Read Ebook: The Livestock Producer and Armour by Armour And Company Publisher

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The big question is, What of the year 1920? While nothing positive can be predicted, better conditions is a practical certainty. The domestic consumption of beef is increasing to a gratifying degree; the arranging of international credits and the opening of foreign markets is a matter of comparatively short time. European need for pork products will be urgent and excessive for a considerable time, and this will not only take care of our surplus hogs, but will react favorably upon the market for cattle and sheep.

ABERDEEN-ANGUS

Early maturing; transmits polled character; high dressing percentage; high proportion valuable cuts.

SHORTHORN

Greatest weight for age; dress out well at slaughter; quiet disposition; strong milking tendencies.

GALLOWAY

Prepotent; adapted to rugged regions; high carcass value; valuable hide.

POLLED SHORTHORN

Characteristics similar to Shorthorn except polled; some strains dual purpose.

HEREFORD

Best grazing breed; matures early; fattens rapidly; good weight for age.

RED POLLED

Strictly dual purpose; fair grazers; early maturing.

The Livestock Situation

RIGHT now is a good time to stick to the middle of the highway of common sense. As shown in earlier chapters, the conditions adverse to the business can be only temporary, and even the losses incurred may be turned to profit in the end, if the livestock men shall learn the lesson of economy and efficiency of production and more complete co-operation among themselves and with the packing industry.

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 0,000,000 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 ,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.

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.

For example, the beef department buys its cattle to the best possible advantage in competition with other buyers, and sells the beef at the best price obtainable. The hides go to the tannery at prices ruling on the open market. If the Armour tannery cannot pay this price the hides go to outside buyers. To sell at less would be favoring the tannery at the expense of the beef department, or robbing Peter to pay Paul.

The same business methods are pursued with every scrap of the animal, whether used in making glue, soap, sand-paper, drugs, fertilizers, or any other commodity.

While on this basis Armour and Company sustained heavy losses in their meat departments, the by-product industries showed profits, as they usually do, because their products are not so perishable and are not so much influenced by market fluctuations.

These by-product industries are, in short, the insurance of the packers against crippling losses, and may be likened to the activities of the up-to-date livestock farmer, who diversifies his operations by feeding cattle and hogs and by keeping fowls, sheep and dairy cows, so that if he loses on cattle or hogs he may offset his losses by better prices for lambs, wool, butter, eggs, poultry, or a money crop.

Why Prices Fluctuate

PRICES for livestock are not controlled by packers, and only to a limited extent by the supply of cattle in the market. They go up or down in response to the price the consumer is willing to pay for meat.

Note how closely the two lines in the chart, representing prices of cattle and dressed beef, follow each other through the two and a half years covered by the graph. America's twenty million food shoppers determine the dressed beef price, by their willingness or refusal to accept beef at the price asked in competition with other food. And naturally dressed beef prices react directly and at once on cattle prices.

It is often necessary for the packer to take a marginal loss on beef in order to stimulate demand, but he must at once hedge against this loss by buying cattle cheaper. He tries to fit the price he pays for cattle each day to the price he is obtaining for beef. Only by so doing can he maintain his business on present small margins. Large receipts of fish, poultry, game, eggs, vegetables or fruit at certain seasons also affect the price the public is willing to pay for beef, and this is reflected in the price the packer can afford to pay for the live animal.

It is plain that the packer cannot determine retail meat prices, simply because he cannot say to the consumer at the butcher's counter, "You must buy meat and you must pay such and such a price." Because he cannot do this he cannot control the prices of livestock.

What Efficient Distribution Means

LIVESTOCK producers are, of course, engaged in an absolutely indispensable industry. Of scarcely less importance is the packing business. For upon food production and preparation depend all other industries and activities.

But it is profitable and enlightening to ask, of what use would be production and preparation without means for delivering the food to the consumer? The mere asking brings realization of the prime importance of ample and uninterrupted transportation and distribution of packing house products to consumers through the retailers of the country.

And this, in turn, brings us to the consideration of the packers' salesmen in the hundreds of cities and towns throughout America, which as a whole make up the final market for the producer's livestock.

With the sale of his meat animals by the commission man at the primary market, the owner seems to witness the end of the transaction as far as he is concerned. But does he?

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