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Articles from 2001 In June

-----Travel Diary, Day 10

Cuiaba, Brazil

Sunday, Feb. 4

We left the Campo Verde hotel at 8 a.m. We headed to the next farm on a blacktop highway. Before we got to the farm, we drove on another red dirt road for several miles. As we rode, I noticed that the land in the area slopes enough and has enough gentle roll to provide fairly good drainage. The soil in the area absorbs water quickly after heavy rains.

I also noticed 3 or 4 Emus walking through the soybeans at a number of locations. One of the fellows at the next stop said the Emus do not hurt the crops and they help to get ride of the snakes. Snakes! I said, what kind. He said, oh all kinds including rattlers. The fellow was a soil conservationist and he said it was a lot easier and safer to walk the fields since the Emus are in the area. The Emu looks about like an ostrich.

We saw workers in various fields hoeing weeds, and we saw lots of cotton in various stages of growth.

Farm Visit #7

As we neared this farm, we saw at least four or five crop-dusting planes spraying over cotton fields.

This farmer operates what I would consider a medium-size farm for the area. He has 1,700 hectares (4,200 acres) of soybeans and 1,500 hectares (3,700 acres) of cotton. This soil looks like a sandy loam and dries out quickly. The farm is all no-till, and the soils look great for no-till. They have no emergence problem because it is always warm weather.

The farmer has a relatively new 5 hectares (12.35 acres) vineyard. He is looking for additional ways to supplement his income. The experts tell him that grape growing in this area cannot be successful. He is trying to prove them wrong.

He estimates his soybean yields are about 55 bushels/acre. He uses Roundup for burndown and various herbicides after planting. His rotation allows three crops in two years. He also said good tractor drivers earn about $200/month plus house plus meals. His soybean fertilizer program is 500 kilograms/hectare of 0-20-20 plus micronutrients and sulfur. He does not use nitrogen on soya. This calculates to about 0-89-89/acre. His pH is about 6.5, and he applies limestone when needed. The soil is very deep with no rocks. We were told that the soil is about 35% clay, 60% sand and 5% organic matter. Corn yields are about 113 bushels/acre.

Farm Visit #8

We briefly stopped at the next farm to look at corn being harvested with two New Holland combines. It was Sunday, and the machines were not running. This farm has 4,500 hectares (11,111 acres). Estimated corn yield was 6,600 kilograms/hectare (105 bushels/acre).

Farm Visit #9

It is about 12:30 p.m. as we drive into the building site of the next farm. The farm’s name is IBF. Mr. Milton who lives in Sao Paulo owns the farm. He is a doctor and owns a graphic arts and medical film business. He is 85 years old and purchased the farm about 50 years ago.

The farm totals about 12,300 hectares (30,393 acres). There are about 6,000 hectares of soybeans (14,826 acres). The farm has 85 employees and 25,000 tons of grain production. They use a soybean-corn-cotton rotation. Estimated yields of soybeans are 3,000 kilograms/hectare (44 bushels/acre). They estimate they produce 13,200 tons of soybeans/year. They said they have two_ crops/year with a millet-soybean-corn rotation.

IBF has a total of 28,000 hectares 69,180 acres in the state of Mato Grosso.

They employee a general manager for the farm. The farm has 10,000 acres of pasture and 3,000 acres of forest. It also has 37 miles of roads. They have a swine facility with 6,000 heads, 770 sows, 35 boars and an annual production of about 16,000 hogs/year.

A special soil conservation consultant, Dr. Joao Carlos de Moraes Sa advises the manager on the agronomic practices. He obtained his doctorate from Ohio State and is very knowledgeable about soils in Mato Grosso.

Dr. de Moraes Sa said organic matter is the key survival question! Because this is a temperate- zone, the organic matter can be reduced 50% within five years if the soils are not properly handled. No-till allows for a considerable reduction in the loss of organic matter. The heat and high rainfall causes increased loss of organic matter. Annual rainfall is 1,500 millimeters (59 in.). He said that all of this farm’s crops are no-till. They were conventional tillage until 1997.

We heard him and other Brazilian farmers say that the natural pH is in the range of 3.9 to 4.5. Currently, the pH on this farm is in the area of 5.7. When new land is brought into crops, 5 to 6 tons of lime are applied per hectare (2.6 tons U.S.). They expect to lime every 4 years. The lime pit is about 300 kilometers (186 miles) from the farm. He expects to apply 1.5 metric tons per hectare every two years.

We also saw Emus on this farm. The soil conservationist said they like the Emus because they eat the snakes. He says he can scout the fields with less concern for the rattlers. He said that the rainforest begins in the north end of the state of Mato Grosso and has up to 3,000 millimeters (118 inches) of rainfall/year.

Once again, all soybeans from this farm are trucked to Port of Paranagua, a distance of 2,500 kilometers (1,553 miles). All grain is sold f.o.b. the farm.

Cost of land to lease is about 8 bags of soybeans containing 60 kilograms/hectare (about 7.138 bushels/acre). In some cases, leased land may go for as high as 9 or 10 bags per hectare. This computes to 8 to 8.9 bushels/acre. After a huge lunch of beef barbecue and all the trimmings that took nearly two hours to eat, we left the farm for visit at Tamil.

Non-farm Commercial Stop #3

The last stop on Sunday afternoon was at Tamil Corp. They buy and store up to 60,000 tons of corn. Inventory is turned two times a year. They also buy sorghum (milo). They manufacture animal feeds, grits for corn flakes and cereals and grits for industrial use. They manufacture many kinds of feeds. They are looking for additional export markets. We viewed a video that I sent to you. We toured the facility.

We left the Tamil Corporation about 5:30 p.m. for a three-hour drive back to Cuiaba. The road was rough, and we were in heavy traffic most of the way to Cuiaba. We arrived at the hotel at about 9:15. We started the day at 6:45 a.m. – a long day again, but we sure had two days jam-packed with soybeans and the related agriculture industries.

For other diary entries, click on the entry day(s) below.

Day 1-2

Day 3 Day 4 Day 5 Day 6 Day 7 Day 8 Day 9

This online exclusive is being re-published with permission from Soybean Digest . Some minor revisions have been made by BEEF magazine editors.

For 2002 Travel Plans to South America see:

-----Travel Diary, Day 9

Curitiba and Cuiaba, Brazil

Sat., Feb. 3

Plane ride #4

Flew about an hour from Curitiba to Brasilia, capital of Brazil.

Plane ride #5

Flew about an hour from Brasilia to Cuiaba in the state of Mato Grosso. We arrived at the airport about noon.

On a bus ride to our hotel, we were told that to check our main baggage into the room and then pack a small overnight bag for an immediate departure for an overnight stay in Campo Verde. None of us were previously aware of this change in the itinerary. Not knowing what to expect and where Campo Verde was, I had visions of going north from Cuiaba deep into the jungle loaded with malaria carrying mosquitoes. In reality, we drove about 3-hours east-northeast of Cuiaba to some of the most fascinating cropland in the world.

We drove through a small mountainous area shortly after leaving Cuiaba. We entered what I believe to be a plateau of. absolutely unbelievable farm country. I have been to most of the major agriculture areas in California, Washington, Arkansas, Mississippi, Colorado, Iowa, Illinois, Indiana, Ohio, Western New York, Missouri Boot Heel, Texas and the sugar cane areas and ranches of Florida. However, I have never seen anything like we began to see and would continue to see for the next six days! I could take you to areas in the U.S. that have small areas of what we saw. But to go for miles upon miles and to look as far as you could see – gently rolling fields of excellent looking soybeans and cotton, was almost more than we could grasp. It was like seeing the northeast Arkansas Delta, the Iowa farm country and the Illinois prairie farms all wrapped into one package. And so for the remainder of this day and the 5 days to come, our group saw as many soybeans and cattle farms as we will probably ever again see!

We entered the town of Campo Verde about 3-hours east-northeast of Cuiaba. According to our local guide, this town was nothing but a gas station in the road in 1986. Today, it has a population of about 30,000. And it is all because of soybeans. We saw at least 5 huge grain terminals including several with familiar U.S. names. We saw several farm equipment dealers along the highway including New Holland, John Deere and local Brazilian manufacturers.

Non-farm Commercial Stop #2

Our first stop was at the Sadia Corporation. They are a large feed processor and contract grower. They have about 6 million broilers under contract with farmer growers. They have over 300 broiler houses in this immediate area. Six turnovers of chickens are made through each house. The farmer owns the buildings and furnishes the labor. Sadia furnishes the chickens and the feed. Each bird weighs about 2.6 kilograms (5.73 pounds) at 50 days. Labor cost is about 19¢ per bird.

Farm Visit #5

We went about a mile out into the country to one of their chicken houses. It was hot and humid and about 3:30 in the afternoon. We could see thunderstorms building in the distance and within a short time we experienced a very heavy rain with lots of lighting. They told us that the rainy season is October to May, and that it rains almost every day in January and February. Remember their January and February is our June and July. The weather is similar to the afternoon thunderstorms that typically occur in the summertime in Mississippi.

Sadia also contracts a lot of turkeys. Sadia is in 5 Brazilian states and also produces feed for pork and beef production. They are on the stock exchange and employ about 25,000 people. They slaughter 40 million broilers per year, process 25,000 tons of feed per month and have storage for 40,000 tons of feed at Campo Verde. They produced 205,352 tons of feed at Campo Verde in 2000. They said they produce 35 kinds of feed. They purchased 188,207 tons of grains in 2000, and have 8 setups like this for processing feed.

Most of the feed is for broilers, 80,550 tons. Second was swine feed and 3rd was turkey feed. They told us that Smithfield in partnership with Carroll was investing $100 million for contract hog production in Mato Grosso. They said Smithfield would have about 45,000 sows. This was the first we had heard of this, but a few days later we were in a meeting with the mayor of the city where Smithfield is locating.

The people at Sadia said they used to own a crushing facility. However, they now buy their meal from a crusher in Cuiaba or Rondonopolis. They said the state of Mato Grosso has 19 million heads of cattle. In the Campo Verde area there are about 110,000 heads. Very few cattle are fed any corn (less than 5%).

The headquarters office for Sadia is in the city of Sao Paulo. Their web site is . Wages for workers are about $200 per month U.S. or $2,400 per year. Information about typical labor wages began to be an important fact in our groups thinking. We found in Argentina as well as Brazil, that $200 per month will get you tractor drivers, and about any kind of agriculture worker.

As we continued our travels in the agriculture areas of Mato Grosso, and later into the state of Mato Grosso do Sul, we found that their wages are a very important factor in the kinds of machinery they use. In several situations we saw that it was cheaper to use manual labor than to invest heavily in labor saving equipment. It was very evident that our group felt the wages and lower chemical prices allowed these farmers to stay very competitive with the U.S. farmer. Neither Argentina nor Brazil has any government farm subsidies. But when you get to the bottom line, because of the wages and chemical costs, they can compete with the U.S. farmer.

By the time we left Sadia Company, it was nearly 6 p.m. We now found out why we had brought an overnight bag. Thinking that we were about to check into the local hotel, I didn’t understand why we didn’t just drive back to Cuiaba and be in the nice hotel by 9 p.m. We found out that we were going to visit a farm 40 kilometers (25 miles) from Campo Verde yet tonight. Keep in mind that it is 6 p.m. and the area had just received a tremendous heavy thunderstorm. Well, I am thinking that here goes another night of getting into the hotel at about 11 p.m. However, that thought was a piece of cake when we discovered that the highway turned in a bright red dirt road at the edge of town. The bus driver didn’t want to take the bus down this dirt road since it had just rained. He cell phoned the owner of the bus company. Then our local tour guide and the owner went round and round with much hollering over the cell phone. Finally we started down this dirt road and for the second time of the trip I became quite concerned. I am used to slick muddy roads when a storm like this occurs. The bus continued along at speeds of 5 to 25 miles an hour. When the bus met other cars, it would, of course, have to get over to the side. On numerous occasions, I was sure the bus would tip over or slide off into the ditch - and there we would be for the rest of the night. Fortunately, this type of red dirt is very porous. There was no slipping or sinking in and finally after bumpy, scary ride of nearly an hour, we arrived at the next farm.

Farm Visit #6

We met the owner and he quickly showed us his soybeans and cotton because it was getting dark. Unfortunately, we spent too much time listening about chickens when we should have been on this farm. Thus, we didn’t get to see what we would have liked. Most of the group was a little irked because it was the first real farm we visited in Brazil. Little did we know that over the next 5 days we would see many more farms just like this one. And little did we know that 5 days later we would be hollering, "Oh my gosh, do we have to look at another soybean field?"

The owner of this farm is Jose Pupin, age 50. He owns 25,000 hectares (61,775 acres). He grows cotton, soybeans, corn, wheat and cattle. He started in 1981 with 8,000 hectares (19,768 acres). He was one of the most impressive people we met.

He currently has 7,000 hectares (17,297 acres) of cotton; 8,000 hectares (19,768 acres) of soybeans; and 4,000 hectares (9,884 acres) of double crop soybeans.

He has about 100 full time employees and 15 part time. Salary ranges from lowest of about $250 U.S. to $500 per month. The average is about $350 U.S. per month. Most of the workers live on the farm. The married are furnished housing and the singles live in a dormitory. A farm cafeteria feeds the employees, and the housing and food are a part of the benefits over and above the salary. A school bus picks up the kids and takes them to a school about three miles away.

The price of land is about $1,200 per hectare ($485 per acre) in this area. Some land may get as high as $3,000 per hectare ($1,214 per acre). He said he is able to buy raw land for about $350 per hectare ($141 per acre) and then it costs about $500 per hectare ($202) to put it into production. When he buys land, he typically contracts with the seller for 6 years. The contract stipulates that he pay the seller a certain amount of kilograms of soybeans per year delivered to Campo Verde. Thus, when the price of soybeans goes down, the ultimate cost of the land purchase is lower or conversely higher when soybean prices rise. He says not all sellers are willing to do this and that some want cash only. He said 3,000 hectares (7,400 acres) is a very easy size property to farm in this area. He said the average size of property owned in the area is 500 hectares (1,235 acres) and much of the smaller tracts are leased to larger farmers.

Mr. Jose Pupin, the owner, is usually on the farm two days per week, and he lives in Cuiaba. He has a mechanical engineering degree and also a business degree. He said he lived in Indiana for 6 months studying U.S. agriculture and business. His father owns a farm near the Parana River and his brother farms that property.

He has a full time manager in charge of agronomy. This man has 5 people reporting to him. The owner is at the farm each Monday to sign checks and to go over various items with the agronomy manager.

All of their crop acreage is no-till. Rotations vary but most are cotton-soybean-corn. Soybean varieties are 110 to 145 days maturity. No Roundup is permitted. He uses lots of herbicides. He uses 2-4D for burn-down. He also uses Cobra, Classic and Septer, to name a few. Again, he said the chemicals are about half the cost of U.S. He said he gets 60-bushel soybeans yields. He uses Staple herbicide on cotton and the price is about half U.S.

He uses about 20% of his own soybean seed and buys about 80% foundation seed. He researches the companies and uses Pioneer, Aventis and Novartis.

He is building a 22,000 tons warehouse for fertilizer storage. He soil tests and applies lime when needed. He prefers pH of 6.2. They also do some leaf tissue analysis. They use micronutrients and sulfur in addition to phosphorus and potash. (not sure about the # on fertilizer, this was one of the translation problems).

They have cyst nematodes and he grows resistant varieties. He grows corn only for 2nd crop in the rotation because yields are only 5,000 to 6,000 kilograms (80 to 95 bushels per acre).

He has a gin on the farm with capacity of 15,000 hectares (37,065 acres). Since he has only 7,000 hectares, he also does custom ginning.

He has 7,000 hectares (17,297 acres) of pasture with 5,000 heads on the pasture.

As it became too dark to see the fields, we boarded the bus and went to the building headquarters. Unfortunately, it was too dark to really see the site. However he turned the lights on in the machine shed. The shed was open on all sides with the roof held up with concrete arch pillars. The building was at about 500 feet long and 100 to 150 wide. He had 21 combines and 9 cotton pickers in it. He also had a number of tractors and planters stored. Most of the equipment was John Deere and New Holland combines and Case-IHC cotton pickers. The tractors were John Deere. Planters were SLS-John Deere-11 row with 45 centimeters width (17.7 inches).

Marketing: He stores much of his soybean crop on the farm. He sells and contracts his crop through one company broker. His soybeans are trucked 2000 kilometers (1,243 miles) to the Port of Paranagua.

We stopped at the farm cafeteria for refreshments and fruit. We boarded the bus about 9-p.m. Saturday night, for the long, bumpy 25-mile ride back to Campo Verde. We checked into the hotel about 11 p.m. after a very long day.

For other diary entries, click on the entry day(s) below.

Day 1-2

Day 3 Day 4 Day 5 Day 6 Day 7 Day 8 Day 9

This online exclusive is being re-published with permission from Soybean Digest . Some minor revisions have been made by BEEF magazine editors.

For 2002 Travel Plans to South America see:

-----Travel Diary, Day 8

Curitiba, Morretes and Paranagua, Brazil

Friday, Feb. 2

At 8 a.m. we boarded a tourist train in downtown Curitiba for a picturesque ride through the mountains to the town of Morretes. Morretes is a small town a few miles inland from the Port of Paranagua. Our tour bus was waiting for us at the Morretes train station.

We drove to Paranagua. Here we saw one of Brazil’s largest ports. Much of the soybeans from the Cuiaba and Campo Grande areas are trucked to this port. We were told that it is 2,500 kilometers (1,553 miles) to Cuiaba and about 1,500 kilometers (932 miles) to Campo Grande. As we drove to the port, I saw several gas stations. The sign said $1.66/liter ($6.28/gallon) for lead-free gas. Brazil has ten major ports along the Atlantic coast from south to as far north as the Amazon River.

At 1:50 p.m. the temperature was 38° C (100.4° F) and very humid. We went to the port’s headquarters where we viewed a video about the port and then had an opportunity to ask questions. They said 40% of the grains arrive by train (on the tracks we rode the train) and 60% by truck. Sao Paulo is also one of Brazil’s largest ports. But they said Paranagua is the number-one exporter in grain. Thirty-eight percent of Brazil’s soybeans are shipped through this port.

They said they have facilities to load up to three grain ships at a time with about 1,000 tons/hour on each ship. Some ships take about 18 hours to load. Much of the grain goes to Europe at Rotterdam. They can dock 13 mid-size ships at one time. Container shipping has increased in the last three years.

The country of Paraguay also uses this port. The port also exports automobiles, timber, coffee, frozen meat and many other items. They said the railroads coming to the port are improving. Up to 120,000 tons vessels dock at the port. In 1998, 20 million tons were handled. They plan to expand the grain handling facilities. Again, they said this is the largest grain export complex in Brazil. We saw several nearby huge grain storage facilities including Cargill.

Paranagua port is at sea level. Curitiba is about 1,000 feet above sea level. It is cooler with better weather, and thus it has become the bigger city. On the ride back to Curitiba we saw numerous banana trees. We stopped at a roadside stand and the guide bought a bunch for the group. Tasted pretty good, as we had been afraid to eat the fresh fruit.

Farm Visit #4

Near Curitiba, we visited a stud farm. The owner was a wealthy retired lawyer and apartment owner. The farm and horses were beautiful, and it looked very much like the horse farms near Lexington, KY. We spent the night in a Curitiba hotel and went to the airport early next morning for our flight to Cuiaba, Mato Grosso.

For other diary entries, click on the entry day(s) below.

Day 1-2

Day 3 Day 4 Day 5 Day 6 Day 7 Day 8 Day 9

This online exclusive is being re-published with permission from Soybean Digest . Some minor revisions have been made by BEEF magazine editors.

For 2002 Travel Plans to South America see:

-----Travel Diary, Day 7

Roasario and Buenos Aires, Argentina

Thursday, Feb. 1

We checked out of our hotel and walked two blocks to the Argentina Board of Trade. This facility has a trading floor similar to the stock and commodity exchanges of the U.S. Here we met an individual who lectured for about one hour. The following are my notes from this meeting:

Rosario is located in the center of Argentina’s grain production. The Board was founded 116 years ago. It annually handles 15 to 16 million metric tons, mostly soybeans, but also some wheat, corn and sunflowers. The Buenos Aires grain exchange handles about 11 million metric tons/year.

They analyze 300,000 samples/year. He estimates a big crop of soybeans in South America this year. He stated that U.S. production is expected at 75 million tons; Brazil 35 million tons; Argentina 25 million tons and China 16 million tons.

Most of Argentina soybeans are exported. They produce 64 million tons of soya and export 47 million tons. Transportation within country is mostly by truck, and this is a major disadvantage. Sixty percent of wheat, 58% of corn, 97.4% of soybeans and 85.5% of sunflower production is exported. This year’s production is estimated at 25 million tons for soybeans, 16 million tons for wheat, 15 million tons for corn and 4 million tons for sunflowers.

Most of the major crushing plants are north of Rosario on the Parana River. Activities of the Exchange are very high. Plants owned by Dreyfus crush 14% of the soybeans, Cargill 13.5%, Vicntin? 11.8%, Ag Deheza? 13.5%, Bunge 8%. ADM is expected soon. Most of these facilities are on the river. He said that Brazil production area is very dispersed; they have a bigger crushing capacity, but they are more dispersed, older, and inland (disadvantage according to him). Brazil equals 160 million people and consumes 30% to 40% of production. Ports are far from production. Cuiaba is the main producing area.

He said Argentina is the number one exporter of oil and soybean meal. He said they had big profits in 1996-1997, and net profit was 3% of Pampas’s investment. 1999 and 2000 profits are not so good. He said U.S. net is similar to here – 2.5% on assets without government support and 4.5% with government support. He is not worried about U.S. subsidies. In summary, most of the data he gave us is on the Internet. But the conversation and location of the discussion makes me aware that these Argentineans are big time players in the market.

Plane ride #2

We left Rosario at 10 a.m. for the Buenos Aires Airport. It took nearly 30 minutes to reach the outskirts of Rosario. We got on a 4 lane limited access highway similar to U.S. Interstates. We arrived at the Buenos Airport at 2:35 p.m. for our flight to Curitiba Brazil. The airport terminal is similar to a typical U.S. terminal. By the time we checked our baggage, got through security and customs it was 3:20 p.m.

Plane ride #3

We landed in Porto Alegre Brazil, a city in the far southeast corner of Brazil. We cleared through Brazilian customs and boarded a new flight to Curitiba Brazil. Each flight was 40 to 50 minutes. Nice planes, first an F100 and then a Boeing 727. We arrived in the Curitiba airport at 10 p.m. The time in Curitiba was 4 hours faster than Chicago. We checked into our hotel and it was the best we had had so far. One of the things we all began to suffer from was "shipping fever." We were on an extremely heavy travel pace with many 12 to 15 hour days. Some of the group developed colds and congestion and all the other things that go with traveling. We had no real trouble with the water, and in the major cities most of us were not concerned with brushing our teeth with the hotel water. Too much in and out of the heat and then into air-conditioned buses and hotel rooms. By the end of the trip, I think we all knew each other’s aliments more than we really wanted to know. I was originally concerned about mosquitoes and malaria. All of the areas we were in have no malaria carrying mosquitoes. I only saw two mosquitoes while we there. Most health people recommend yellow fever shots. We all survived.

For other diary entries, click on the entry day(s) below.

Day 1-2

Day 3 Day 4 Day 5 Day 6 Day 7 Day 8 Day 9

This online exclusive is being re-published with permission from Soybean Digest . Some minor revisions have been made by BEEF magazine editors.

For 2002 Travel Plans to South America see:

The Entrepreneur Recipe

The Entrepreneur Recipe

Spirit, Determination Capture Vision For New Agricultural Book

From one calf to 12,500 milk cows. From leaving the farm at age 17, only to return years later and amass 40,000 acres of corn, soybeans and sunflowers. From a Red River Valley start of 200 acres in 1964 to an enterprise that has become the nation’s largest producer of potatoes.

Some may believe those three vignettes might have shades of Cinderella woven into them. But for Louis Larson, Leonard Odde and Ronald Offutt, work ethic, determination and vision have made their entrepreneurial stories reality. A reality that author and historian Hiram M. Drache has captured in his new book titled "Creating Abundance: Visionary Entrepreneurs of Agriculture."

Drache, a retired 40-year history professor at Concordia College in Moorhead, Minn., says the inspiration for the book came to him over 25 years ago. "In 1975, I spoke at a symposium on the bicentennial of American agriculture and stated that 95 percent of our farmers did not grasp the rate of change that was taking place in their industry. You can imagine the kind of reception I received from that comment," he notes. "It was then and there that I decided it was imperative to write about incredible visionaries who were not only industrializing agriculture, but were taking it into the global era."

The literary undertaking profiles entrepreneurs from all segments of agriculture; from turkey and cattle production, row crops and potatoes, to celery and pecans. Overall, 15 different enterprises are featured in the book, which is Drache’s ninth published.

The book, which Drache embarked on with his first interview in 1990, is a geographical and enterprise sampling of individual entrepreneurs who today have placed their operations in the top rank of agricultural firms. But Drache notes that the farms he profiled do not fall under a Wall Street version of "corporate farm." "All but one of the farms covered in this book belong to an individual or a family," he says. "The owners of these large farms are primary producers in a rapidly changing food chain with processors and retailers who are trying to satisfy the ever-demanding consumer with a greater variety of nutritious and safe food."

While many of the profiles do not have a direct link to traditional row-crop farming, Drache says that shouldn’t limit the interest level for the book. "If you’re a Midwest corn or soybean producer, you may think to yourself, ‘why would this apply to me?’ But the type of thinking these people put into their businesses is what can shape today’s row-crop farmer for tomorrow," he notes. "I truly wanted to look at all industries within agriculture and write about what it takes to change and shape an agricultural enterprise."

The book is available at most national book outlets. Or, for more information, call Interstate Publishers Inc. at 800-843-4774 or visit their Web site at The book is also available with a personal inscription from the author by ordering direct at: Hiram M. Drache, 326 10th Ave. South, Fargo, ND 58103-2846. Include your name, address and a check for $29.95 plus $2.50 for shipping and handling ($3 U.S. for Canada delivery).

Dairy Gold

Dairy Gold

John Tracy is a cattle feeder who likes dairy cattle. And this is not an uncommon combination these days in places where cattle feeders and dairy producers are neighbors.

Tracy’s feedyard is located in Buttonwillow, CA., just off Interstate 5 west of Bakersfield. This dairy rich region provides a steady supply of Holstein steer calves to a handful of feeders/backgrounders like Tracy who don’t mind seeing the black and white animals coming to the feedbunks.

"Oh I know, most self-respecting cattle feeders cringe at the thought of feeding Holsteins," says Tracy, partner in Buttonwillow Land and Cattle Co. "But, let me tell you something, they do really well for us – for a lot of reasons.

"These are very predictable cattle, both in terms of feeding performance and end-product traits," says Tracy. "They also have great dispositions, and once they come to us, the death loss is not at all what some people think."

But even more than their performance in the feedyard, cattle feeders appreciate dairy calves because of their steady year-round availability. Making up about half of Tracy’s feedyard mix, the Holsteins help keep pens full during times of the year when runs of beef-type calves slow to a trickle.

Tracy’s rations, as well, are not what one would consider conventional for a self-respecting feedyard. But he doesn’t care. His facility is located in the shadow of an enormous Frito-Lay chip plant. A steady supply of nutrient-rich processed and cooked corn and potato chips – waste and cull chips, test runs and by-products from the plant – are hauled to Tracy’s feedyard every day.

The mountains of chips are mixed with hay-based roughages and other local feeds – like cull carrots and tomatoes grown on nearby farms. Along with feedyard employee Armando Montoya, Tracy adjusts the rations based on the mix of feed products available day to day.

Tracy’s agreement with Frito-Lay stipulates he uses their unwanted product on an all-or-nothing basis. And because storage is out of the question, he must have cattle coming to the feed bunks every day. Of course, that’s what feeding cattle is all about.

What's A Fair Cow Lease?

setting up a beef cow lease

Recently, I've received several queries regarding beef cow leasing. Some were from owners interested in leasing their cows. Others came from folks who wanted to lease cows. The question from all of them was: What's an equitable beef cow lease for my unique situation?

The answer is simple. An equitable lease is one in which both parties share the calf crop in the same proportion that they share the costs of running the beef cowherd. For example, if the leasing rancher provides 70% of the costs of running the cowherd and the owner picks up the other 30%, then the equitable share-lease ratio for the calf crop should be 70/30.

In addition, the cow owner gets the cull cow income. In a typical herd, this would bring the owner's share up to 40-45% of the total herd's income.

An example of a full-cost, equitable lease is posted on my Web site, By full-cost, I mean the budget includes all resource costs including a charge for unpaid family and operator labor, management and the capital invested by both parties in the cowherd.

Here are three steps for establishing an equitable lease. An equitable agreement should be based around the projected full costs of production, of which there are two components. The first is the direct operating production costs plus the annualized overhead costs. The second is the opportunity costs for the resources used by the working rancher's family, plus the capital investment costs of both parties.

(The numbers used to illustrate an equitable beef cow share-lease ratio in the example below will be those of my North Dakota Demonstration Herd.)

Step 1: Identify and project the direct costs of production for the cowherd.

The direct costs are the combined operating and the annualized overhead costs for the primary resources used in the beef cow enterprise. Farm-raised feeds fed are charged at fair market price and overhead costs are annualized for just the equipment and buildings utilized by the beef cow herd.

Farm operating costs and farm machinery costs are not included when feeds are charged in at fair market value. Cow depreciation should be included in place of replacement heifer costs.

After accounting for all the above operating and annualized overhead costs in my example herd, the total cost is $336/cow.

Step 2: Calculate the opportunity costs of family resources and investment capital provided by both parties.

Next, determine the full cost of production by adding opportunity costs to the direct costs. Opportunity costs include the working rancher's unpaid family and operator labor, management and both parties' equity capital.

In my example herd, the eight hours of labor required/cow was valued at $8/hour, while management charge was valued at 5% of gross income. The charge for equity capital was valued at 8% of fair market for the beef cow assets.

Adding the labor charge of $64, management charge of $28 and equity capital charge of $89/cow, the full-cost budget is $516/cow.

Step 3: Allocate each resource cost to one party or the other.

Once the full cost of production is determined, allocate each cost item to one of the two leasing partners. In a few cases, the costs will be shared.

Total each of the three columns to determine the cost contribution for each partner. Then calculate each partner's total cost allocation as a percent of the herd's total costs. These percentages become the equitable share-lease ratio.

In my example herd, the owner is projected to contribute 29% of the full costs, while the rancher will contribute 71%. Thus, an equitable agreement would be one in which the owner receives 29% of calf income and the rancher receives 71%.

Remember, the cow owner also gets the cull cow income. And, because the owner also provides the bulls in this case, he also gets the cull bull income.

No one share-lease ratio is equitable for all producers. If the resources were provided in different proportions, the equitable lease would be different.

There's no shortcut to determining an equitable share-lease ratio. The time spent up front designing an equitable beef cow share-lease ratio can prevent most problems down the line, particularly legal fees that might pop up at termination of the agreement.

Leasing agreements often end because of disgruntled partners. A poorly designed lease or no written business lease at all can lead to all kinds of legal and financial problems.

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A good written business plan documents in detail how the agreement will be terminated — things like when the cows are to be returned, what condition are the cows to be in at termination, how will death loss be handled, who feeds the animals in the last year, etc. Most legal and financial problems that arise at termination can be prevented with a thorough, thought out, written business plan at the beginning.

Harlan Hughes is a Professor Emeritus at North Dakota State University. Retired last spring, he is currently based in Mankato, MN. He can be reached at 701/238-9607 or [email protected].

Evaluating Market Alternatives For 2000 Calves

These planning price projections (Table 1) are based on both the futures market price and Western North Dakota sale barn prices for the current week. The price projections in Table 1 were used to evaluate six marketing alternatives for year 2000 calves shown in Table 2.

The “buy/sell margin” in Table 2 is the buying price of animals going into a lot subtracted from the selling price of animals coming out of the lot. Since selling price is normally less than purchase price, the buy/sell margin is normally negative. The negative buy/sell margin represents the marketing loss/cwt. on the purchase weight of the animals. The cost of gain (COG) represents the cost of the added weight while in the lot. Profit/head represents the combined marketing losses and profits from gain.

Table 1. Suggested planning prices
Lbs. Fall 00 Mar 01 Wk Apr 19 Spg 01* Fall 01*
400 $119 $120 $119 $119 $120
500 $105 $110 $109 $108 $109
600 $96 $102 $100 $99 $100
700 $90 $93 $92 $91 $92
800 $88 $85 $85 $84 $85
900 $89 $78 $79 $78 $79
Slaughter $72 $79 $77 $74 $74
*Projected week of April 19, 2001
Table 2. Traditional marketing alternatives
Marketing Strategy Buy/Sell COG Profit/Hd
1. Sell at weaning N/A $0.70 $149
2. Bck high ADG -$17 $0.49 -$16
3. Fin bckg. steer -$16 $0.46 $38
4. Grow and finish -$10 $0.42 $66
5. Steers on grass -$12 $0.45 -$5
6. Fin grass steer -$10 $0.45 $60
The six marketing alternatives evaluated here are: 1) selling 565-lb. calves at weaning, 2) backgrounding 565-800 lbs. sold after first of the year, 3) finishing backgrounded steers 800-1,200 lbs., 4) growing and finishing 565-1,175 lbs., 5) steers on grass 625-800 lbs., and 6) finishing grass steers 800-1,250 lbs.


Thanks for your support

Intertec, the parent group for BEEF and 77 other business-to-business trade journals, recently conducted a survey of each magazine's readership. The objective was to gauge the importance of each magazine's editorial content to its audience. In that survey, BEEF was rated by more than 71% of beef producer respondents as the “must read” publication in the U.S. beef business.

It was a welcome result for our BEEF editorial staff, which strives each month to provide our readers with a package of fresh, thought-provoking and pertinent news and information. Our purpose is to give our readers the insight and ammunition — in an easily digestible format — that's necessary to stay on top of a rapidly changing industry.

To accomplish that goal, we work to diversify the package to keep content fresh and inviting. For instance, for the past three years we've cooperated with Texas A&M University and commercial sponsors to bring the industry the highly successful Beef Quality Challenge contest. We've also strived to integrate our electronic media efforts ( and with our printed product in order to provide deeper and more timely coverage of industry happenings.

For more than a year, BEEF has presented a continuing series of feature stories on the beef industry's top marketing alliance programs. Our 14th installment — Caprock's Sharing Total Added Value (STAV) alliance — appears on page 14. In addition, we publish an annual index of alliance programs — The Alliance Yellow Pages — each August.

Last fall, we began a monthly series of taste tests on new beef convenience foods available at retail — the “BEEF Taste Test.” You'll find the latest (Excel's Cattleman's Reserve Fully Cooked Beef Patties) on page 35.

Recently, we've also revamped our regular column offerings to introduce our readership to new industry experts and personalities. For instance, we added economist Harlan Hughes as a regular marketing columnist in January. His column — “The Market Advisor” — appears on page 16 of this issue.

In our April issue, we gave you a sneak peek at our new specialist in agricultural legal issues — Jane Easter Bahls. Her accompanying story on liability issues having to do with a national cattle ID system was a dandy complement to the April cover story. Look for her byline dealing with agricultural law topics in upcoming issues.

All these additions, features and efforts are dedicated to keeping our readers abreast of what's transpiring in the beef business, both inside and outside of the production sector.

Series Focuses On Florida

This month, it's my pleasure to introduce Mary Anne Cruse, or “MAC” to her friends. MAC begins her monthly diary on ranching and ranch life in South Florida in this issue.

MAC assumes the challenge filled ably and wonderfully for four years by Heather Smith Thomas of Salmon, ID. Heather's “Monthly Journal From The Lemhi Mountains” imparted to BEEF readers a better understanding of the unique challenges faced by ranch families in the Intermountain West.

Now, MAC will provide insight into the challenges of operating in the Southeast, with its attendant heat, humidity, abundant grass and even-more-abundant environmental and urbanization issues. Give her column, which appears on page 18, a read. I think you'll find what she has to say both enjoyable and enlightening.

MAC is the latest tweak in our efforts to provide you with a beef industry trade journal that will be indispensable — a “must read” — in your business. Any comments or suggestions on how we can do a better job of helping you do yours are welcomed and appreciated. Thanks for your support. It's what we work for.

Skinning BVD

New skin test accurately diagnoses BVD in young calves.

The bovine viral diarrhea (BVD) virus can do a lot of damage to a cattle herd. From promoting pneumonia in calves to causing abortions in cows, the virus has been blamed for estimated losses of up to $150 million annually nationwide.

Traditional BVD virus testing involves blood samples taken from all cattle in a herd. The virus is detected by use of an ELISA blood test, which is highly accurate in animals over 2-3 three months of age.

Now a new skin test should eliminate the problem of diagnosing BVD in young calves.

Although the virus can be transmitted across fences and by commingling livestock, the main infection source in most herds is carrier animals that are persistently infected (PI). These PI animals are produced as a result of infection of the fetus during days 45-145 of gestation, before the fetal immune system has developed sufficiently to recognize the virus as foreign. The calves can spread the virus throughout a herd.

“As the fetal immune system develops, it thinks the virus is normal and no rejection attempt is made,” explains Donal O'Toole, Laramie, WY, a researcher with the Wyoming State Veterinary Laboratory at the University of Wyoming. “Thus, a carrier PI animal results and sheds the virus throughout its life.”

Normal blood tests often aren't accurate in detecting the BVD virus in calves. Calves absorb antibodies through colostrum in the milk that interfere with the ELISA test.

New Skin Test

Bruce Brodersen, veterinary pathologist at the University of Nebraska's Veterinary Diagnostic Laboratory, discovered an accurate test that can be used on calves soon after birth. He looks for the virus in a skin sample, rather than blood serum.

“It's really just a new application of a test that's been around for awhile,” says Brodersen. “Using the skin test, we can identify infected calves at a younger age and remove them from the herd sooner, so there's less chance of them infecting other animals.”

He read about a similar skin test in a European scientific journal in 1996 and decided to try it at the lab. The test, known as the BVD-IHC (immunohistochemistry) test, has been accurate in early research. Using formalin-preserved ear notches or biopsies, the tissue is sectioned and stained with an antibody against BVD virus.

Interest in the test is strong, Brodersen says. His lab has been testing 3,500-4,000 samples a month since the test came online late in 1999. Veterinary labs in Iowa, Oklahoma, Pennsylvania and Wyoming, among others, are processing samples.

“In PI animals, the virus is found in high concentrations in the skin,” says Lynn Woodard, Wyoming's Extension veterinarian. “Rather than use blood, veterinarians and ranchers may want to consider using ear notches from ear-marking activities.”

Eradication Possible

The skin test for the BVD virus will help a concerted effort to eradicate BVD. The Wyoming State Veterinary Laboratory is among those now testing skin biopsies for BVD. Woodard thinks it will help ranchers eliminate BVD on a herd-by-herd basis from the state.

“We're aware of several herds in Wyoming and elsewhere that have done so, although reintroduction is always a possibility,” says Woodard. “Eradication would be hard if you are a public lands rancher with mixed ownership of herds.”

For herds closed to other cattle, especially during the breeding season and early pregnancy, eradication may be an economic reality.

BVD eradication efforts were often unsatisfactory because only cows and replacement heifers were tested. New research reveals that calves nursing pregnant cows during the breeding season are the most likely carriers.

“This is the reason BVD continued to be a problem in some herds even though all adult carriers had been eliminated,” explains O'Toole.

The new skin test eliminates the cost and hassle of testing the bulk of the cowherd. Dams of any infected calves then need to be tested to see if they are PIs also. The traditional ELISA test on blood can be used on these individuals, plus the replacement heifers, the bull battery and cows without calves.

Monica Manton Norby, University of Nebraska, assisted with this article.