef.  income and  resultant  i n c r e a s e d consumer i n the  t o p two  higher  preference  grades of  Canada Good, i n c r e a s i n g f r o m  car-  20  per-  i n s p e c t e d s l a u g h t e r i n Canada i n I n a d d i t i o n t h e consumer has  consumption of beef of the other  at a faster  r e d meats and  consumption a t higher has  been w i l l i n g  beef  she  been rate has  prices;  t o i n c r e a s e her  the  than been  which  expen-  beef.  MARKET AND and  THE  the  SUPPLY OF  fact  FED  same p e r i o d h e l p s  20,970 head o f c a t t l e necessary  CATTLE  t h a t the p o p u l a t i o n of  V a n c o u v e r I s l a n d r e g i o n s has  of c a t t l e  production  c l i m a t e of the area i s  e x p l a i n the  i n t h e r e g i o n s ' consumer f e d b e e f  estimated The  THE  above f a c t o r s  Lower M a i n l a n d  crease  t h a t she  for high quality  The  percent  diet  t o i n c r e a s e her  I.  and  t o 1966.  t o i n c r e a s e her  indicate  ditures  The  resulted  of t o t a l  i n c r e a s e i n her  willing  capita  along with  cass beef,  period  agricultural  to the p r o d u c t i o n of high q u a l i t y  The  for  F r a s e r V a l l e y - Lower M a i n l a n d  w i t h i n a r e g i o n w h i c h c o n t a i n s an  of B r i t i s h  standard  CONCLUSIONS  i n 1951  the  i n c r e a s e d by  58  significant in-  requirements  from  t o 107,150 head i n  t o meet t h e demand has  been  an 1966. from  99 an  increase i n size  and  of the B r i t i s h Columbia  increased importation of slaughter c a t t l e  from the p r a i r i e An  a n a l y s i s of the  channels  l o c a l consumer r e q u i r e m e n t s  fed  cattle  estimated the  consumer r e q u i r e m e n t s  indicated  31. p e r c e n t  cated cent  i n 1966.  beef  carcasses  supply  cattle  the  t o meet  Columbia  of t o t a l  1962-1966 p e r i o d  a trend of decreasing, and  fed beef  21 p e r c e n t  i n the  s l a u g h t e r beef  i n 1966,  of  indicates that B r i t i s h  local while  from the p r a i r i e  f r o m 42  percent  pro-  in  1962  i m p o r t a t i o n of c a r c a s s beef  a t r e n d o f i n c r e a s i n g , from  cattle  of  amounted t o a p p r o x i m a t e l y  importations of  vinces  and  industry  provinces.  the  to  fed beef  However, i t s h o u l d  34  percent  be  noted  i n a l l t h r e e c a t e g o r i e s has  i n 1962  indi-  t o 48  per-  t h a t t h e number  i n c r e a s e d i n the  of  1962-66  period. The ity  F r a s e r V a l l e y r e g i o n has  of fed c a t t l e  sumer m a r k e t .  of B r i t i s h Columbia o r i g i n  I n 1966,  duced a p p r o x i m a t e l y quirements while estimated met with and  with  18  approximately  48  of  of the province  balance  percent  being  imported  OF  cattle,  feedstuffs,  ment i n d i c a t e s t h a t t h e r e s o u r c e s  con-  l o c a l consumer r e contributed only  as  slaughter  as c a r c a s s  an  was  provinces cattle  beef.  RESOURCES  a n a l y s i s of the a v a i l a b i l i t y of the necessary feeder  major-  industry pro-  from the p r a i r i e  imported  AVAILABILITY  local  o f consumer r e q u i r e m e n t s  fed beef  31 p e r c e n t  II.  factors  The  of the t o t a l  f a r the  to the  F r a s e r V a l l e y fed beef  percent  importation of  approximately  An  the  the balance  4 percent. an  c o n t r i b u t e d by  capital,  exist  l a b o r and  in sufficient  input manage-  quantity  100 for  an  i n c r e a s e i n the  mated 129,000 b e e f approximately in  1967  as  local  and  good  p e r c e n t a g e o f them had i n f o r m a t i o n would  British mately ished  1,736 and  t o be  Columbia  east of B r i t i s h and  It  the  i s considered  existing  modate t h e  However, t h e the c a t t l e  financial  long  term  the  and  29,04 2 head o f  Columbia,  United  States  shipped  end  of the  financial  within  t o be  back i n t o  fin-  shipped*  A l b e r t a and  or  i s able  the  approxi-  r e m a i n d e r were e i t h e r  Ontario  British  still  re-  year.  a v a i l a b l e sources  institutions  and  and  Available  slaughtered  Columbia, mainly  t h a t the  feed over  esti-  significant  should  be  requirements  of funds  of the  feedlot firms.  above t h a t p o r t i o n o f t h e  t o c a r r y from h i s own  from  a d e q u a t e t o accom-  adequacy o f s h o r t term funds to c a r r y the c o s t  and  the o p e r a t o r  to the  if a  consumer r e q u i r e m e n t s ,  ranees at the  Columbia  elsewhere.  in British  consumed t h e r e o r  t o h e l p meet t h e  m a i n e d on  the  f o r consumption  consumed t h e r e , and  finished  cattle  were f i n i s h e d  head were s h i p p e d  to provinces  feeder  been s h i p p e d  supply  an  c a l v e s would have been a v a i l a b l e  type  not  I n 1966  in British  i n d i c a t e that approximately  cattle  Columbia  industry.  c a l v e s were p r o d u c e d  90,9000 o f t h e s e  choice  above f e e d e r  fed beef  source  of  of  expense  funds i s a  q u e s t i o n which r e q u i r e s f u r t h e r r e s e a r c h . It and of  i s not  labor w i l l the  local  from o t h e r  felt  be  fed beef  industry.  agricultural  i n d u s t r y can  quality  c o n s t r a i n i n g f a c t o r s t o an  through the present local  t h a t t h e q u a n t i t y and  educational compete w i t h  i n c r e a s e i n the  These r e s o u r c e s  production  areas  or can  facilities alternative  o f management size  are a v a i l a b l e be  provided  developed that  employment  in  the the  101 form o f wages and No tation  problems are  and  increased capacity  s i z e of  the  an  increase  i n the  facilities  industry.  in slaughtering  the  transportation  adequacy of  f o r the  At  facilities  and  i n s i z e of  the  fed beef  present  present  there  and  past  slaughtering  the  the  industry  good  will  or  e x i s t s an  i n d u s t r i e s to  industry  transporan  over-  performance accommodate  in a l l probabil-  continue.  III. The  STRUCTURE AND  s u r v e y of  the  undertaken to acquire duct within that tle  the  per  se  felt  the  of  to  erators  due  and  Fraser  whether or  the  Valley. not  the  of  firms' only The  The  The  local  the  objectives  The  varied  present  industry  structure  Valley  .industry t o an  I t was  varied from  the  fed beef  con-  from the  cat-  opera-  finishing  the  cattle  particular found  industry  i n which the  region  .  Twenty-three of  to  the  c o n s i s t s of  to group  q u a l i t y beef. an  feedlots  l a r g e consumer m a r k e t s  throughout the  in  majority  contained the  is op-  as  i s i n t r a n s i t i o n from a  i s to produce high  f e e d l o t s spread industry  was  found  unanswered q u e s t i o n  - Lower M a i n l a n d  adjacent  and  were f i n i s h i n g  circumstances of  i n 1966  that  large d i v e r s i t y i n objectives  economic a c t i v i t y  immediately  balance of  on  e n t r e p r e n e u r s who  There i s a l s o the  feedlots  the  fed beef  most i l l u m i n a t i n g .  enterprises  Fraser 55  INDUSTRY  d i v e r s i t y of a g r i c u l t u r a l e n t e r p r i s e s  complementary  situated  the  THE  to maximize h i s p r o f i t s  to-the  of  estimated  was  "hobby" f e e d i n g .  t o be  local  information  significantly.  endeavoured  CONDUCT IN  present  the  industry  objectives  varied  t o r who  the  foreseen  slaughtering  of  ity  salaries.  Fraser  are  with  Valley.  f e e d l o t s which vary  in  102 size  from  20 head t o 2500 head w i t h  having  a unit  differ  s i g n i f i c a n t l y with  pasture ing  i n part of their  to note  prise  c a p a c i t y o f under  72 p e r c e n t  250 h e a d .  64 p e r c e n t  The t y p e s  of feedlot  of the f e e d l o t s u t i l i z i n g  f e e d i n g programme.  t h a t 66 p e r c e n t  o f the f e e d l o t s  I t i s also  o f t h e f e e d l o t s a r e o n l y one e n t e r -  i n a m u l t i - e n t e r p r i s e farm. The  s e a s o n a l i t y of supply  from t h e l o c a l  f e d beef  analysis  of the o r i g i n  plants.  March-April  of fed c a t t l e  industry i s clearly o f f e d beef  to  slaughterhouses  indicated  and  July  fed  cattle  and November-December p e r i o d s  a p p e a r t o be  a r e r e c e i v e d from t h e l o c a l  agricultural  i n d i c a t e s that 8 2 percent  pounds . 1  with  produced  The 1966-1967 i n different suggest  areas. cattle  purchasing  and  marketing  of the f e e d l o t s purchase  t h e emphasis b e i n g  on t h e a n i m a l s  under  The m a j o r i t y o f t h e f e e d l o t s p u r c h a s e c a t t l e  auctions although  number o f  i s on t h e i n c r e a s e i n t h e F r a s e r  a n a l y s i s of the feeder  animals  public  production  industry.  i n B r i t i s h Columbia would  Okanagan, and P e a c e R i v e r  policies ling  production areas  fed cattle  The J  are received  and A u g u s t a r e t h e months i n w h i c h t h e l o w e s t  c o m p a r i s o n o f t h e number o f f e d c a t t l e  Valley,  i n the  received at local slaughtering  t h e months i n w h i c h t h e g r e a t e s t number o f f e d c a t t l e  that  interest-  some o p e r a t o r s  year-  700  through  p r e f e r t o purchase a l l  I t s h o u l d be n o t e d t h a t a l t h o u g h 82 p e r c e n t o f t h e f e e d l o t s p u r c h a s e y e a r l i n g c a t t l e w h i c h a r e u n d e r 700 p o u n d s , 72 p e r c e n t o f t h e f e e d l o t s have a c a p a c i t y o f 250 head o r l e s s . The r e m a i n i n g 28 p e r c e n t o f t h e f e e d l o t s , w i t h c a p a c i t i e s r a n g i n g f r o m 250 h e a d t o 2500 h e a d , on t h e most p a r t , p u r c h a s e y e a r l i n g c a t t l e w h i c h a r e 750 l b s . and o v e r . The l a t t e r g r o u p o f f e e d l o t s produce a t l e a s t f i f t y percent o f the f e d c a t t l e produced i n the Fraser V a l l e y . x  103 their  cattle  directly  were r a i s e d . most e v e n l y  from t h e r a n c h  The p u r c h a s e s  on w h i c h t h e f e e d e r  o f the feeder c a t t l e  between t h e f e e d l o t o p e r a t o r  cattle  are s p l i t a l -  and a c o m m i s s i o n e d a -  gent. Most o f t h e f e d c a t t l e 950  t o 1100 p o u n d s .  their  cattle  On t h e a v e r a g e ,  on a d r e s s e d  s h o u l d be e m p h a s i z e d their  fed cattle  larger  trates is  the operators  that the smaller operators  their  of the types  although  cattle  hay,  grass  and c o r n  on a  i n the f e e d l o t s  of feedlot operation.  litter,  live  beet  illus-  Barley feed  p u l p s and  Commercial p r o t e i n supplements, g r a s s .  silage  are a l s o important  Some f e e d l o t s have as many a s f i f t e e n one r a t i o n  basis to  o r by p u b l i c a u c t i o n .  oats, grain, screening p e l l e t s ,  molasses a r e a l s o used.  i n a small feedlot  ration ingredients.  ingredients i n the r a t i o n  consists of barley,  chicken  m o l a s s e s and g r a s s h a y . The  shavings  bedding  used  and s a w d u s t .  varies  significantly  supply  during  higher  i n t h e f e e d l o t s i s , i n t h e m a j o r i t y , wood The a v a i l a b i l i t y  throughout  o f t h e wood  the year.  shavings  I t i s usually i n short  some w i n t e r months and i n p l e n t i f u l  t h e summer months. ly  selling  used e x t e n s i v e l y i n the i n d u s t r y as the prime energy  source  and  favor  on t h e a v e r a g e , t h e  a l l their  a n a l y s i s o f t h e f e e d s t u f f s used  the d i v e r s i t y  selling  although i t  c a t t l e on a d r e s s e d  some l a r g e f e e d l o t s s e l l t o the packer  favor  to the packer  by a u c t i o n and a l t h o u g h ,  weight b a s i s d i r e c t The  between t h e w e i g h t s o f  basis direct  feedlots favor s e l l i n g  the packer,  are sold  The p r i c e o f t h e wood s h a v i n g s  supply  during  i s significant-  i n t h e Upper F r a s e r V a l l e y a s c o n t r a s t e d t o t h e Lower  Fraser V a l l e y area.  104 The erators. a  majority of Only  one  or s i c k n e s s . Perhaps the  quacy o f m e d i c i n e s use  of  insurance The  Futures  specifically  Livestock insurance  t o hedge a g a i n s t t h e  ance.  f e e d l o t s a r e owned by  f e e d l o t was  feedlot operator.  jury  the  risk  of  l o s s of animals  a l l of  the o p e r a t o r s  low  annual  expected  risk  majority  f e e d l o t s feed  IV.  least  f o u r out of the  a n a l y s i s would beef  production  an  after  is insufficient  the p o l i c y fattening in  the  the  of purchasing them on  beef  livestock and  the  insurade-  e x p l a i n s the  States  non-  Cattle  to adverse  the r i s k  since  cattle in  the  year.  i n Chapter  t o 1967.  However, i n the use  production process  the  fed is at  percent.  yearling  indicate  feeder c a t t l e  f e e d g r a i n s and  l e a v i n g the  operating costs i n at  indicate efficient  i n the  10  IV i n d i c a t e s  i n the F r a s e r V a l l e y  income g e n e r a t e d  a n a l y s i s would  imported  s p r i n g , then  to  used  tax d i s c o u n t r a t e of  Specifically  out  f r o m 1962  t h a t the  b e i n g made o f a l l r e s o u r c e s  some o p e r a t o r s  INVESTMENT  income t o c o v e r  s i x years  illustrate  to  INDUSTRY  analysis carried  sufficient  rented  f u t u r e s market, a t l e a s t  CAPITAL  the p r o d u c t i o n of high q u a l i t y  r e g i o n produced  op-  to p h y s i c a l i n -  f o r o n l y p a r t of the  IN THE  that  The  DESIRABILITY OF  financial  t o be  loss  the U n i t e d  c o u l d have a b e n e f i t i n r e d u c i n g  of the  The  cattle  o f l o s s e s due  m a r k e t c o n d i t i o n s i s n o t known. principle,  use  feedlot  operators.  feedlots using  M a r k e t t o hedge t h e  due  t h e common a i l m e n t s  by many o f t h e  number o f  built  i s u s e d by  Not  to t r e a t  the  feedlot  that, i n the  selling  the  firstly, fall, fed  cattle  empty f o r t h e b a l a n c e  of  105 the  y e a r does not  generate s u f f i c i e n t  ment i n b u i l d i n g s , incorporating the  cost  per  the  land, use  of  benefits  scribed  pasture  to the  equipment, a l t h o u g h the net  that  quite  fed  an  discount  a f t e r tax  the  It analyzed prise  s h o u l d be i n the  i n existence  cluded  that  particular larger  erations  dairy sary  be  i n the  barns or  10  i n the  do  not  se  thus  that  region.  to  a yearly  enjoy  p o l i c i e s s e t up  and  any  enter-  one  feedlot  necessarily that  investment.  due  an  entrepreneur could  con-  conforms to Many o f  e n t r e p r e n e u r who  to  the  addition  low  of  price  and  t h e r e b y change t h e t o make t h e i t i s not  increase  to change b e n e f i t - c o s t  as  unused necesfeed ratio  investment  inconceivable  h i s p r i c e and  r a t i o s from  0.7  feed to  op-  cap-  d e c r e a s e the  change t h e  and  that  commenced  availability will  the  the  special circumstances  sufficiently In  firm  at  the  necessarily  opportunity.  sufficiently  feedlot  investment opportunity  i t c a n n o t be  feedlot operation  investment  the  of  suitable buildings not  pre-  Thirdly,  Such s p e c i a l c i r c u m s t a n c e s  in buildings other  that  volume  represent  to another  desirable astute  head and  and  indicates the  the  percent.  i n existence  investment but  benefits  1500  decreases  buildings,  rate.  of  increases  to cover  particular existing feedlot  available  investment  margins  of  invest-  policy  process  thereby  i n land,  sufficient  s i z e group i s a d o u b t f u l  feedlots  would not  ital  any  per  and  the  the  high c a p i t a l investment  emphasized  report  feeding  undertaken s t i l l  c a t t l e i s a doubtful of  Secondly,  percent discount  with a unit d r y l o t capacity 3000 head o f  beef gain  analysis  were n o t  indicates  i n the  investment  i n v e s t m e n t a t a 10  analysis  equipment.  hundredweight of  income c o n t r i b u t i o n  the  and  income t o c o v e r  of  a that  margins greater  106 t h a n 1.0 areas  f o r some o f  the  dollars  the  feedlot  examples.  appreciation i n land value  per  acre  per  ready a p p r e c i a b l e l o t s m a k i n g an  year  and  thereby  income f r o m  extensive  V.  AN  use  will  land  be  land value  in their  EVALUATION OF  greater  than  fifty  f u r t h e r i n c r e a s e the a l -  increased of  L a s t l y , i n some  THE  i n those  feed-  program.  FUTURE  . INDUSTRY GROWTH An dustry  e v a l u a t i o n of  i n terms o f  the  growth of  the  report. At  product tor  the  outset  level  short or of  a n a l y s i s of  the  necessary  their  ranch  feeder  continue tion  i t can the long  be  increase  run  given  exist  and  i n s i z e of  cattle  and  calves  the  The  question  be  for high  the  lending  to  l a c k o f knowledge o f  will  of  information  regarding  the  s e c t i o n of  an  inhibiting  the  supply  i n the  feeder  inventory  be m e n t i o n e d  the  the of  year  will  f e e d l o t operacattle  throughout  capital  is  left  t h a t any d i s c r i m i n a t i o n  i s no  d o u b t due  i n d u s t r y b u t more l i k e l y s e c u r i t y and  future for  However,  months o f  of  products.  the m a j o r i t y  fed beef  pre-  indicate that  industry.  f o r the  the fac-  the  quality,beef  exist  intermediaries the  in this  markets would  o f adequacy of  i t should  inhibit  c o n t i n u a t i o n of  i n a few  to create d i f f i c u l t i e s  by  not  i n d u s t r y p r a c t i c e of marketing  unanswered a l t h o u g h practiced  most l i k e l y  t h a t l a c k o f demand f o r  industry w i l l  i n a c q u i r i n g a continuous  the year.  said  input resource  resources  appreciable  present  the  Fraser V a l l e y fed beef i n -  i n d u s t r y i s set out  consumer p r e f e r e n c e  The  an  present  factors that w i l l  present  p r o d u c e d by  i n the  sent  the  the  the  somewhat  to the  profitability  of  lack the  107^ particular It factor  enterprise. i s considered  to a s u b s t a n t i a l i n c r e a s e  opportunity to for  t h a t t h e most c o n s e q u e n t i a l  f o r the  his resources, the  use  entrepreneur  given  the  i n the  2  i n d u s t r y i s the  to a c q u i r e  present  inhibiting  sufficient  lack  of  returns  alternative opportunities  o f h i s l a b o r , management, l a n d ,  and  capital  in  the  economy. No in  the  f u t u r e due  already the  own  feeding  other  to the  p r o g r a m and  reasons,  resulting  special  fact  t h a t the  the b u i l d i n g s and/or  e n t e r p r i s e s , or  personal is  d o u b t some more f e e d l o t o p e r a t i o n s  or  the  the  operators,  wishes to stay  encroachment of  permit  i n most  land which they  i n a substantial increase  circumstances  come i n t o  fed beef operation w i l l  the o p e r a t o r the  will  the  cases, use  in  complement  i n the  industrial  i n the  can  being  area  for  development,  land value  profitable operation  or  of  other  the  feedlot. In  summation, w i t h o u t  ment o f r e s o u r c e s Valley  region w i l l  sources  i n the  2  relation Mainland  to the not  special  production  circumstances, of  n e c e s s a r i l y be  fed beef the  best  the  i n the use  commitFraser  of the  re-  economy.  T h e s u b s t a n t i a l i n c r e a s e i s r e f e r r i n g t o an i n c r e a s e i n t o t h e t o t a l f e d b e e f m a r k e t r e q u i r e m e n t s o f t h e Lower and V a n c o u v e r I s l a n d r e g i o n s .  108  Topics  For F u r t h e r Research  1.  The  adequacy o f the s h o r t  the requirements  term c a p i t a l  of the f e e d l o t  firm  s u p p l y t o meet  in British  Columbia. 2.  The  comparative  economic advantage  the F r a s e r V a l l e y ing high q u a l i t y  or disadvantage of  - Lower M a i n l a n d beef  region  f o r the l o c a l  large  for providconsumer  market. 3.  A comprehensive and  4.  calves  study o f the marketing  in British  of a l l c a t t l e  Columbia.  A study of the f a c t o r s which  cause  beef c a t t l e  t o be m a r k e t e d  from  the ranches  months o f t h e y e a r ; w i t h t h e v i e w w h e t h e r o r n o t i t w o u l d be parties  concerned  the m a j o r i t y of  to  indicating  an a d v a n t a g e  to a l l  to spread the marketing  more e v e n l y t h r o u g h o u t  the y e a r .  i n three  of  cattle  B I B L I O G R A P H Y  110 BIBLIOGRAPHY A.  BOOKS  D e G r a f f , H.F. B e e f P r o d u c t i o n and D i s t r i b u t i o n . Norman: U n i v e r s i t y o f Oklahoma P r e s s , 1960.  First  Edition.  L e f t w i c h , R.H. The P r i c e S y s t e m and R e s o u r c e A l l o c a t i o n . York: H o l t , R i n e h a r t and W i n s t o n , 1966. Q u i r i n , D a v i d G. The C a p i t a l E x p e n d i t u r e D e c i s i o n . Illinois: R i c h a r d D~. I r w i n I n c . , 1967.  New  Homewood,  U r q u h a r t , M.C., and K.A.H. B u c k l e y . H i s t o r i c a l S t a t i s t i c s o f Canada. T o r o n t o : M a c M i l l a n Company o f Canada L t d . , 1965. W o r k i n g , E l m e r J . Demand f o r Meat. v e r s i t y o f C h i c a g o P r e s s , 1954.  B.  Chicago, I l l i n o i s :  The U n i -  PUBLICATIONS OF THE GOVERNMENT  A l l a n , A . J . B r i t i s h Columbia Department o f A g r i c u l t u r e , "Second A p p r o x i m a t i o n R e p o r t - Peace R i v e r D i s t r i c t . " V i c t o r i a , B.C. Mimeographed. B r i t i s h Columbia. 1959.  Beef Grading A c t .  Victoria:  Queens  Printer,  B r i t i s h C o l u m b i a D e p a r t m e n t o f i n d u s t r i a l D e v e l o p m e n t , T r a d e and Commerce. B u r e a u o f E c o n o m i c s and S t a t i s t i c s . S a l a r y and Wage R a t e S u r v e y . Victoria: Queens P r i n t e r , 1966. B r i t i s h C o l u m b i a D e p a r t m e n t o f I n d u s t r i a l D e v e l o p m e n t , T r a d e and Commerce. B u r e a u o f E c o n o m i c s and S t a t i s t i c s . R e g i o n a l Index of B r i t i s h Columbia. Victoria: Queens P r i n t e r , 1966. B r i t i s h Columbia Department o f A g r i c u l t u r e . C l i m a t e o f B r i t i s h Columbia. Victoria: Queens . P r i n t e r , 1966. Canada D e p a r t m e n t o f A g r i c u l t u r e , L i v e s t o c k P r o d u c t i o n a n d Marketing Branch. A n n u a l R e p o r t s . V a n c o u v e r , B.C. Mimeographed. Canada D e p a r t m e n t o f A g r i c u l t u r e , P r o d u c t i o n and M a r k e t i n g B r a n c h . L i v e s t o c k M a r k e t Review •. - O t t a w a : Queens P r i n t e r . Canada D e p a r t m e n t o f A g r i c u l t u r e , M a r k e t s I n f o r m a t i o n S e c t i o n . P o u l t r y M a r k e t - Review. Ottawa: Queens P r i n t e r . - . . . Canada Meat I n s p e c t i o n A c t and t h e Meat I n s p e c t i o n R e g u l a t i o n s P.C. 1965-2176. Ottawa: Queens P r i n t e r , 1965.  Ill Dominion Bureau o f S t a t i s t i c s , Food Consumption i n Canada.  A g r i c u l t u r e D i v i s i o n . Apparent Ottawa: Queens P r i n t e r , 1966.  D o m i n i o n B u r e a u o f S t a t i s t i c s , A g r i c u l t u r e D i v i s i o n . R e p o r t on L i v e s t o c k S u r v e y s , C a t t l e ^ Sheep - H o r s e s . O t t a w a : QueensPrinter. Dominion Bureau o f S t a t i s t i c s . Printer.  Canada  Domion B u r e a u o f S t a t i s t i c s . Livestock tistics. Ottawa: Queens P r i n t e r .  Yearbook.  Ottawa:  Queens  and A n i m a l P r o d u c t S t a '  Dominion Bureau of S t a t i s t i c s . 1966 C e n s u s o f Canada, Volume J u n e 1967. Ottawa: Queens P r i n t e r , 1967.  1.  D e p a r t m e n t o f N a t i o n a l Revenue, T a x a t i o n . F a r m e r s ' and F i s h e r mans ' Income Tax G u i d e . Ottawa: Queens P r i n t e r , 1967. C. K e r r , T.C. Policy. Ottawa:  MISCELLANEOUS PUBLICATIONS  An E c o n o m i c A n a l y s i s o f t h e F e e d F r e i g h t A s s i s t a n c e A g r i c u l t u r a l Economics R e s e a r c h C o u n c i l o f Canada. Queens P r i n t e r , 1966.  L o g a n , S.H. "Economics o f S c a l e i n C a t t l e F e e d i n g , " S u p p l e m e n t No. 3 t o T e c h n i c a l S t u d y No. 1, O r g a n i z a t i o n and C o m p e t i t i o n i n t h e L i v e s t o c k and Meat I n d u s t r y . N a t i o n a l C o m m i s s i o n on Food M a r k e t i n g , J u n e 1966. M a n n i n g , T r a v i s W. Country Livestock Auctions formance . A g r i c u l t u r a l E x t e n s i o n T e c h n i c a l Edmonton: U n i v e r s i t y o f A l b e r t a , 19 67.  and M a r k e t P e r B u l l e t i n 1.  . "Feed Q u a l i t y Sub-Committee R e p o r t , " Ruminant N u t r i t i o n Committee M e e t i n g O c t o b e r 2 6 t h , 1966. Mimeographed.  A P P E N D I C E S  113 APPENDIX A C a l c u l a t i o n o f R e a l Income P e r C a p i t a i n Canada 1948-19.66<*j  Year  Personal expenditures on consumer goods and services constant & 1949  Population 1000's  R e a l income per c a p i t a • $  1948  $10,451,000,000  12,823  815  1949  10,923,000,000  13,447  812  1950  11,642,000,000  13,712  849  1951  11,817,000,000  14,009  1952  12,633,000,000  14,459  874  1953  13,338,000,000  14,845  898  1954  13,650,000,000  15,287  893  1955  14,662,000,000  15,698  934  1956  15,603,000,000  16,081  970  1957  16,083,000,000  16,610  968  1958  16,585,000,000  17,080  971  1959  17,392,000,000,  17,483  995  1960  17,945,000,000  17,870  1004  1961  18,508,000,000  18,238  1015  1962  19,351,000,000  18,570  1042  1963  20,175,000,000  18,896  1068  1964  21,336,000,000  19,235  1109  1965  22,800,000,000  19,571  1165  1966  23,943,000,000  Dominion Bureau of S t a t i s t i c s , ( O t t a w a : . Queens P r i n t e r ) .  Canada  .  843  Yearbook,  ^ U r q u h a r t , M.C., and K.A.H. B u c k l e y , H i s t o r l e a l S t a t i s t i c s o f C a n a d a, ( T o r o n t o , M a c M i l l a n Company o f Canada L t d . , 1 9 6 5 ) .  APPENDIX B Per  C a p i t a C o n s u m p t i o n and P r i c e s o f B e e f , P o r k and C h i c k e n s i n Canada 1947-66  Figures consumption was  4,5,  and  6 were drawn by c o n v e r t i n g  f i g u r e s and t h e p r i c e s t o b a s e o f 10 0.  t h e a v e r a g e o f t h e 1947-49 p e r i o d  53 f o r t h e  the per c a p i t a The  f o r b e e f and p o r k and  4, r e p r e s e n t i n g ,  beef consumption  and p r i c e s ,  b a s e d on t h e p e r c a p i t a c o n s u m p t i o n  of beef  the  f o r Choice steers at  average monthly Figure  p r i c e p e r pound  5, r e p r e s e n t i n g  average monthly Figure  of  p r i c e per.pound  6, r e p r e s e n t i n g  the chicken  pound b r o i l e r The  chickens  Statistics, Ottawa,  published  Canada;  M a r k e t Review  and  Canada D e p a r t m e n t  of chicken  and  Calgary.  and p r i c e s ,  and t h e p r i c e  f o r t h e above c a l c u l a t i o n s  the L i v e s t o c k  by t h e D o m i n i o n  and A n i m a l P r o d u c t  Bureau of  the L i v e s t o c k Market  published  was  ( c a r c a s s weight)  consumption  and  a t Vancouver.  sources of information  were t h e Canada Y e a r Book and  was  Calgary.  and p r i c e s  f o r G r a d e A Hogs a t  b a s e d on t h e p e r c a p i t a c o n s u m p t i o n 4-5  1951-  ( c a r c a s s weight)  pork consumption  b a s e d on t h e p e r c a p i t a c o n s u m p t i o n o f p o r k  was  used  chickens.  Figure  the  base  by t h e P r o d u c t i o n  o f A g r i c u l t u r e , Ottawa,  Review  Statistics, and t h e P o u l t r y  and M a r k e t i n g B r a n c h , Canada.  APPENDIX C E s t i m a t e d C o n s u m p t i o n o f C h o i c e and Good G r a d e B e e f Lower M a i n l a n d and V a n c o u v e r I s l a n d R e g i o n s Units Population  1951  1961  1962  1963  i n the  1964  1965  1966  a  Lower Mainland Vancouver Island  persons  Total  649,238  907,531  934,323  961,115  987,907 1 ,014,700  215,003  290,835  298,151  305,467  312,783  320,100  864,241 1 ,198,366 1 ,232,474 1 ,266,582 1 ,300,690 1 ,334,800 1,355,742  Consumption of Choice & Good G r a d e Beef Apparent per C a p i t a Consumption o f Beef &  percent  24.9  51.4  46.9  52.2  54.3  49.3  51.6  e  lbs/capita  49.3  69.7  69.2  73.7  78.5  81.7  82 .7  507 .0  530. 2  529.5  542. 7  542.1  530. 7  545.5  12.3  35.8  32.4  38.5  42.6  40.3  42.7  102,211  101,361  Average Carc a s s Wts o f , Beef Animals  lbs/hd  Apparent per C a p i t a Consumption o f C h o i c e & Good Grade Beef d  Consumption of Choice & Good G r a d e B e e f Cattle 6  lbs  head  20,967  80,916  75,414  89,852  106,123  APPENDIX C Sources  (continued)  of Information  D o m i n i o n B u r e a u o f S t a t i s t i c s , 1951, 1961, 1966 C e n s u s Of C a n a d a , op. C o l u m b i a D e p a r t m e n t o f I n d u s t r i a l D e v e l o p m e n t , T r a d e and Commerce, op. c i t . a  ^Canada D e p a r t m e n t o f A g r i c u l t u r e , M a r k e t s B r a n c h , op. c i t . ^Dominion Bureau of S t a t i s t i c s , Queens P r i n t e r , 1 9 6 7 ) .  Apparent  Information Section,  c i t . and  P r o d u c t i o n and  per C a p i t a Consumption o f Food,  British  Marketing  (Ottawa:  ^ A p p a r e n t p e r C a p i t a C o n s u m p t i o n o f Canada C h o i c e and Canada Good g r a d e b e e f was c a l c u l a t e d my m u l t i p l y i n g t h e a p p a r e n t c o n s u m p t i o n o f b e e f ( a l l g r a d e s ) by, t h e p e r c e n t a g e o f t h e t o t a l i n s p e c t e d c a t t l e s l a u g h t e r w h i c h g r a d e d Canada C h o i c e and Canada Good. T h e number o f Canada C h o i c e and Canada Good g r a d e f e d c a t t l e r e q u i r e d t o meet t h e c o n sumer r e q u i r e m e n t s i s c a l c u l a t e d by m u l t i p l y i n g t h e r e g i o n s p o p u l a t i o n by t h e a p p a r e n t c o n s u m p t i o n o f Canada C h o i c e and Canada Good g r a d e b e e f and d i v i d i n g t h e q u o t i e n t by t h e a v e r a g e w e i g h t o f c a t t l e ( p e r head) f o r t h e p a r t i c u l a r y e a r u n d e r a n a l y s i s . e  1  117  APPENDIX D C h a n n e l s o f S u p p l y o f F e d B e e f t o t h e Lower M a i n l a n d and V a n c o u v e r I s l a n d R e g i o n a l Markets (Number o f C a t t l e )  Estimated Consumption of C h o i c e and Good G r a d e Beef a  Year  no.  S l a u g h t e r e d i n t h e Lower M a i n land & Vancouver I s l a n d a r e a  o f B.C.  i m p o r t e d as Origin Slaughter Cattle no.  no.  Estimated Imports as carcass beef no.  1962  75,410  17,535  32,013  25,866  1963  89,850  16,808  36,157  36,887  1964  102,210  21,148  30,269  50,794  1965  101,360  23,025  24,655  53,681  1966  106,123  23,298  32,720  50,105  See A p p e n d i x  C for calculations.  ^ L i v e s t o c k P r o d u c t i o n and M a r k e t i n g B r a n c h , Canada D e p a r t ment o f A g r i c u l t u r e , V a n c o u v e r , B.C., "Weekly Summary S l a u g h t e r house I n s p e c t i o n S h e e t s . "  118 APPENDIX E Monthly  Beef C a t t l e P r i c e s a t C a l g a r y and V a n c o u v e r 19 62-67 1^  Year  Calgary" Choice Steers  Calgary" Good Steers  $/cwt  $/cwt  Feedlot Fed Beef Prices $/cwt  1961 S 0 N D  Calgary" Good F d r Steers  Feedlot Feeder Steer Prices c  $/cwt  $/cwt  21.01 20.43 21.22 21.71  21.52 20.94 21.73 22.22  1962 J F M A M J J A S 0 N D  24.20 22.86 23. 00 23.74 24.74 25.32 26. 24 26.96 27. 98 27.83 27.56 25.98  23.15 21.75 21. 97 22.46 23.68 24.01 24.92 25.48 26. 64 26.35 26.02 25.00  25.76 24.40 23.56 24.27 25.02 25.84 26.60 26.95 27.52 27.91 27.46 26.64  21.95 21.32 22.41 22.99 23.40 23.89 24.16 25.12 25.77 25.36 24.92 24.80  22.76 21.83 22.92 23.50 23.91 24.40 24.67 25.63 26. 28 25.87 25.43 25.31  1963 J F M A M J J A S 0 N D  23.63 22. 28 21.52 22.86 23.1.9 23.93 2.5.13 25. 52 25. 23 23.12 22.09 20.98  22.88 21. 53 20. 67 21.77 22.10 22.87 24.03 24. 20 24. 28 22. 04 21.07 20.16  24.94 23.19 22. 07 22. 39 23. 08 23.50 24.69 25.17 25. 31 25.09 22.7.9 21.89  23.38 22.97 22.70 24.31 24.11 24.18 24. 60 24.70 23.91 22.59 21.54 20.46  23.89 23.48 23.21 24.82 24.62 24.69 25.11 25.21 24.42 23.10 22. 05 2 0.97  1964 J F M A M J J A S 0 N D  20.96 21.19 22. 44 23. 08 23. 06 22.90 23.10 22.31 21.96 21.27 20.97 21. 22  19.91 20.30 21.49 22.11 22.13 22.03 22.07 21.37 20.96 20.23 19.88 20.20  21.25 21.71 22.66 23. 64 23.46 23.00 23.35 23.20 22. 96 22.33 21.49 21.89  20.32 21.14 21.92 22.40 22.55 21.83 21.68 20.40 19.99 19.85 19.89 19.54  20.83 21. 65 22.43 22.91 23.05 22.34 22.19 20.91 20.50 20.36 20.40 20.05  119  APPENDIX E  Year  Calgary Choice Steers  a  Calgary Good Steers  a  (continued)  Feedlot Fed B e e f Prices  Calgary Good F d r Steers a  Feedlot Feeder Steer Prices  $/cwt  $/cwt  $/cwt  $/cwt  $/cwt  1965 J F M A M J J A S 0 N D  21. 48 22.11 22. 31 22.72 24.43 25.24 24.95 24. 27 23.79 23.70 24.14 24.80  20.52 21. 08 21. 24 21.82 23.33 24.15 23.70 23.33 22.86 22.65 23.08 23.67  22. 24 22.76 22.99 23.07 24.15 25.11 25.08 24.66 23.89 23.86 23.75 24.75  18 . 97 2 0.39 20.81 21.33 21.98 22.91 22.69 22.48 .22.13 22.09 22.26 22.22  19.48 20.90 21.32 21.84 22.49 23.42 23.20 22.99 22.64 22.60 22.77 22.73  1966 J F M A M J J A S 0 N D  26. 62 26.63 26. 20 25.98 25.60 24.98 24. 41 24. 25 25.02 25.22 25.24 26. 35  25.32 25.52 25. 22 25.10 24.75 24.13 23.52 23.43 24.11 24.22 24.47 25.40  26.06 26.95 26.55 25.99 25.57 24.78 24.76 24.90 25. 03 25.49 25.44 26.24  23.83 25.48 26.10 26.00 25.65 25. 09 23.86 23. 37 24.72 25. 00 24.88 24.91  24.34 25.99 26.61 26.51 26.16 25.60 24.37 23.88 25.23 25.51 25. 39 25.42  1967 J F M A M J J A S 0 N D  26. 6.5 25.86 25. 07 24.73 25.40 26.48 26.47 27.12 28.8 8 28.72 28.10  25. 61 25.23 24.50 24.15 24.64 25.71 25.84 26. 21 27.78 27.88 27.23 26.89  25.85 25.42 25.17 25. 24 25.43 26.51 27.75 27.88 28.96 28.24 27.86  25. 54 25. 39 25. 82 25.89 26.22 26.35 25.94 25.98 27.12 27 .14 26.38 26.00  26.05 25.90 26.33 26.40 26.73 26.86 26.45 26.49 27.63 27.65  120  APPENDIX E ( c o n t i n u e d )  L i v e s t o c k P r o d u c t i o n and M a r k e t i n g B r a n c h , Canada D e p a r t ment o f A g r i c u l t u r e , L i v e s t o c k ' M a r k e t Review, (Ottawa: Queens Printer, 1961-67). The f e e d l o t f e e d e r c a t t l e p r i c e i s c a l c u l a t e d by s u b t r a c t i n g the e s t i m a t e d average t r a n s p o r t a t i o n c o s t from the B r i t i s h C o l u m b i a S o u t h e r n I n t e r i o r t o C a l g a r y , A l b e r t a and a d d i n g t h e c o m m i s s i o n a g e n t ' s c o m m i s s i o n and t h e a v e r a g e t r a n s p o r t a t i o n c o s t from the Southern I n t e r i o r t o the f e e d l o t ; t o the average m o n t h l y good f e e d e r c a t t l e p r i c e on t h e C a l g a r y T e r m i n a l M a r k e t . The t r a n s p o r t a t i o n c o s t i s c a l c u l a t e d on a n e t w e i g h t b a s i s . F o r example, t h e September 1961 f e e d l o t f e e d c a t t l e p r i c e i s 21.01 - .50 + .25 + .76 = $21.52 p e r cwt. T h e f e e d l o t f e d b e e f c a t t l e p r i c e i s b a s e d on t h e c a t t l e b e i n g o n e - h a l f c h o i c e and o n e - h a l f good g r a d e b e e f s t e e r s . The p r i c e i s c a l c u l a t e d by c o n v e r t i n g t h e a v e r a g e m o n t h l y w h o l e s a l e C h o i c e and Good g r a d e b e e f c a r c a s s p r i c e a t V a n c o u v e r t o a l i v e w e i g h t b a s i s and a d d i n g (or s u b t r a c t i n g ) o n e - h a l f o f t h e d i f f e r e n t i a l between t h e C h o i c e and Good f e d b e e f s t e e r p r i c e s on t h e . C a l g a r y T e r m i n a l M a r k e t and s u b t r a c t i n g t h e a v e r a g e t r a n s p o r t a t i o n c o s t from the f e e d l o t t o the s l a u g h t e r h o u s e . A d r e s s i n g p e r c e n t a g e o f 56 p e r c e n t f o r C h o i c e g r a d e and 54 p e r c e n t f o r Good g r a d e c a r c a s s b e e f i s assumed. An example o f t h e c a l c u l a t i o n s i s g i v e n f o r t h e J a n u a r y , 1962 f e e d l o t f e d b e e f c a t t l e price. (47.3 x .56) + .5(24.20 - 23.15) - .11 = $25.76 p e r cwt. G  APPENDIX F Estimated Beef cow population (t-1)  Year (t)  Number o f F e e d e r C a t t l e P r o d u c e d  Calf population f e  i n B.C.  Heifer r e p l a c e - Feeder^ Feeder ments Steers Heifers Heifers e  f  6  N U M B E R  0 F  Feeder Cattle  J  H E A D  1960  113,000  84,750  17,700  42,375  42,375  24,675  67,050  1961  118,000  88,500  18,700  44,250  44,250  25,550  69,800  1962  124,700  93,500  20,000  46,750  46 ,750  26,750  73,500  1963  133,500 100,150  21,600  50,075  50,075  28,475  78,550  1964  144,000 108,000  23 ,700  54,000  54,000  30,300  84,300  19 65  158,000 118,500  25,500  59,250  59,250  33,750  93,000  1966  170,000 127 ,750  25,800  63,750  63,750  37,950 101,700  1967  172,000 129,000  24,750  64,500  64,500  39,750 104,250  The number o f f e e d e r c a t t l e a v a i l a b l e i n y e a r t depends upon t h e c a l f p r o d u c t i o n i n t h e p r e c e d i n g y e a r , t h u s t h e cow p o p u l a t i o n t o be u s e d i n c a l c u l a t i n g t h e numbers o f f e e d e r s a v a i l a b l e , as y e a r l i n g s , i s t h e p r i o r y e a r ' s p o p u l a t i o n . Source o f i n f o r m a t i o n was A g r i c u l t u r e D i v i s i o n , D o m i n i o n B u r e a u o f S t a t i s t i c s , Ottawa; R e p o r t on L i v e s t o c k S u r v e y s C a t t l e - Sheep Horses. JL  The 75% mated b e e f c a l f p r e t e d from t h e e s t i m a t e d 14.1% the f i g u r e used  c a l f c r o p was d e r i v e d a t by u s i n g t h e 1965 e s t i c r o p p e r c e n t a g e o f b e e f cow p o p u l a t i o n as i n t e r above i n f o r m a t i o n s o u r c e (60.9%) and a d d i n g an f o r the dairy-beef cross feeders. Implicit i n i s a l s o a 5% c a l f c r o p l o s s e s t i m a t e .  T h e 15% r e p l a c e m e n t s f o r t h e b a s i c h e r d was assumed f o r l a c k o f a more o b j e c t i v e f i g u r e . The cow p o p u l a t i o n o f y e a r t was assumed t o be a good b a s i s f o r e s t i m a t i n g t h e r e p l a c e m e n t s n e c e s s a r y i n l i g h t o f t h e f l u c t u a t i n g cow p o p u l a t i o n numbers between y e a r s . c  The number o f b u l l c a l v e s k e p t f o r r e p l a c e m e n t s i n t h e h e r d i s c o n s i d e r e d t o be n e g l i g i b l e f o r t h e c a l c u l a t i o n s . The p e r c e n t a g e o f h e i f e r s t o s t e e r s i s assumed t o be 50 p e r c e n t . T h e number o f f e e d e r h e i f e r s i s c a l c u l a t e d b y s u b t r a c t i n g h e i f e r r e p l a c e m e n t s from t h e t o t a l e s t i m a t e d number o f h e i f e r s e  the  T h e number o f f e e d e r c a t t l e ( y e a r l i n g s ) i s c a l c u l a t e d by t h e f e e d e r h e i f e r s and t h e f e e d e r s t e e r s .  J  adding  122  APPENDIX G E s t i m a t e d Number o f Good and C h o i c e Type F e e d e r C a t t l e P r o d u c e d i n B.C. Percentage (Canada Av.) Number o f S t n d . S t n d & Comm.l & Commercial 1 Grade type animals  Number o f Good & Choice Feeder C a t t l e  Year  Feeder" Cattle  1960  67,050  13.7  9,190  57,860  1961  69 ,800  14.1  9,840  59 ,960  1962  73,500  14.6  10,730  62,770  1963  78,550  13.5  10,600  67,950  1964  84 , 300  13.2  11,130  73,170  1965  93,000  13.  12,090  80,900  1966  101,700  12.8  13,000  88,700  1967  104,250  12.8  13,340  90,900  See A p p e n d i x  C  F.  ^Canada D e p a r t m e n t o f A g r i c u l t u r e , L i v e s t o c k P r o d u c t i o n and M a r k e t i n g B r a n c h , V a n c o u v e r , B.C., A n n u a l R e p o r t s . The p e r c e n t a g e o f S t a n d a r d and C o m m e r c i a l 1 G r a d e c a t t l e k i l l e d i n Canada i s c o n s i d e r e d a r e a l i s t i c e s t i m a t e o f t h e number o f f e e d e r c a t t l e t h a t w i l l n o t be b r o u g h t t o a c o n d i t i o n suffici e n t f o r t h e Good and C h o i c e g r a d e b e c a u s e o f g e n e t i c c o n s t i t u t i o n , management o r o t h e r s l a u g h t e r a l t e r n a t i v e s . ^ P e r c e n t a g e o f S t a n d a r d and C o m m e r c i a l 1 g r a d e c a t t l e n o t a v a i l a b l e a t t h e t i m e o f w r i t i n g so t h e p e r c e n t a g e was assumed t o be t h e same as 1966.  123 APPENDIX H Number o f C a t t l e and C a l v e s S h i p p e d t o P r o v i n c e s East of B r i t i s h Columbia a  Canada Census Division Number  l  b  2 3  4 5 6  bulls  total  2773  117  7755  West Kootenay  627  603  446  110  51  1837  Okanagan, Similkameen, Boundary  716  845  557  2370  16  4504  1003  -  1067  Lower Mainland  64  —  -  Vancouver Island  _  _  _  4254  8716  2240  —  —  Peace c  calves  972  —  Northwestern B.C.  10  heifers  1917  Central Interior  9  steers  1976  Lower Coast  8  cows  East Kootenay  ShuswapChilcotin  7  Total  Region  River  3035 —  5042 —  1979 —  —  7768  -  _  —  36  23014  —  —  3900  81  14037  -  —  -  4650  3288  1527  4099  258  13822  15322  20411  7721  22023  559  66036  C o m p i l e d by t h e w r i t e r f r o m B r a n d C e r t i f i c a t e I n v o i c e s reviewed i n the o f f i c e o f t h e Recorder o f Brands, Department o f A g r i c u l t u r e , V i c t o r i a , B.C. The a n a l y s i s i s b a s e d upon t h e p o i n t o f i n s p e c t i o n o f t h e c a t t l e and c a l v e s . Some o f t h e c a t t l e w i l l n o t h a v e b e e n r a i s e d i n the r e g i o n i n which the i n s p e c t i o n o c c u r r e d . Therefore, the a n a l y s i s o n l y approximates the shipments from each r e g i o n . T h e d i f f e r e n c e between t h e t o t a l c a t t l e and c a l v e s i n d i c a t e d i n t h e t a b l e and t h a t r e p o r t e d by t h e R e c o r d e r o f B r a n d s (67,4 37 head) i s due t o t h e w r i t e r ' s e f f o r t s t o l e a v e o u t d a i r y c a t t l e from t h e a n a l y s i s . The above a n a l y s i s s t i l l i n c l u d e s an unknown number o f d a i r y c a t t l e . c  124  APPENDIX I Movement for  o f Feed G r a i n s i n t o Southern B r i t i s h Columbia t h e F i s c a l Y e a r s , 1 9 6 3 - 6 4 and 1 9 6 4 - 6 5 1  Year  Item  Peace R i v e r  2  Prairie Provinces  (tons)  1963- 64  36,745.2  (tons)  1964- 65  35,753.3  Percentage of T o t a l Wheat  1963- 64  78.0  22.0  100.0  1964- 65  78.0  22.0  100.0  Oats  (tons)  1963- 64  18,941.8  17,950.1 36,891.9  25.8  (tons)  1964- 65  18,917.6  24,544.5 43,462.1  27.0  Percentage of T o t a l Oats  1963- 64  51.0  49.0  100.0  1964- 65  43.0  57.0  100.0  Barley  (tons)  1963- 64  48,211.9  10,557.6  58,769.5  41.0 .  (tons)  1964- 65  63,219.5  8,574.3  71,793.8  44.6  Percentage' of Total Barley  1963- 64  82.0  18.0  100.0  1964- 65  88.0  12.0  100.0  Totals  1963-64 103,898.9  Feedgrain  19 6 4 - 65  Wheat  Percentage Change  10,540  Total  Percentage of Total  47,285.2  33.2  9,881.8 45,635.1  28 .4  39,047.7 142,946.6  117 , 8 9 0 . 4 9.8  100.0  4 3 , 0 0 0 . 6 160,891.0 100.0 2.8  12.6  Sources: K e r r , - T . C . , An E c o n o m i c A n a l y s i s o f t h e F e e d F r e i g h t A s s i s t a n c e P o l i c y , A g r i c u l t u r e Economics Research C o u n c i l o f C a n a d a , 1966. 1  2  -  Canada L i v e s t o c k Feed  Board  Records, Vancouver,  B.C.  125  APPENDIX Movement  o f F e e d G r a i n s i n t o t h e Lower M a i n l a n d and Vancouver I s l a n d Regions f o r the F i s c a l Y e a r 1964-65 ( t o n s )  Item  Peace R i v e r  Wheat  35,319.7  Percentage of  total  Oats Percentage of  total  Barley-  Source: B.C.  total  Prairie Provinces  20.7  17,638.1  18,454.3  49  90  Total  9,216.4 44,536.1  79.3  61,238.1  Percentage of  J  51  97.6  100 36,092.4  83.0  100  6,839.4 68,077.5 10  Percentage o f T o t a l B. C. Movement  94.8  100  Canada L i v e s t o c k F e e d B o a r d R e c o r d s ,  Vancouver,  126 APPENDIX K Analysis of Grain Year & Month  Grain Screenings $/ton  Prices  Grain Screening Pellets  a t Vancouver,  Refuse Screenings  B.C. - 1962-67  Number One Feed Grade Feed Oats  Number One Feed Grade Barley  $/ton  $/ton  $/ton  $/ton  39.15 39.70 39.70 39.75 39.75 40.85  19.00 20.50 23.00 23. 00 23.50 23.50 23.50 23.50 24. 00 25.00 26.00 27.00  58.05 58.05 58 .05 58.05 64.90. 64.30 63.55 60.15 54.50 49.80 49.80 50.60  55.05 58.40 58.40 58. 40 6 5.60 64.10 62.25 59.90 54.20 54.20 54.20 54.20  47.00 47.00 47. 00 47.00 47.00 47. 00  42.15 42.55 42.30 40.80 39.80 39.50 39.40 37.15 33.75 32.50 33.50 33.50  27.00 27.50 27.50 27.50 26.10 25.00 24. 50 24.00 22.50 21. 00 21.50 21.50  51.45 51.45 51.45 51.45 51.45 51.45 . 51.45 51.45 49.60 47 .75 50.20 50.20  54.20 54.20 54.20 54.20 54.20 54. 20 54.20 54.20 50.30 46.40 48.00 48 .80  45.00 45.00 44. 00 42.00 42.00 42. 00 42.50 43.00 44.00 45.00 46.00 47.00  35.50 35.20 34. 90 31.85 28.60 28.70 29. 00 29.70 29.55 30.00 35.00 37.15  21.50 20.25 18.25 16.75 16.00 16.00 16.00 16. 00 16.00 17.00 20.25 22.50  51.00 51.00 51.00 51.00 51.00 51.00 51.00 51.00 51.00 51.00 51.00 51.00  50.60 51.45 51.45 51.45 51.45 51.45 51.45 51.45 51.45 51.45 51.45 51.45  1962 Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.  44. 00 45.00 45.00 45. 00 47.50 52.50 55. 00 54.25 51.75 48. 50 47.00 47.00  a  a  a a  a  a  1963 Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 1964 Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.  Wheat B o a r d  Prices.  a  a  127  APPENDIX K Year & Month  Grain Screenings $/ton  Grain Screening Pellets  (continued)  Refuse Screenings  Number One F e e d Grade Feed Oats  Number One F e e d Grade Barley  $/ton  $/ton  $/ton  $/ton  37.55 37. 55 41. 30  41.00 41.05  22. 50 28.25 28.25 26.60 25.50 28.00 30.00 30.00 30 . 00 27.50 25.50 , 26. 00  51.00 51.00 53.50 53.50 53.50 53.50 53.50 53. 50 53.50 53.50 53.50 53.50  51.45 51.45 52.75 53.00 53.00 53.00 53.00 53.00 52.50 52.00 52.00 52.00  49.50 49.50 49. 50 49.50 49.50 50.25 50.75 51. 00 51.00 51.00 51.00 51. 00  41.45 42.00 42.00 39.60 37.75 40.95 44.30 46.25 47. 50 47.50 47. 50 47.50  27.50 29.00 28.00 26.20 23.25 22.50 24.50 28.00 29.00 28.00 28 . 00 28.00  54.75 58.00 60.00 • 60.00 60.00 60.00 60.00 60 . 45 60.90 60.90 60.90 60.90  53.35 57.05 59.40 59.40 59.40 59.40 59.40 59.40 58.05 56.50 56.50 56. 50  51. 00 51. 50 52.00 52.00 52.00 52.00 52. 00 52.00 52.50 53.00 53.00 53-'00  46.55 44.60 43.50 42.50 41.50 38.75 39 .75 39.00 38.50 41.75 40.25 39.50  28.50 28.00 28.00 23.50 23.50 21.25 21.25 22.50 22.50 22.50 24.25. 24.50  61.60 61.60 61.60 61.60 61.60 61.60 61.60 61.60 61.60 61.60 61.60 61. 60  57.10 57.10 57.10 57.10 57.10 57.10 57.10 57.10 57 .10 57.10 57.10 57 .10  1965 Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.  47. 25 47. 50 . 47.50 47.50 47. 50 48.00 48. 50 48 . 50 48 . 50 48.50 49. 00 49.50  44 . 05 46.40 42.00  1966 Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 1967 Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.  2 9-0 0  2 8.0 0  2 7.0 0  2 6.0 0  \  2 5.0 0  \ \  2 4.0 0  /  I I  V  2 3.0 0  2 2.0 0  H  \/ i /  2 1.0 0  Fed S t e e r P r i c e s Feeder Steer P r i c e s Negative P r i c e Margin  2 0.0 0  1 9.0 0  1962  63  6 5  64  66  Years APPENDIX L PRICE MARGIN ANALYSIS See A p p e n d i x E f o r p r i c e  series  1962-67 a  67  2 9.0 0  APPENDIX  M  FEED MARGIN ANALYSIS  1962-67  to <x>  130 APPENDIX M  (continued)  C a l c u l a t i o n of Average Feed C o s t Hundred Pounds o f B e e f G a i n A.  Average Feed 40% 20% 35% 5%  B.  Ration  No. 1 F e e d B a r l e y Grain Screening P e l l e t s L o c a l G r a s s Hay M i n e r a l s and P r o t e i n S u p p l e m e n t  It will  be  assumed t h a t  feed  he  requires  be  as  f o r the  the  1962-67 p e r i o d . $22.00 p e r  barley  and  D.  ton  grain  as  presented  the  average feed  be  10.85  presented  using  pellet  the  as  feed  per  minerals  be  constant  prices will  be  u s e d as  ratio  t o one  the  be  The  protein for  the constant The  calculated price  a basis  will  be  pound g a i n  per  of  series calcu-  assumed  equation.  for A p r i l ,  19 67  ton, , f e e d : beef , conversion ratio  .2 (45.54) + beef  gain  gain  .5 (100)  +  .35  (25)  beef  The  example.  (.4) (56.88-) +  to  i n weight.  hundredweight of  following  hundredweight of beef  $24.75/cwt o f  that  assumed t o be  hundredweight of beef g a i n an  and  will  $25.00 f r o m 1965-67.  average cost  using  the  prices.  .average r a t i o n c o s t p e r 20 cost  grain prices  a moving a v e r a g e .  actual  derived  average c o s t per is  price will  to beef conversion  c a l c u l a t i o n of be  hay  the  assumed t o be  average g r a i n  pounds o f  gain w i l l  be  purchases  average g r a i n p r i c e  The  i n Appendix K w i l l  An  The  period.  screening  a monthly b a s i s  of  Thus, the  f r o m 1962-64 and  on  lations C.  The  feedlot operator  average of  feeding  supplement p r i c e s w i l l  at  the  i t .  c a l c u l a t e d t o be  existed  per  10.85  APPENDIX M  (continued)  C a l c u l a t i o n o f A v e r a g e F e e d C o s t p e r One Hundred Pounds o f B e e f G a i n  Year  &  Month  Number One Feed Grade Barley Average P r i c e  Number One F e e d Grade Screening Pellets Average P r i c e  Average Cost per Hundredweight of Gain  1962 Jan. Feb. • Mar. Apr. . MayJune July Aug. Sept. Oct. Nov. Dec.  52.62 53.36 54.94 56.40 57.56 60.20 61.62 62.58 62.96 60.11 57.63 55.62  44.75 44.50 44.50 44.50 44.75 45.62 47.50 46.03 44.7l 42.76 39.57 39.72  54.20 54.20 54.20 54.20 54.20 54.20 54.20 54.20 54. 20 53.22 51. 27 49.7 2  40 .01 40 . 02 . 41.3 6 41.96 41.95 41.36 40.60 39.87 38.96 37.45 35.70 34.22  a a a a a a a a a a  23.16 23.29 23.64 23.96 24.23 24.90 25.42 25.42 25.40 24.57 23.69 23.27  1963 Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.  22.99 23.10 23.13 23 . 20 23.20 23.14 23.06 22.97 22.88 22.50 21.89 21.39  1964 Jan. Feb. Mar. Apr. May June July Aug. . Sept. Oct. Nov. Dec.  48.00 48.45 49.71 50. 57 51.23 51.45 51.45 51.45 51.45 51.45 51.45 51.45  Grain available.  33.31 33.75 34.42 34.77 34.36 32.63 31.01 29.53 29.00 29.23 29.56 31.06  s c r e e n i n g used  since grain  20.92 21.06 21.41 21.63 21.73 21.60 21.42 21.26 21.20 21.23 21.26 21.42 p e l l e t s not  132 APPENDIX M  Year & Month  Number One Feed Grade Barley Average P r i c e  (continued)  Number One F e e d Grade Screening Pellets Average P r i c e  Average Cost per Hundredweight of Gain  1965 Jan. Feb. Mar. Apr. MayJune July Aug. Sept. Oct. Nov. Dec.  51.45 51.45 51.45 51.77 52.16 52.42 52.81 52.87 52.87 52.75 52.50 52.25  32.92 34.92 36.81 38.38 39.42 40. 36 41.98 43.26 43.43 43.61 43.10 41.75  22.19 22.41 22.62 22.86 23.05 23.21 23.47 23.63 23.65 23.64 23.53 23.33  52.00 52.34 53.60 55.45 57.30 58.81 59.40 59.40 59.40 59. 06 58.34 57.61  41.51 41.13 41.38 41.62 41.26 40.33 40.07 40.65 42.31 44.75 46.38 47.18  23.25 23 .28 23.58 24.01 24.37 24.60 24.69 24.76 24.94 25.13 25.15 25.08  56 .89 56. 65 56.80 56.88 57.10 57.10 57.10 57.10 57.10  • 47.50 47.26 46.53 45.54 44.28 43.02 41.56 40.62 39.75  24.95 24.88 24.84 24.75 24.66 24.52 24.36 24.25 24.16  1966 Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 1967 Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.  APPENDIX N Calculation  Year Month  o f Summation o f P r i c e and F e e d  Margins  Summation of P r i c e and Feed M a r g i n  . • a Prxce Margin  Feed Margin  4.24 3.46 1.83 2.05 2.56 4.01 3 . 68 3.45 3.61 3.51 2.79 1.01  2.60 1.11 - .08 .31 .79 . 94 1.18 1.53 2.12 3.34 3.77 3.37  6.84 4.57 1.75 2.36 3.35 4.95 4.86 4.98 5.73 6.85 6.56 5.38  -1.34 -2.68 -3.36 -2.92 - .81 .02 1.48 .35 .'6 9 .40 -2.32 -3. 32  1.95 . 09 -1.06 - .81 - .12 .36 1.63 2.20 2.43 2.59 .90 . 50  .61 -2.59 -4.42 -3.73 - .93 .38 3.11 2.55 3.12 2.99 1.42 -2.82  -2.84 -1.39 .61 2.67 2.63 1.35 .92 .29 - .09 .49 - .70 .98  .66 .65 1.25 2.01 1.73 1.40 1.93 1.94 1.76 1.60 .23 .47  -2.18 - .74 1.86 4.86 4.36 2.75 2.85 2.23 1.67 2.09 - .47 1.45  &  1962 Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 1963 Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 1964 Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.  134  APPENDIX N  Year & Month  _ • a.  (continued)  Summation of P r i c e and Feed Margin  Price Margin  Feed Margin  1.74 2.40 2.59 3.02 4.67 4.21 3.76 2.82 1.40 .44 .55 1.76  .05 .35 .37 .21 1.10 1.90 1. 61 1. 03 .24 .22 .22 1.42  1.79 2.75 2.96 3.23 5.77 6.11 5.37 3.85 1.64 .66 .77 3.18  3.42 4.35 3 .78 3.26 1.23 - 1 . 21 -1.85 - 1 . 61 -1.13 - .11 1. 07 2.36  2.81 3. 67 2.97 1.98 1. 20 .18 .07 .11 .09 .36 .29 1.16  6.23 8.02 6.74 5.24 2.43 -1.02 -1.78 -1.50 -1.04 .25 1.36 3.52  . 62 .09 .22 .18 .60 . 61 1.42 1.48 2.23  .90 .54 .33 .49 .77 1.99 3.39 3.63 4.80  D  1965 Jan. Feb. Mar. Apr. MayJune July Aug Sept. Oct. Nov. Dec. 1966 Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 1967 Jan. Feb. Mar. Apr. May June July Aug. Sept.  -  1.52 .45 .11 .31 .17 2.60 4.81 5.11 7.03 '  APPENDIX N  (continued)  " c a l c u l a t e d by s u b t r a c t i n g f r o m t h e a v e r a g e fed beef p r i c e a t the f e e d l o t ; the feeder steer f e e d l o t p r i c e w h i c h e x i s t e d f o u r months p r e v i o u s to the date of s a l e . F o r example t h e p r i c e marg i n f o r J a n u a r y i s c a l c u l a t e d by s u b t r a c t i n g the p r e c e d i n g O c t o b e r f e e d e r s t e e r p r i c e from the January f e d beef p r i c e . See A p p e n d i x E f o r p r i c e s e r i e s a t the f e e d l o t . ^ C a l c u l a t e d by s u b t r a c t i n g t h e a v e r a g e c o s t p e r pound o f g a i n (Appendix M) f r o m t h e f e d s t e e r p r i c e (Appendix E ) .  136 APPENDIX O F e e d l o t Example One Income S t a t e m e n t f o r t h e S i x Y e a r s E n d i n g A p r i l 30, 1 9 6 7 a  Year Net c a t t l e s a l e s (50 head) Cost of c a t t l e sold feeder 'cattle  1962  1963  1964  1965  1966  $  $  $  $  $  12,553. 00 11,671. 00 12,154. 00 12 ,091. 00 14,086. 00  7,694. 00  8,879. 00  7,529. 00  7 ,078. 00  7,963. 00  4,165. 00  4,055. 00  3,766. 00  3 ,979. 00  4,253. 00  694. 00 -1,263. 00  859. 00  1 ,034. 00  1,870. 00  Direct c a s h expenses  225. 00  225. 00  225. 00  225. 00  225. 00  Net o v e r direct c a s h expenses  4 69. 00 -1,4 88. 00  634. 00  809 .00  1,645. 00  Allocated operating expenses^  422. 00  428. 00  435. 00  452. 00  470. 00  47. 00 -1,916. 00  199. 00  357. 00  1,175. 00  405. 00  405. 00  40 5. 00  604. 00  762. 00  1,580. 00  feed Gross Margin Less. O p e r a t i n g expenses A/  B/  Net o v e r operating expenses  ;  O t h e r Revenue manure and bedding N e t C a s h Income b e f o r e Income Taxes  405. 00  452. 00  405. 00  -1,511 .00  The method o f c a l c u l a t i o n  i s indicated  i n T a b l e XIV.  The 19 67 a l l o c a t e d o p e r a t i n g e x p e n s e s were d i s c o u n t e d by C o m p o s i t e Index P r i c e ( e x c l u d i n g c o s t o f l i v i n g ) o f c o m m o d i t i e s and S e r v i c e s Used by F a r m e r s i n W e s t e r n C a n a d a . R e f e r e n c e , Dom i n i o n B u r e a u o f S t a t i s t i c s , Summary o f A g r i c u l t u r a l S t a t i s t i c s , (Ottawa: Queens P r i n t e r ) .  137 APPENDIX Feedlot  P  Example Two Income S t a t e m e n t f o r t h e S i x Y e a r s E n d i n g May 31, 1967  Year  1962 $  1963 $  1964 $  Net C a t t l e S a l e s (250 head)  1966 $  1967 $  63,735 .59 ,089 61,031 61,425 68,328  66,360  Cost o f C a t t l e Sold feeder c a t t l e (250 head) feed  38,465 44,397 37,642 35,385 39,812 44,450 20,947 20,256 18,672 19,801 20,685 21,709  Gross  Margin  1965 $  4,323  -5,564  4,717  6,239  7 ,831  201  637  637  637  637  637  637  Net o v e r d i r e c t c a s h o p e r a t i n g expenses  3,686  -6,201  4 ,080  5,602  7,194  -436  B/ A l l o c a t e d o p e r a t i n g expenses^  1,43,9  1,461  1,482  1,542  1,602  1,690  Net over O p e r a t i n g expenses  2,247  -7 ,662  2,598  4,060  5,592 -2,126  O t h e r Revenue manure and b e d d i n g  1,725  1,725  1,725  1,725  1,725  1,725  N e t c a s h income before taxes  3,972 -5,937  4,323  5,785  7 ,317  -401  Less Operating expenses A/ D i r e c t c a s h expenses a  The d i r e c t o p e r a t i n g e x p e n s e s were c a l c u l a t e d on t h e b a s i s o f c o s t o f b e d d i n g $2.00 p e r a n i m a l , v e t e r i n a r y and m e d i c i n e s $.30 p e r a n i m a l and g a s and o i l e x p e n s e $.25 p e r a n i m a l f o r a t o t a l d i r e c t o p e r a t i n g e x p e n s e o f $2.55 p e r a n i m a l . The a l l o c a t e d o p e r a t i n g e x p e n s e s were c a l c u l a t e d on t h e b a s i s o f a 1967 c o s t o f $20.00 p e r a c r e f o r b u i l d i n g and l a n d t a x e s (2 a c r e s x $20.00) $40.00, l a b o r e x p e n s e o f $750.00; ( b u i l d i n g r e p a i r s , b u i l d i n g and l i v e s t o c k i n s u r a n c e , e l e c t r i c i t y and t e l e p h o n e e x p e n s e s ) o f $400.00 and a c a t t l e l o s s p r o v i s i o n o f $500.00 t o t o t a l $1690 i n 1967. The a l l o c a t e d o p e r a t i n g e x p e n s e s f o r y e a r s p r i o r t o 1967 were c a l c u l a t e d by d e f l a t i n g t h e 1967 e x p e n s e by t h e C o m p o s i t e Index P r i c e o f C o m m o d i t i e s and S e r v i c e s Used by F a r m e r s i n W e s t e r n Canada., op. c i t . ^Manure and b e d d i n g r e c o v e r y e s t i m a t e d a t .55 t o n s p e r a n i m a l p e r month a t a v a l u e o f $2.50 p e r t o n t o p r o v i d e a r e v e n u e o f $6.90 p e r a n i m a l .  APPENDIX  P  (continued)  Summary o f Income S t a t e m e n t s 1962-67 f o r F e e d l o t Example  Year  Gross Margin  Net Cash Income Before Tax  $  $  C a p i t a l " Net Cost Income AllowBefore ance Tax $  $  Income Tax  Net Income After Tax  Net Cash Income After Tax  $  $  $  Two  Cattle Investment Cost $  Net Cash Flow $  1962  4,323  3,972  750  3,222  -664  2,578  3,328  1,615  1,713  1963  -5,564  -5,937  750  -6,687  + 664  -6,043  -5,293  1,865  -7,158  1964  4,717  4,323  750  3,573  -22  3 ,551  4,301  1,581  2,720  1965  6,239  5,785  750  5,035  -1,007  4,028  4,778  1,486  3,292  1966  7,831  7,317  750  6,567  -1,313  5,254  6,004  1,672  4,332  1967  201  -401  750  -1,151  +230  -922  -172  1,867  -2,039  C a p i t a l C o s t A l l o w a n c e c a l c u l a t e d on a s s u m p t i o n o f 1961 c o n s t r u c t i o n c o s t o f $20,000 f o r b u i l d i n g s w i t h a s a l v a g e v a l u e o f $5,000 i n 20 y e a r s . S t r a i g h t l i n e method o f c a l c u l a t i o n used i n c a l c u l a t i o n s . Income t a x p r o v i s i o n f o r c a r r y b a c k and c a r r y f o r w a r d o f income l o s s u t i l i z e d i n calculations. Reference: D e p a r t m e n t o f N a t i o n a l Revenue, T a x a t i o n ; F a r m e r s ' and Fishermans Income Tax G u i d e , (Ottawa: Queens P r i n t e r , 19 67) P. 13. 1  APPENDIX  Q  F e e d l o t Example T h r e e Income S t a t e m e n t f o r t h e S i x Y e a r s E n d i n g O c t o b e r 31, 1967 Year Net  Cattle Sales  (100 head)  Cost of C a t t l e Sold f e e d e r c a t t l e (100 head) feed a  1962 $  1963 $  1964 $  1965. $  1966 $  1967 $  28,833  26,449  24,150  25,347  26,397  29,778  11,665 8,175  13,885 7,775  13,445 7,000  10,855 8 ,200  12,245 8,850  14,570 8,500  Gross Margin  8, 993  4,789  3,705  6,292  5,302  6,708  Less O p e r a t i n g expenses , A/ D i r e c t c a s h e x p e n s e s Net o v e r d i r e c t c a s h e x p e n s e s B/ A l l o c a t e d expenses'  865 8,128 1,975  865 3,924 2,005  865 2,840 2,036  865 5,427 2,116  865 4 ,437 2,198  865 5,843 2,320  Net  6,153  1,919  804  3,311  2,238  3,523  500  500  500  500  500  500  6,653  2,419  1,304  3,811  2,738  4,023  3  over operating  expenses  O t h e r Revenue , manure and b e d d i n g Net  cash  income b e f o r e  income t a x  The f e e d c o s t was c a l c u l a t e d on an e s t i m a t e d a v e r a g e f e e d c o s t o f $17.00 p e r cwt o f b e e f g a i n i n t h e 1966-67 o p e r a t i n g y e a r . The f e e d c o s t f o r y e a r s p r i o r t o 1967 were c a l c u l a t e d by d e f l a t i n g t h e 1967 a v e r a g e f e e d c o s t by t h e d i f f e r e n c e i n f e e d i n g r e d i e n t costs. The f e e d c o s t does n o t i n c l u d e p a s t u r e o p e r a t i n g e x p e n s e s . D i r e c t c a s h e x p e n s e s i n c l u d e c o s t o f b e d d i n g a t $3.00 p e r head, v e t e r i n a r y and m e d i c i n e s $.65 p e r head, and equipment o p e r a t i n g e x p e n s e s o f $5.00 p e r head t o t o t a l $8.65 p e r h e a d . A l l o c a t e d e x p e n s e s i n c l u d e : t a x e s f o r one a c r e o f l a n d f o r f e e d l o t ($20.00) p l u s t a x e s f o r 50 a c r e s o f l a n d a t $15.00 p e r a c r e ( p a s t u r e u s e i s e s t i m a t e d t o be 2 a n i m a l s p e r a c r e f o r 5 m o n t h s ) ; l a b o r e x p e n s e o f $1200, a d m i n i s t r a t i o n e x p e n s e o f $150 and a c  APPENDIX  Q  (continued)  c a t t l e l o s s p r o v i s i o n o f $200 t o t o t a l $232 0 f o r 1967 . The e x p e n s e f o r y e a r s p r i o r t o 1967 were c a l c u l a t e d i n t h e same manner a s d e s c r i b e d i n A p p e n d i x P.  animal  ^Manure and b e d d i n g r e c o v e r e d from and a v a l u e o f $2.50 p e r t o n .  the feedlot  i s estimated  a t 2.0 t o n s p e r  o  APPENDIX  Q  (continued)  Summary o f Income S t a t e m e n t s 1962-67 f o r F e e d l o t Example T h r e e  Gross Margin  Net Cash Income Before Tax  $  $  1962  8,993  6,653  250  6,403  1,280  5,123  5,373  1,050  1963  4,789  2,419  250  2,169  433  1,736  1,986  1,250  736  1964  3,705  1,304  250  1,054  211  843  1,093  1,210  -117  1965  6,292  3,811  250  3,561  712  2,849  3,099  977  2,122  1966  5,302  2,738  250  2,488  498  1,990  2,240  1,102  1,138  1967  6,708  4, 023  250  3,773  755  3,018  3,268  1,311  1,957  Year  value  Capital Cost Allowance $  1 2  Net Income Before Tax $  Income Tax  Net Income After Tax  Net Cash Income After Tax  $  $  $  $  $ 4 ,323  Cattle Investment Cost  C a p i t a l c o s t a l l o w a n c e based, on 1961 b u i l d i n g v a l u e o f $5000 and no i n 20 y e a r s and s t r a i g h t l i n e method o f c a l c u l a t i o n .  Net Cash Flow  salvage  Income t a x p r o v i s i o n f o r c a r r y b a c k and c a r r y f o r w a r d o f income l o s s u t i l i z e d i n calculations. Reference: D e p a r t m e n t o f N a t i o n a l Revenue, T a x a t i o n ; F a r m e r s ' and F i s h e r m a n s ' , I n c o m e Tax G u i d e , (Ottawa: Queens P r i n t e r , 19 67) P. 13.  APPENDIX R F e e d l o t Example F o u r Income S t a t e m e n t f o r S i x Y e a r s E n d i n g November 30, 1967 Year  the  1962  1963  1964  1965  1966  1967  $  $ '  $  $  $  $  26,248  23,180  21,147  22,638  24  ,054  26,932  11,605 6,907  12,005 6,547  11,335 5,850  10,790 6,930  13,280 7 ,515  13,180 7 ,200  Gross Margin  7,736  4,628  3,962  4,918  3 ,259  6,552  Less O p e r a t i n g Expenses ^ A/ D i r e c t c a s h e x p e n s e s Net o v e r d i r e c t c a s h e x p e n s e s B/ A l l o c a t e d expenses'  575 7,161 1,251.  575 4,053 1,271  575. 3,387 1,290  575 4,343 1,341  575 2,684 1,393  575 5,977 1,470  Net  5,910  2,782  2,097  3,002  1,291  4,507  Net  C a t t l e Sales  (100  Cost of C a t t l e Sold f e e d e r c a t t l e (100 feed  head) head)  a  3  over operating  expenses  O t h e r Revenue , manure and b e d d i n g Net  cash  income b e f o r e  150 taxes  6,060  150 2,932  150 2,247  150 3,152  150 1,441  A v e r a g e f e e d c o s t e s t i m a t e d t o be $16.00 p e r cwt o f b e e f g a i n i n 1966-67 t i n g year. P r i o r y e a r s f e e d c o s t c a l c u l a t e d by d e f l a t i n g t h e 1967 f e e d c o s t by d i f f e r e n c e i n feed i n g r e d i e n t c o s t s .  150 4,657 operathe  D i r e c t o p e r a t i n g e x p e n s e s i n c l u d e c o s t o f b e d d i n g a t $.50 p e r h e a d , v e t e r i n a r y and m e d i c i n e s a t $.50 p e r head and e q u i p m e n t and o p e r a t i n g e x p e n s e s a t $4.75 p e r head t o t o t a l $5.75 p e r h e a d . A l l o c a t e d e x p e n s e s i n c l u d e t a x e s o f $770 (same l a n d a r e a as i n F e e d l o t Example T h r e e ) ; l a b o r e x p e n s e o f $400, a d m i n i s t r a t i o n e x p e n s e o f $100 and a c a t t l e l o s s p r o v i s i o n o f $200 t o t o t a l $1470 i n 1967. P r i o r years expenses c a l c u l a t e d a c c o r d i n g t o p r o c e d u r e d e s c r i b e d i n F e e d l o t Example One.  APPENDIX R  animal  (continued)  Manure and b e d d i n g r e c o v e r e d f r o m t h e f e e d l o t w i t h a m a r k e t v a l u e o f $2.50 p e r t o n .  i s estimated  t o be  .6 t o n s p e r  APPENDIX R  (continued)  Summary o f Income S t a t e m e n t s 1962-67 f o r  F e e d l o t Example F o u r  Gross Margin  Net Cash Income Before Tax  $  $  1962  7,736  6,060  250  5,810  1,162  4,648  4 ,898  661  4,237  1963  4,628  2,932  250  2,682  536  2,146  2 ,396  684  1,712  1964  3,962  2,247  250  1,997  399  1,598  1,848  646  1,202  1965  4,918  3,152  250  2,902  580  2,322  2,572  615  1,957  1966.  3,259  1,441  250  1,191."  238  953  1,203  757  446  1967  6,552  4,657  250  4,407  881  3,526  3,776  751  3,025  Year  Capital Cost Allowance $  1 2  Net Income Before Tax $  Net Income After Tax  Net Cash Income After Tax  $  $  $  Income^ Tax  Cattle Investment Cost $  Net Cash Flow $  See A p p e n d i x Q f o r i n f o r m a t i o n . Income t a x p r o v i s i o n f o r c a r r y b a c k and c a r r y f o r w a r d o f income l o s s u t i l i z e d i n calculations. R e f e r e n c e : D e p a r t m e n t o f N a t i o n a l Revenue, T a x a t i o n ; F a r m e r s ' and F i s h e r m a n s ' Income Tax G u i d e , (Ottawa: Queens P r i n t e r , 19 67) P. 13.  APPENDIX Feedlot  S  Example F i v e Income S t a t e m e n t f o r t h e S i x Y e a r s E n d i n g May 31, 1967 1962  1963  1964  1965  1966  1967  $  $  $  $  $  $  127,470  118,177  122,062  122 ,850  136,657  132,720  76,930 41,895  88,795 38,762  75,285 35,595  70,770 37,852  79,625 39,620  88,900 41,667  8,645  -9 ,380  11,182  14 ,228  17 ,412  2,153  Less o p e r a t i n g expenses ^ A/ D i r e c t c a s h e x p e n s e s Net o v e r c a s h e x p e n s e s B/ A l l o c a t e d expenses'  1,075 7,570 3,291  1,075 -10,455 3,343  1,075 10,107 3,393  1,075 13,153 3,527  1,075 16,337 3,665  1,075 1,078 3/865  Net  4,279  -13,798  6,714  9,626  12,672  -2,787  2,050  2,050  2,050  2,050  2,050  2,050  6,329  -11,748  8,764  11,676  14 ,722  -737  Year Net  C a t t l e Sales  (500 head)  Cost of c a t t l e Sold feeder c a t t l e feed  (500 head)  a  Gross  Margin  3  over operating  expenses  O t h e r Revenue , manure and b e d d i n g Net  c a s h income b e f o r e  taxes  The a v e r a g e f e e d c o s t p e r cwt b e e f g a i n i s e s t i m a t e d t o be $23.81 p e r cwt i n t h e 1967 f e e d i n g p e r i o d . The p r i o r y e a r s f e e d c o s t was c a l c u l a t e d by d e f l a t i n g t h e 1967 f e e d c o s t by t h e d i f f e r e n t i a l i n f e e d i n g r e d i e n t p r i c e s . The d i r e c t c a s h e x p e n s e s were c a l c u l a t e d on t h e a s s u m p t i o n o f c o s t o f b e d d i n g $1.75 p e r h e a d , v e t e r i n a r y and m e d i c i n e s $.15 p e r h e a d , and g a s and o i l e x p e n s e o f $.25 p e r h e a d f o r a t o t a l e x p e n s e o f $2.15 p e r h e a d .  c The a l l o c a t e d e x p e n s e s were c a l c u l a t e d on t h e b a s i s o f a 1967 c o s t o f b u i l d i n g t a x e s $95.00, l a n d t a x e s $20.00 (2 a c r e s a t $10.00 p e r a c r e ) , l a b o r e x p e n s e o f $2000, a d m i n i s t r a t i o n e x p e n s e o f $750 and a c a t t l e l o s s p r o v i s i o n o f $1000 f o r a t o t a l o f $3865.  APPENDIX  S  (continued)  ^Manure and b e d d i n g v a l u e e s t i m a t e d on t h e b a s i s o f .55 t o n s month f o r f i v e months and a v a l u e o f $1.50 p e r t o n .  p e r head p e r  APPENDIX S  (continued)  Summary o f Income S t a t e m e n t s 1962-67 f o r F e e d l o t Example  Year  • Gross Margin  Net Cash Income Before Tax  $  $  Capital Cost Allowance $  a  Net Income Before Tax  Income Tax  $  $  •u  - Net Cash Net Income Income After After Tax Tax $  $  Five  Cattle Investment Cost $  Net Cash Flow $  1962  8,645  6,329  2000  4,329  -866  3,463  5 ,463  3,231  2 ,232  1963  -9,380  -11,748  2000  -13,748  +866  -12,882  -10,882  3,729  -14,611  1964  11,182  8,764  2000  6,764  0  6,764  8,764  3,162  5,602  1965  14,228  11,676  2000  9,676  -1,404  8 ,272  10,272  2,972  7,300  1966  17,412  14,722  2000  12,722  -2,544  10,178  12,172  3,344  8 ,828  1967  2,153  -737  2000  -2,737  +547  -2,190  -190  3,734  -3,3924  C a p i t a l c o s t a l l o w a n c e c a l c u l a t e d on a 1961 c o n s t r u c t i o n c o s t o f $50,000 f o r b u i l d i n g s and a s a l v a g e v a l u e o f $10,000 i n 20 y e a r s . S t r a i g h t l i n e method o f c a l c u l a t i o n used i n t h e a n a l y s i s . Income t a x p r o v i s i o n f o r c a r r y b a c k and c a r r y f o r w a r d o f income l o s s u t i l i z e d i n calculations. Reference: D e p a r t m e n t o f N a t i o n a l Revenue, T a x a t i o n ; F a r m e r s ' and Fishermans Income Tax G u i d e , (Ottawa: Queens P r i n t e r , 1967) P. 13. 1  APPENDIX T F e e d l o t Example S i x Income S t a t e m e n t f o r t h e S i x Y e a r s E n d i n g November 30, 1967 Year Net  1962 $  C a t t l e Sales  (500 head)  1963 $  1964 $  1965 $  1966 $  1967 $  131,245  115,900  105,735  113,192  120,270  134,662  Cost of C a t t l e Sold f e e d e r c a t t l e (500 head) feed  63,827 28,700  66,027 27,100  62,342 24,000  59,345 28,800  73,040 31,400  72,490 30,000  Gross  38,718  22,773  19,393  25,047  15,830  32,172  2,575 36,143  2,575 20,198  2 ,575 16,818  2,575 22,472  2,575 13,255  2,575 29,597  4,249  4,316  4,381  4,555  4 ,732  4,990  31,894  15,882  12,437  17,917  8,523  24 ,607  450  4 50  450  450  450  450  32,344  16,332  12,887  18,367  8 ,973  25,057  a  Margin  Less o p e r a t i n g expenses A/ D i r e c t c a s h e x p e n s e s ^ Net o v e r c a s h e x p e n s e s B/ A l l o c a t e d Net  expenses  over operating  0  expenses  O t h e r Revenue , manure and b e d d i n g Net  c a s h income b e f o r e  taxes  F e e d c o s t c a l c u l a t e d on t h e b a s i s o f an a v e r a g e f e e d c o s t p e r cwt o f b e e f g a i n o f $15.00 p e r cwt i n t h e 1967 o p e r a t i n g p e r i o d . The p r i o r y e a r s f e e d c o s t was c a l c u l a t e d by d e f l a t i n g t h e 1967 f e e d c o s t by t h e d i f f e r e n t i a l i n f e e d i n g r e d i e n t s c o s t s . The d i r e c t c a s h e x p e n s e s were c a l c u l a t e d on t h e b a s i s o f c o s t o f b e d d i n g $.50 p e r h e a d , v e t e r i n a r y and m e d i c i n e s $.15 p e r head and e q u i p m e n t and o p e r a t i n g e x p e n s e s o f $4.50 p e r head t o t o t a l $5.15 p e r h e a d .  o The a l l o c a t e d e x p e n s e s were c a l c u l a t e d on t h e b a s i s o f $95.00 t a x e s f o r t h e b u i l d i n g s , $2520 t a x e x p e n s e f o r p a s t u r e and f e e d l o t l a n d e x p e n s e (252 a c r e s ) , l a b o r e x p e n s e - $1000, a d m i n i s t r a t i o n e x p e n s e - $375 and a c a t t l e l o s s p r o v i s i o n o f $1000 t o t o t a l $4990. P r i o r y e a r s expense c a l c u l a t e d a c c o r d i n g t o p r o c e d u r e o u t l i n e d i n F e e d l o t Example One.  APPENDIX T  (continued)  V a l u e o f manure and b e d d i n g c o l l e c t e d f r o m t h e f e e d l o t i s b a s e d upon a r e c o v e r y t o n s p e r head p e r month f o r one month and h a s a v a l u e o f $1.50 p e r t o n .  APPENDIX T  (continued)  Summary o f Income S t a t e m e n t s 1962-67 f o r F e e d l o t Example S i x  Year  Gross Margin  Net Cash Income Before Tax  $  $  Capital Cost Allowance $  1 3  Net Income Before Tax $  Net Income After Tax  Net Cash Income After Tax  $  $  $  $  $ 22,637  Income^ tax  Cattle Investment Cost  Net Cash Flow  1962  38,718  32,344  2000  30,344  6,609  24 ,275  26,275  3 ,638  1963  22,773  16,332  2000  14,332  2 ,867  11,465  13 ,465  3,763  9,702  1964  19,393  12,887  2000  10,887  2 ,177  10,710  3,553  7 ,157  1965  25,047  18,367  2000  16,367  3 ,273  13,094  15,094  3,383  11,711  1966  15,830  8,973  2000  6,973  5,578  7,578  4,163  1967  32,172  25,057  2000  23,057  18,446  20,446  1,395 4 ,611  8 ,710  4 ,132  3 ,415 16,314  C a p i t a l c o s t a l l o w a n c e c a l c u l a t e d on a 1961 c o n s t r u c t i o n c o s t o f $50,000 f o r b u i l d i n g s and a s a l v a g e v a l u e o f $10,000 i n 20 y e a r s . S t r a i g h t l i n e method o f c a l c u l a t i o n , used i n t h e a n a l y s i s . Income t a x p r o v i s i o n f o r c a r r y b a c k and c a r r y f o r w a r d o f income l o s s u t i l i z e d i n calculations. Reference: D e p a r t m e n t o f N a t i o n a l Revenue, T a x a t i o n ; F a r m e r s ' and F i s h e r m a n s ' Income Tax G u i d e , (Ottawa: Queens P r i n t e r , 1967) P. 13.  APPENDIX  U  F e e d l o t Example Seven Income S t a t e m e n t f o r t h e S i x Y e a r s E n d i n g November 30, 1967 1962  Year Net  C a t t l e Sales  (1000 h e a d )  1963  1964  1965  1966  1967  258,715  234,077  227,797  236,042  256 ,927  267,382  140,757 70,595  154,822 65,862  137,627 59 ,595  130,115 66,652  152,665 71,020  161,390 71,667  47,363  13,393  30,575  39,275  33,242  34,325  Less o p e r a t i n g expenses A/ D i r e c t c a s h e x p e n s e s " N e t o v e r c a s h expenses, B/ A l l o c a t e d e x p e n s e s  3,650 43,713 7,445  3,650 9,743 7,561  3,650 26,925 7,676  3,650 35,625 7,979  3,650 29,592 8 ,290  3,650 30,675 8,740  Net  36,268  2 ,182  19,249  27,646  21,302  21,935  2,500  2,500  2,500  2,500  2,500  2,500  38,768  4,682  21,749  30,146  23 ,802  24,435  Cost of C a t t l e Sold f e e d e r c a t t l e (1000 h e a d ) " feed a  Gross  Margin  over operating  expenses  O t h e r Revenue manure and b e d d i n g " Net  cash  income b e f o r e  Calculated  taxes  by a d d i n g  a  the parameters  from F e e d l o t  Examples F i v e and S i x .  A l l o c a t e d e x p e n s e s were c a l c u l a t e d on t h e b a s i s o f l a n d and b u i l d i n g t a x e s $2615, l a b o r e x p e n s e - $3000, a d m i n i s t r a t i o n e x p e n s e - $1125 a n d a c a t t l e l o s s p r o v i s i o n o f $2000 t o t o t a l $8740 i n 1967.  APPENDIX U  (continued)  Summary o f Income S t a t e m e n t s 1962-67 f o r F e e d l o t Example  Seven  Gross Margin  Net Cash Income Before Tax  $  $  $  1962  47,363  38,768  2000  36,768  7,354  29,414  31,414  6,869  24 ,545  1963  13,393  4,682  2000  2,682  536  2,146  4,146  7,492  -3 ,346  1964  30,575  21,749  2000  19,749  3 ,950  15,799  17 ,799  6,715  11,084  1965  39,275  30,146  2000  28,146  5,629  22,517  24,517  6 ,355  18,162  1966  33,242  23,802  2000  21,802  4 ,360  17,442  19,442  7 ,507  11,935  1967  34,325  24,435  2000  22,435  4 ,487  17 ,948  19,948  7,866  12,082  Year  Capital Cost Allowance  a  Net Income Before Tax $  Income Tax  Net Income After Tax  Net Cash Income After Tax  $  $  $  $  Cattle Investment Cost  Net Cash Flow $  C a p i t a l c o s t a l l o w a n c e c a l c u l a t e d on a 1961 c o n s t r u c t i o n c o s t , o f $50,000 f o r b u i l d i n g s and a s a l v a g e v a l u e o f $10,000 i n 20 y e a r s . S t r a i g h t l i n e method o f c a l c u l a t i o n used i n the a n a l y s i s . Income t a x p r o v i s i o n f o r c a r r y b a c k and c a r r y f o r w a r d o f income l o s s e s u t i l i z e d i n calculations. Reference: D e p a r t m e n t o f N a t i o n a l Revenue, T a x a t i o n ; F a r m e r s ' and F i s h e r m a n s ' Income Tax G u i d e , (Ottawa: Queens P r i n t e r , 1967) P. 13.  APPENDIX V Feedlot  1962 $  Year Net  Example E i g h t Income S t a t e m e n t f o r t h e S i x Y e a r s E n d i n g J u l y 31, 1967  C a t t l e Sales 1500 h e a d "  1963 $  1964 $  1965 $  1966 $  1967 $  369,750 387,150  373,800 356,400  325,800 349,050  334,500 371,700  388,800 375,600  387,600 398,400  756,900  730,200  674,850  706,200  764,400  786,000  Cost of C a t t l e Sold f e e d e r c a t t l e " (1500 head) feeder c a t t l e (1500 head) feed  240,750 255,937 143,925  290,925 268,200 140,175  260,887 251,212 129,825  229,725 240,187 137,625  255,037 296,662 144,150  285,525 294,862 150,000  Gross Margin  116,288  30,900  32,926  98 ,663  68,551  55,613  31,254  31,740  32,220  33,500  34,800  36,700  85,034  -840  706  65,163  33,751  18,913  5,400  5,400  5,400  5,400  5,400  5,400  90,434  4,560  6,106  70,563  39,151  24,313  1500  Net  head  b  Sales  6  e  Less Operating Net  Expenses^  Over O p e r a t i n g  Expenses  O t h e r Revenue manure and b e d d i n g Net C a s h Income income t a x  before  Cattle  purchased  and s o l d a c c o r d i n g  to p o l i c y  8a i n T a b l e  XIII.  Cattle  p u r c h a s e d and s o l d a c c o r d i n g  to policy  8b i n T a b l e  XIII.  ^ A v e r a g e f e e d c o s t i n 1967 i s assumed t o be $20.00 p e r cwt o f n e t b e e f g a i n . The p r i o r y e a r s p r i c e s were c a l c u l a t e d by d e f l a t i n g t h e 1967 f e e d c o s t by t h e d i f f e r e n t i a l i n feed ingredient p r i c e s .  APPENDIX  V  (continued)  d 1967 o p e r a t i n g e x p e n s e s i n c l u d e : b e d d i n g a t $1.75 p e r head v e t e r i n a r y and m e d i c i n e s a t $.35 p e r head a d m i n i s t r a t i o n , b u i l d i n g r e p a i r s and insurance, c a t t l e insurance, e t c . gas and o i l e x p e n s e s and m a c h i n e r y r e p a i r s labor l a n d and b u i l d i n g t a x e s cattle loss provision  = =  5,250 1,050  = 10,500 = 1,500 = 10,000 = 2,400 = 6,000 $36,700  The p r i o r y e a r s o p e r a t i n g e x p e n s e s were c a l c u l a t e d i n A p p e n d i x O.  according to the procedure  Manure and b e d d i n g r e c o v e r e d from t h e f e e d l o t i s e s t i m a t e d head p e r month, and t h e v a l u e i s e s t i m a t e d t o be $1.00 p e r t o n .  described  t o be 0.60 t o n s p e r  APPENDIX V  (continued)  Summary o f Income S t a t e m e n t s 1962-67 f o r F e e d l o t Example E i g h t  Year  Gross Margin  Net Cash Income Before Tax  $  $  Capital Cost Allowance $  1 2  Net Income Before Tax $  Income Tax  Net Income After Tax  Net Cash Income After Tax  $  $  $  $  $  Cattle Investment Cost  Net Cash, Flow  1962  116,288  90,434  5500  84,934  -42,467  42,467  47,967  13,410  34,557  1963  30,900  4,560  5500  -940  +470  -470  5,030  15,096  -10,066  1964  32,926  6,106  5500  660  -330  330  5,830  13,827  -7 ,997  1965  98,663  70,562  5500  65,062  -32,531  32,531  38,031  12,688  25,343  1966  68,551  39,150  5500  33,650  -16,825  16,825  22,325  14,895  7,430  1967  55,613  24,312  5500  18 ,812  -9,406  9,406  14,906  15,670  -764  C a p i t a l c o s t a l l o w a n c e c a l c u l a t e d on a s s u m p t i o n o f a 1961 c o s t o f $80,000 f o r b u i l d i n g s and $20,000 f o r m a c h i n e r y and e q u i p m e n t . Salvage value o f b u i l d i n g s i s e s t i m a t e d t o be $10,000 and no s a l v a g e v a l u e f o r m a c h i n e r y . Marginal  income t a x r a t e assumed t o be 50 p e r c e n t .  

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