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Adapting To Thrive

Mixing realism, pragmatism and long-term planning keeps Ben Thorlakson high on the cattle feeding business. The owner of Thorlakson Feedyards near Airdrie, Alberta, and partner of Cattleland Feedyard near Strathmore, Alberta, has strong viewpoints on where the industry is headed and how he intends to continue.Thorlakson started the business in 1970 after buying a quarter-section of land that now boasts

Mixing realism, pragmatism and long-term planning keeps Ben Thorlakson high on the cattle feeding business. The owner of Thorlakson Feedyards near Airdrie, Alberta, and partner of Cattleland Feedyard near Strathmore, Alberta, has strong viewpoints on where the industry is headed and how he intends to continue.

Thorlakson started the business in 1970 after buying a quarter-section of land that now boasts farming and an 18,000-head feedyard. He expanded five years later by purchasing Cattleland Feedyard when Pat Fisher joined him as managing partner. Combined capacity of the yards is about 43,000 head. Several modifications, enhancements and related businesses have developed since and more are happening at an accelerated pace.

"Feeding is a mature industry. We have sufficient capacity to supply the system. This happened because of an unsaid assumption: we assumed there would be constant demand for our product," he says. "Needless to say, we assumed incorrectly. Now everyone's looking to adjust and retain profitability.

"Cow/calf producers, stockers, feeders and even packers are changing the way they operate," Thorlakson adds.

The current industry status propels Thorlakson to continually fine-tune the feeding operation and tighten other parts of the business. Contracts for manure composting for a wholesale retailer and research trials are two ways he's increasing income-utilizing characteristics inherent to a feedyard.

"We built some pens several years ago for research," he says. "Now we have 112 pens dedicated to replicated studies."

Unsatisfied with the long-term prospects of the status quo, Thorlakson relentlessly examines steps to ensure business success into the next century. A combination of proven strategies, realistic trend analyses and gut-truth economic analyses are his tools.

"We have to find ways to structure our business so it will survive and prosper," he says. "And, our enterprise responds to economies of scale, which presents unique challenges in this industry cycle.

"In a mature or declining industry, the first strategy is to manage cost. The other is to manage risk and identify synergies. An obvious synergy for our operation is the farmland to supply feed, spread and compost the manure. It'd be hard to extract the value of the manure if we didn't own the land next to us," he says.

Thorlakson plans to expand and says feeding cattle will get even more competitive as this expansion begins. He won't say which direction, he's going - only one that complements existing business.

Integration? Yes!At Sunterra Enterprises Ltd., integration is the foundation of the business. Doug Price, president of Sunterra Cattle Division, oversees Sunterra Farms Feedyard and its herd.

Price and four brothers run the diverse operation, which includes a farming operation, retail stores in Calgary and Edmonton, a meat processing plant and a pig breeding facility.

The retail stores are full service grocery stores with delicatessens, prepared foods, catering, even delivery service.

"We've had to think long-term to accomplish this much," he says. "It's committed us to things such as building a new feedyard and going from 5,000 head capacity to 35,000."

The feedlot supplies the approximate 50 head per week average for the retail stores, plus some Japanese exports and general marketings.

"The marketplace shows us what to buy. I like to feed a mixed exotic #1 feeder steer," he says. "Our retail customers are still unable to believe how much better our product is. Everything combined - the genetics, feeding and initial processing make it so. Further processing and sometimes full preparation at the stores enhance the products more."

Seeing this at work has caused the Prices to visualize what it will take to stay profitable.

"We're going to have to own more cattle and own them longer," Price says. "Turning cattle is a drain on industry dollars. If a calf is sold two to three times, that's a minimum $60 loss to the industry. We can't afford that."

Changing owners often negates obtaining all information possible about an animal, too. And, Price wants to identify the most profitable cattle from conception to consumer. He says that's one of the benefits of an individual identification system that will be in place in Canada in the near future. System data will enable performance tracking all the way to the plate.

Price admits that all operating challenges aren't removed simply by owning everything from conception to the plate. There are still environmental considerations, current and future drug use concerns and the need for tighter efficiencies.

"There are still efficiency gains to be made by working on the synergies throughout the system," Price says.

"Our retail operations will still sell less than a majority of what we produce, so we've got to find rewarding marketing methods, keep stores profitable and customers satisfied. And, more and varying regulations are coming, so we'll adjust again and again."

Winning WeaningsWhen you wean more than 20,000 head of calves per year, you know what's going on at the cow/calf and feeder levels. On top of that, what the two sectors wanted nearly 20 years ago is a far cry from what it is today.

Joyce and Miles Crandall, owners of Triple 7 Ranch near Ponoka, Alberta, started in 1981 with a pen capacity for 500 weaning calves. Last year, they weaned 21,000. About 30% went back to grass, half went to feedyards and the rest were finished on site. That 20% may be growing.

"If we remain in business, we'll have to offer all services a cow/calf producer may need," Crandall says. "Right now, we're in a 'hanging' phase, determining how we'll meet customers' newer needs."

Additional staffing needs were partly met a couple of years ago when Joyce left a healthcare career to become part of the operation.

While the average customer runs between 200 and 250 head through the yard, some run as few as 25 and as many as 5,000 per year. They all have one thing in common - each has increased the size of their operation.

Some customers go further, making use of Crandall's option to pasture the calves or winter cows, a growing part of the business. Last year, they custom-wintered 2,000 head. They're considering making it a permanent part of the business mix.

Crandall says the health program is under continual adjustment based on calf needs and customer preferences. And, there are different approaches to different loads of cattle.

Temperatures are checked on all arrivals. Long-haul calves are given extra time to settle in before processing. Ideally, Crandall prefers vaccination on long-haul calves to take place before arrival, but that's not always possible.

Dollar management being top of mind, Crandall's processing setup is fairly standard except that it's under a tarp structure that lets natural light shine through. The investment is a fraction of what a permanent building would cost, roughly $4/sq. ft. It worked so well that they installed similar structures to hold feedstuffs and equipment.

"Once in the lot, there's a high degree of pen-checking," Crandall says. "It's generally several times a day. If pulls from one pen run to 10-12 percent, we'll run the entire pen through the chutes to prevent full outbreaks."

Daily routines are more intense since the first 500 calves ran through Triple 7, but the Crandalls have modified their approach and grown with customers. And, they still see industry opportunities. Aside from that, both believe the region has strong potential as a cattle feeding area. In fact, Crandall and other board members of the Alberta Cattle Feeders Association have invited a Montana representative to join the board.

"If we work together within the region, we can build business opportunities for cattlemen on both sides of the border," he says. "There are more similarities than differences in what we do."

Niche FeedsSome feedyards have an edge on customer service, others on pricing and so on. Owner Robert VanderHeyden says an attribute of his Picture Butte yard is controlling feed costs.He grows all the barley silage and some of the corn for the 4,500-head yard, but purchases barley and other ingredients. Working with a nutritionist, he's formulated a system that allows flexibility with the type of feedstuffs bought.

"I'm finding niche feeds such as barley screening pellets that give me a cost advantage, while not affecting rate of gain," VanderHeyden says. "I can also make ration changes fairly quickly being a smaller operation. I can take advantage of alternative feedstuffs that may be offered by a processor or other business."

VanderHeyden uses nine rations, depending on the stage of calf development, ranging from 20% barley on an as-fed basis as a starter ration to 78% barley as-fed in the finishing ration.

He's been experimenting with how to better preserve the silage part of his ration, using different preservation additives in his bunker silos. "The silage here is really good, I want to keep it that way," he says. "I want to preserve it well so it remains a consistent part of the ration."

He's reduced runoff and held nutrient levels consistent by using a bacterial silage inoculant, which he says he'll apply to upcoming harvest. VanderHeyden is not the only one incorporating improvements.

"The cow/calf end of the system is making strides," VanderHeyden says. "They're getting better at medicating and vaccinating before the calves hit the feedlots, plus we're seeing more preconditioned calves. This will help us all hit profit goals."

Driven By Margins "The challenge business owners continually face is to watch margins and expenses, since margins drive the business," says Scirocco Feedyard owner Lance Carnine of Lethbridge. This fact, he adds, has forced more gains in the feeding industry the past few years than any passing fad or new gadget.

"We've had to become more efficient at handling barley, in the ways we roll it and feed it. We use several byproducts including pea vines, beet tops and beet pulp to extend feedstuffs. And, we've had to become better negotiators for our customers as well as with our suppliers.

"Overall in our region, we're seeing staffing efficiencies with a lot of yards moving to one employee per 1,500 head of cattle on average, compared to one employee per 1,000 head. More risk management tools are being employed and feedyards are using more nutritional advice than ever before," Carnine adds.

Carnine is working on several levels to ensure feeding remains a viable business in the area.

"The Alberta government is working on a Code of Practice," he says. "On a county by county basis, officials are determining business practices and various regulations to standardize throughout the province. Plus, we're working with the government on water rights and creating reciprocal agreements to determine minimum distances feedyards must be from residential areas."

Carnine says the advantage to a reciprocal agreement is that while a new feedyard can't be built close to a residential area, neither can a new development be started near an existing feedyard.

Carnine also works with a local college to develop curricula for students interested in a feeding career.

"We've got to have more training options for young people wanting to work in agriculture," he says. "Besides production skills, graduates need to know how to run a business."

Carnine constantly rethinks his strategy. "We're currently feeding some backgrounders. Depending on how the industry heads, it could lead to this becoming a backgrounding yard instead of a finishing yard," Carnine says.

"It's all part of finding where you fit in the system and making it work. If it takes a complete turnaround here, that's what we'll do."