The Livestock Producer and Armour 3

The Livestock Producer and Armour 3

Recent experiences will impel some producers to curtail or discontinue

their operations temporarily, but others will take their places and

quantity of production will be maintained while quality will be

increased.

 

High-priced land, grain and labor will compel stockmen to grade up

their herds, to discriminate more closely in the purchase of feeding

stock, to improve feeding methods and to keep exact records of costs.

For at the higher level of costs and values all around, as compared

with prewar times, both the risks and rewards of the business will be

greater.

 

As co-operative activities are extended among producers, it may be

found advisable for livestock associations to employ expert buyers

at the various markets whose duty shall be the filling of orders for

association members, for the choice of feeders cannot be safely based

on personal fancy. The only true guide is unbiased judgment as to what

the market demands in the finished product and what type of feeding

cattle will yield the result.

 

An experienced buyer of keen judgment, constantly in touch with the

market, should prove as valuable to producers as the expert buyer of

fat cattle is to the packer.

 

Such expert selection of feeders would take the guesswork out of the

first and most important step in feeding.

 

Generally speaking, the consumers’ demand is constantly for better

meats from comparatively young animals. Taking the situation the

country over with present prices of feed stuffs considered, it has been

found that beef cattle make most money for the producer if not held

past the age of two years. But there is no hard-and-fast rule for the

guidance of every individual producer; the heavy, well-finished cattle

always bring high prices. Only by keeping an accurate feeding record

can the producer decide for himself what policy is most advantageous in

his case, or determine when his steers stop making sufficient gains to

compensate him for the feed required.

 

 

 

 

Armour’s 1919 Livestock Purchases

 

 

RISING prices of farm land and feed have changed entirely the

character of livestock received on the market as compared to twenty

years ago. The period following the war shows all conditions more or

less accentuated, and one can trace very definitely the tendency to

market animals younger and to feed to lesser ripeness than prevailed

in the earlier years of the last decade. In 1919 Armour and Company

purchased 12,235,451 head of livestock, while in 1918 they purchased

11,398,131. Yet the animals bought last year weighed actually fewer

pounds, in spite of their greater numbers, than those received the

year preceding; the former weight being 3,740,347,223 pounds and the

latter 3,939,278,534 pounds. Furthermore, the animals of 1919 cost over

nineteen million dollars more. The following table presents these facts

on a percentage basis:

 

Increased number animals 1919 over 1918 7.3%

Decrease in total weight animal purchases 5.0%

Increase in cost of animals 3.7%

Increased price per pound live weight 1.2¢

 

Probably the fundamental factor in bringing about these conditions,

which are distinctly unfavorable from a quality trade standpoint, is

the feeder’s expectation of declining prices. This attitude has driven

all the animals to market almost as soon as they were in merchantable

form. The late winter months of 1919-20 saw an opposite tendency among

hog feeders, but this was not sufficiently marked to check the general

trend.

 

Another factor in stimulating this hurried marketing has been the

belief that more money could be made by selling the grain crop than by

feeding it. This has given short rations to many animals that would

have made suitable market records if handled properly, but it has

enabled farmers to cash in their grain and meat crops while prices were

relatively high.

 

In terms of permanent agriculture it would have been better to leave

a greater share of this cash invested in a further development of

livestock, but the war order against feeding wheat placed the situation

in some western states beyond the control of the average stockman. As a

general practice in production this incomplete utilization of livestock

must be deplored, although one cannot criticize the tendency under the

special market conditions of 1919 and early 1920.

 

 

 

 

Financial Aspects of Livestock Industry

 

 

ONE of the most significant and gratifying gains in the livestock

business during the decade just past is the recognition of its

financial soundness. This is reflected in the changed attitude of

financiers and investors towards cattle paper. While a decade ago

bankers in the great financial centers looked with suspicion upon

such securities, now bankers and business men throughout the country

purchase approximately $500,000,000 of cattle paper annually and regard

it as among the safest investments.

 

Melvin A. Traylor, President of the First Trust and Savings Bank

of Chicago, declares that “loans on livestock are the best of all

investments,” and President Thos. P. Martin, of the Oklahoma Stock

Yards Bank, Oklahoma City, agrees with him. This latter bank loaned

$45,000,000 in seven years to cattle producers in Oklahoma, Texas and

New Mexico, only fifty dollars of the amount loaned being lost. It is

doubtful if any other industrial securities could make a better or even

an equal showing.

 

There is still some difficulty in arranging loans in some sections of

the country, where bankers have not yet realized the changed conditions

of the business and farmers have not given the proper emphasis to the

improvement of livestock production. But generally speaking the cattle

feeder with good judgment in the breeding and selection of feeders

meets with no obstacles in financing his operations.

 

Most country bankers freely accept cattle paper because it is readily

rediscounted in the country’s financial centers. But many of them urge

the borrowing feeders to keep accounts and determine accurately their

profits and losses.

 

This is to the interest of the feeder and the cattle industry as a

whole. For if the business is ever to be placed on a cost-of-production

basis for the reckoning of market prices, it must be done by an

accumulation of thousands of actual tests in feeding practice. It

is plain that each individual feeder could not set or ask a certain

percentage of profit, since a poor judge of stock and a careless feeder

would demand more for an inferior product than the more efficient

feeder would ask for a better article.

 

The feasibility of any such scheme of regulating prices does not now

appear, but it is clear in any case that each lot of cattle would have

to be appraised at what their production _ought_ to cost, considering

quality, and not what it actually _did_ cost.

 

[Illustration: Bankers now recognize cattle loans as good investments,

and the skilled stockman has access to needed funds.]

 

 

 

 

Losses on Declining Markets

 

 

THAT the packing industry suffers with the livestock producers on a

falling market was never more clearly emphasized than in the year

1919. Armour and Company’s losses on dressed beef alone amounted, in

the twelve months, to several million dollars; and on the sale of pork

products the losses were even greater.

 

These losses are figured on the basis of the primary sales, which

include not only the meat but the hides and all other by-products

derived from the animals.

 

Such deficits do not mean that the Armour organization, as a whole,

suffered a net loss for the year. But there is no mystery about the

methods of countering these deficits. They are offset by the profit

made in manufacturing by-products into merchantable commodities.

Each by-product industry in the Armour organization is placed on its

own responsibility. It must pay to the beef, hog, or sheep killing department the market value for its raw materials—the same price it would pay if it purchased on the outside market.