MOSSBANK, Sask. – Establishing a community-owned cow herd is an opportunity to improve local economies and decrease individual risk.
But it also means sharing the profit and giving up decision-making powers.
Sandy Russell, a beef economist with Saskatchewan’s agriculture department, told a recent meeting here that there are several communities looking at the concept of a cow-calf operation.
People can capitalize on the synergies between cattle producers, feed grain producers and investors.
“You can diversify without large irreversible investment or putting your own operation at a bigger risk,” Russell said.
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The first problem groups encounter is the different goals and opinions of their members. For example, one decision that needs to be made is which breed of bulls to use.
“You’ll find out very early on” what these types of obstacles are going to be, said Russell.
“Consider who’s at the table and whether you can work with them,” she said. “Ask yourself, ‘does it really fit into my business?'”
If a group decides to proceed, a feasibility study should be the first step.
Russell said there is no single best business structure for a project like a cow-calf operation.
It all depends on how many people are participating and the capital requirements, although these businesses are usually corporations or new generation co-operatives.
Most community herds are started from scratch rather than combining existing stock from the participating producers.
Russell said it can be a challenge to raise the required capital in the community at large and to gain acceptance from people who aren’t involved.
“The key to that is communication,” she said.
When raising money, proponents have to take construction and initial operating funds into account.
Russell broke down some of the costs involved with running a cow-calf operation. Feed and bedding cost the most, at 43 percent of total costs. Pasture represents 29 percent.
There may also be different regulatory requirements if the operation is large. Permits are required for an operation larger than 300 head.
She said feed grain producers who participate in a community herd can realize more money. She used one example that showed $2.50 per bushel barley converted to $8 as a finished animal.
Saskatchewan’s beef cow herd grew 7.6 percent in 2005 to 1.535 million head.
The province exported 812,000 weaned calves, with 625,000 going to Alberta and 101,000 to Ontario.
Saskatchewan feedlots finished 306,000 head last year, a number Russell described as “astronomical.”
“We typically did 180,000,” she said. “As we look to retain more animals, we kept more here to finish.”
