Cattle business moves from the pasture to the global scene
By TIM KALINOWSKI
It’s a late January auction day at the Medicine Hat Feeding Co., the slowest season of the year. There are just 120 animals on the block today. Auctioneer Darren Lutz drawls out the bids as each animal enters the ring. After a minute of furious activity the winning bid is announced and the next animal is ready for the sort. Just a normal day at the weekly auction, but it speaks volumes about the state of the auction mart in today's mega-ranching economy. This economy of scale presents a dire challenge for local stock yards.
Lyle Taylor of the Medicine Hat feeding Co. knows how hard it is to survive in today’s auction mart business. Since 1994, he’s had to drastically expand his company size and offer greater incentives to buyers and sellers to get them through the door.
“We have to diversify,” Taylor explains. “And you have to look at all the options available to help the producer maximize their potential. That’s what we're here for: To help the producer maximize their potential. We've got to serve that purpose or otherwise why are they coming to us? In 1976 there were three auction marts in Medicine Hat. Now the rest are all gone.”
Chuck MacLean’s office is the cab of his pick-up truck. MacLean is one of the most knowledgeable cattlemen operating in the livestock industry.
MacLean wears a 10-gallon cowboy hat (white of course) and an even larger smile. MacLean is a founding partner of Porter-MacLean Livestock Management Inc. and is the current chairman of Canada Beef Inc. When you ask MacLean about the state of the southeast Alberta cattle industry, it is difficult for him to see from that perspective.
MacLean’s head is full of numbers, statistics and snippets of conversations with corporate leaders, senior bureaucrats and provincial and federal cabinet ministers. MacLean says, to be successful, large operators must do their planning based on global consumer trends and forward contracting. It’s no longer about taking your calves to the local auction mart in the fall.
“Everybody's strategy is they need to be informed. And depending on where you are, and on what it is you’re trying to do, you see how you can match the information with your production. And I think that’s where we’re at today. Because of all the technical abilities we have to check the Chicago Mercantile (Exchange) or check the price of a market in Europe, or the price in Hong Kong... There are so many things that affect what you’re doing that you don't even know,” says MacLean. “Most of the business today, the people who have managed to survive, they do either a lot of forward contracting or they get with the packing plants and do an integrated deal.”
Auction Day at the Medicine Hat Feeding Co.
Wayne Bowyer runs Cowtown Livestock Exchange Inc. in the small town of Maple Creek, Sask., just a hop, skip and a jump across the border from southeast Alberta. A typical auction in the busy fall season sees about 3,000 animals coming through the pens. This makes Cowtown one of the littlest guys in the auction mart business. Bowyer has no desire to try to compete with the big guys, or to think too globally when it comes to his business. Bowyer knows his customer: He’s here for the little guy. Most of his clients are older ranchers with just a few hundred head of cattle. Bowyer says Cowtown fulfills a niche market that’s all about the relationships he maintains with his clients.
“Some of these places (auction marts) that are getting bigger, they can go direct with their cattle and things. But at the end of the day a lot of our clientele are the smaller guys with one or two or 300 cows, that sort of thing. And I mean if you have 100 calves, you can’t put a load together. So you come to a stock yard, right? It’s basically the guys we’ve dealt with for years. There’s a relationship there. We have a good sort here, and a very strong market, and very strong buyer support,” states Bowyer.
Taylor also has his loyal clients, and he is grateful to have them. However, Taylor finds that loyalty might no longer be enough to stay competitive in the cattle auction business down the road. So Taylor focuses on what he does well: Giving high quality, value-
Lyle Taylor, owner of Medicine Hat Feeding Company Ltd., took over the family business from his father, Jim Taylor, who started the business in 1948. Lyle became manager of the business on 1976.
Chuck MacLean has a long history in the cattle ranching business. MacLean is a founding member of Porter & MacLean Livestock Management, past chair of the Alberta Beef Association, and current chair of Canada Beef Inc.
20 | 2013 REPORT ON SOUTHEAST ALBERTA
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