Tuesday, January 28, 2014

70 head small beef ranch

I'm going to talk about a tour I had of a beef operation, and I think it's good to say right up front that pretty much everything at this operation looked good. I'd definitely buy beef from this guy, and all of the steers and cows looked good -- good condition, bright eyed, healthy.

The ranchers father (who's 80 this year) talked a bit about his history with  beef cattle in this area; he talked about the beef market in the 50s and 60s and 70s, and described his reaction on seeing the newer beef breeds; how efficient the limosine breeds were vs others that he'd cut up, and basically laid the foundation for why they had chosen limosine as their primary herd genetic, with some crosses to black angus.     

This particular farmer had a split operation; his cow-calfs were at a farm about 10 miles away, his market steers and replacement heifers were at this barn complex that he leased from a farmer that his family knew; his father (the 80yo) took care of the steers on the weekdays at the barn complex while the son worked his full-time job as an electrician, and did the weekend work and the cow-calf care.  Their house is midway between these two locations.

Just a note about commute-farming, which is what I did for my first 7 years:  It really sucks, particularly when you have animal operations.  You've really got to have bomb proof fences to have any chance, and even with pretty good fences (and I've built a lot of fences!) you still get that call at 2am that your critters are out.  Good fences means that it doesn't happen as often.

Most of the talk centered around the steers and cows that he was looking to sell this year; in these pictures are yearling steers that he'd sold to 4H or FFA kids for their show animals.  Carefully selected, these are good-gaining cows, and will pretty much live the rest of their lives in this barn with the occasional trip.  He described a diet for the show animals as 10lbs of grain a day, (about two coffee-cans full of grain), a bale of hay (40-60lbs) and 20 to 30lbs a day of corn silage (ground up corn, stalks, cobs and all).  On that ration he expected his best steers to gain 2 to 3lbs a day during the next few months, ending at a hanging weight (more on this later) between 850 and 1050lbs.

I suspect that these show steers sell for a higher price than the average slaughter animal, but I didn't ask; sometimes farmers will sell animals to FFA / 4H kids for a discount; other times it's a profit center for the farm, depends on how he handles it.

This particular rancher is interested in growing his herd from the 70 that he's got now to roughly 90 over the next couple of years.  In another area of this barn he had 12 heifers that he'd selected on the basis of daily gain as good prospects for adding to his herd, and talked about what he does to select his new cows.

He's got a corral/chute system on one side of the barn with a cattle squeeze chute and a cattle-sized scale.  About once a month he runs all of the animals over the scale (and does whatever other treatment is needed) and records their weight on a whiteboard, calculating average daily gain primarily.  He's looking for cows that gain 2lbs or more over the course of their grow out, and is looking to breed them at 65% of their expected adult weight, which will be around 1500lbs; so he wants to breed them at approximately 1000lbs.  He is very particular about this group, too.  He wants the cow to have been born in february and to be able to sync to the calving of the rest of the herd.   To give himself the best shot, he brings in a vet as they get closer to breeding time and has the vet examine each cow via ultrasound; looking carefull at the development and maturity of the sex organs.  If a cow doesn't gain on schedule, or shows any signs of difficulty, it gets returned to the market corral and the best-looking heifer from that corral gets added to the replacement cow corral.  He'll do this until breeding time, April/May for february calving  The vet visit is done on an hourly basis; he estimates it costs him $200 to $300 for that trip.  Part of the reason that it's this amount and not more is that he's got a very nice cattle chute/squeeze/scale setup so he can run all of the cows through quickly.

 He does AI exclusively; took a course on how to do it from Select Sires, and his goal is to narrow the calving window down as far as he can.  He explained that a narrow calving window meant less work overall; if every cow calves within a week or two, you have a burst of work, and then things settle down much quicker.  He AIs the cows, and then turns them loose with a cleanup bull to make sure that everyone has the best chance of conception.

In order to make all of the cows ovulate at the same time, he'll use a vaginal insert that prevents ovulation; inserting it a week or 10 days before, on removal, he'll administer shots to promote ovulation, order the semen and 60 hours afterwards all cows get a dose, repeating that with a second dose 12 hours later.

This may seem like a lot of work, but I understand completely why he's doing this.  Having your animals in a consistent state allows you to treat them like a group for nutrition, bedding and housing.  It also allows you to schedule time from your full-time job (in this case his electrician job) during calving season -- you schedule your emergencies into a few weeks.  I guess it's not an emergency if its scheduled, is it?

If a cow shows up open, that is, not pregnant after this, she's deemed unthrifty and sold as grass fed beef at the end of the summer after grazing all year.  The cows that are pregnant are assessed after they deliver, and the existing cows in the herd are also assessed and some are culled.  So 12 replacement heifers in his experience will usually end up with 2 that don't get pregnant leaving 10 replacements, and depending on the year and conditions, he'll cull 2 or 3 cows from his herd, giving a net increase of 7 by next year.

For the animals that he's going to sell he estimates that his feed cost per day is about $3; he said "It's $1.49 in hay, $0.97 in grain, and $0.49 corn silage", and this gives him his average daily gain of around 2.1lbs across the herd.

He sells his cattle for $3.50/lb hanging weight, but what I really wanted to know is how much profit margin he's making vs his input costs.  Kill fee and cut-and-wrap fees are included in that amount.

HHW (hot hanging weight) is the weight of the warm steer immediately after slaughter.  This includes about 5% extra weight that will be lost as the animal cools and drains blood; typically beef is hung for two to three weeks after slaughter, and during this  hanging time the animal looses water weight.  Hanging weight includes the weight of the head and hooves; what is removed is the hide and the organs.  A typical yield for choice-grade cattle is 62% of live weight.

So to yield a 900lb HHW you'd need a 1500lb or so live weight steer.  So from what was said it costs about $1.50/lb (grain, hay, corn silage) to put a pound of live weight on a steer.  One pound of live weight is .62lb of hanging weight.  So it costs $1.50 to put on beef that you'll sell for $2.17.

Well, not really.  the quoted price of $3.5 includes kill fee and cut and wrap fees, which around here are about $60 for the kill and  $0.60/lb for the cut-and-wrap - so the gross proceeds to the farm aren't $3.5, they're $2.9.    And 62% of $2.9 is $1.79.  His gross margin is about $0.29 per pound - he makes about $0.60/cow/day.   If I were to pay someone to feed and water the cows, I'd expect that to take about an hour, or an hour and a half.  At $10/hour, that's a daily labor cost of $10 to $15.  at this rate, that's the entire profit from  51lbs of beef -- or 25 head.     Since I'd expect his production to be about 35 cows a year (70 cows * 50% bull calves) this enterprise survives on the profit from 10 cows after labor costs.  I don't know what he leases the barns for, or whether he owns or leases the other property his cow-calves are on, but there are costs there, too.

My opinion?  Thats a vanishingly small profit margin.  If a cow dies or doesn't gain as expected, or the lease on the barn goes up, or any one of a number of other things go wrong, there won't be any profit from this entire operation for the year.  It's possible that he makes more money on selling breeding stock or show steers and that makes up for this small margin, but I think his prices are a bargain at his expense.  Great deal for the consumer, considering the beef right now in the supermarket is way north of $3.5 a pound for virtually every cut.

I sell my beef at $3.5/lb hanging weight exclusive of kill and cut-and-wrap fees, and that extra $0.60/lb is the difference for me between making a profit and making a loss, after considering equipment, fuel, rent and other associated costs.

He showed samples of his beef, and they looked great.    I'd buy some.  And honestly, after looking at these numbers and his operation, I just might.  I don't think I could produce beef myself any cheaper.

I may have misstated some of these numbers; I'm going to go back to the farmer and confirm what I've written here to make sure I've got it down correctly.

Notes on forage:  He contracts a custom farmer to cut and bale hay on his ground, and with another farmer to produce corn silage and deliver it to his bunk.  He runs a 40hp utility tractor to move the silage around with, and buys his grain from a local feed mill and gets it delivered to his farm.  The hay is baled in small squares and is stored at the cow-calf operation; he brings in hay to the finishing barns as needed.

Farm life:

I don't talk much about the day-to day stuff, but if you're curious; here's what I on Monday, Jan 27.

I got up at 7:30, ate something, and then started pruning the fruit trees that are in the back yard.  It's a ladder job, as they were well-pruned until about 4 years ago, and have since gone straight up.  I'm pruning both for structure and to thin the trees; I have about 30 fruit trees, mostly apple, that I'm working on.

Sean, one of my farmhands, made the morning run to pick up the load of fruit and veges from the scheduled market, and he was using a forklift to move the food and feed the pigs.  Wave to him, and keep working on the trees.

As I pruned them I noticed that there is (was) a fairly large number of lesions in the bark that looked a lot like the black-knot disease; I have been pruning off all of the branches that are affected, and I've been burning the pruned limbs in case they're contagious.

I spent about 2 hours on the pruning, and the guys from Excel Dairy service showed up, so I stopped pruning and worked with them to describe what I wanted to do.  Basically I've got two big bins (farmers call silos bins, for reasons I have never figured out) and one of them is in pretty good shape, but auger motor is erratic, so I asked them to take a look at that, and the other bin needs a new bottom boot and lid.

I explained to them I'd like the feed to be moved via auger from the bin to the barns at the back of the building complex, and could they work up a quote so that we could get that set up?  

After that I ate lunch about 12:30 and then drove into seattle to meet with an attorney who's handling some business issues, and then back to the farm at 4pm, where I did a welfare check of the animals; had two lambs born overnight, both in good shape, twins to one ewe.  bedding was dry, everyone had food and water, things are good.

Checked my email and orders for two half-hogs, with questions from three other people, worked through the email, returned a couple of calls, and then went back to pruning trees, got down to the last 3 trees and it was too dark to work anymore, so I went in and started working on replacing the glass on my phone.  ended up ruining the phone, or the display was more broken, cursed a little, and figured i'd go buy another phone tommorow.  Reviewed some stuff the attorney had sent me, and then ate dinner; roughly 8pm now.

Spent the next two hours working on the farm books; getting them in shape for meeting with the bookeeper on thursday, starting the tax season work for the year.

Around 10pm decided i was done for the day, so spent an hour or so reading the blogs and newspapers that I read around the net; some pretty good stuff; kept me interested enough that I finally had to tear myself away and then thought that I'd never really run down a day of mine on the blog and started writing this.

Bedtime at 1:45am, set an alarm for 8:00am

Beef 200, Country Living expo and beef ranch tour

I spent the last weekend on a variety of pretty intense classroom experiences and a couple of tours.

The first was "Beef 200", put on by WSU, which was sold as a way to learn about the techniques for making great grass-fed beef.    It was a 12 hour course, started at 8am and ended at 8:30pm, and included a hands-on beef harvest demonstration and a lot of work related to looking at live beef and trying to figure out how they'd grade for meat quality and for efficiency.  There was also a section on genetics, which gave me the basics on how to read an AI catalog, and there was a bit of socializing as well, since everyone there was interested in the same sorts of things.

The country living expo was a day-long event, held on the last saturday of january, that offered classes in all sorts of things.  I chose semi-randomly things like "managing a sow for maximum litter size", "growing grapes in western washington" "arc welding" and "pasture to plate:  raising cattle".  I missed my selection "raising prime beef" because the farm-kill guys showed up early at my farm and I stayed to get that going.  

The final part was a tour on sunday of a small working beef ranch; it's a cow-calf operation run by a local rancher.  It was pretty interesting because he was pretty open about the economics of it, and had a great handle on exactly what it cost him to feed his cattle, what his market was, and so on.  He was running 70 cows.

I'll be writing a longer entry on each of these in the next few days; just wanted to let you guys know what I was doing over the weekend.

Sunday, January 19, 2014

Eating more off the farm: Vegetable scheming

This year I'm going to make a serious attempt to grow every kind of vegetable that I and my family eat that I can.   The first step was to figure out what is on that list.  Here's the vegetables that top my personal list, in alphabetical order:

arugula basil beets bell-pepper broccoli brussel-sprouts cabbage carrot catnip
cayenne-pepper chives cilantro collard-greens corn cucumber Garlic green beans
habenero kale leek lettuce melon mescaline onions parsley parsnip peas pepper
peppermint potato pumpkin rosemary rutabaga scallons spinach squash sugar-peas
tomatillo tomato turnip watermelon

The second thing to do is to figure out what makes the most sense to grow -- not so much from a cost perspective, but from a desire to grow clean versions of things that usually test postive for herbicides or pesticides.   Things like sweet corn, sweet potatoes, kale and summer squashes get on the list because of that.  

Ok,  time to work through the seed catalogs.  lets take "carrot" as an example
I've got three catalogs I'm working through, and there are sure a lot of choices for carrots.  Yellow carrots and long carrots and short carrots...   How big are carrot seeds?  what's the time to harvest?  Row spacing?  What kind of soil do they like?  a little work on the computer, and I add the carrots to the map of the garden, and then move on to the next thing on the list.  

I also note a rough guide on when to plant, and, more importantly, when to start the plants indoors so that they're big enough to transplant.  

 Sweet corn; I had a pretty good crop last year with the big corn patch; this year I'm just going to do personal consumption amounts; a couple of hundred plants vs 10s of thousands.

 I do like the idea of ornamental corn, but I wonder if it gets dry enough long enough to cure.  I think I'll spend a couple of bucks and see.
 Potatoes.  I think the best mashed are a mix of several kinds; like some red and some russet.  Purple potatos -- I've never heard of that.  Hmm...  a buck or two again.

I've also got a box of seeds, leftovers from previous years.   I can use as much land as I want this time; but I've found that for me, anything over a half-acre of garden is just wasted.  I only have so much time to weed and tend it, and if I go above a half acre it just doesn't get done.  I could probably mechanize somehow, but a half-acre of ground is LOTS of vegetables.  .

I'm a little old-fashioned about this.  I like pictures, and I like being able to leaf through the catalogs.  My garden map is on a legal pad; a rough scale drawing of the amount of space and placement of crops, along
with some notes on succession planting of parts.

So if I want to eat a salad a week, I should plant 2 or 3 lettuce plants a week so that at least one has a good chance of making it to the dinner table.

I also have a good place for any spare vegetables to go.  The pigs and cows are where the #2 crops go, and some #1 crops, too, if we're not going to eat them in time.

Sunday, January 12, 2014









Saturday, January 11, 2014

Virus problems in commercial pork production

StephenP emailed me a link to a news story, and it's something that I should talk about a bit - Despite piglet virus, pork is safe to eat

This news article is talking about a problem that commercial pork producers are having right now with a virus that kills young pigs; this particular virus is called Porcine epidemic diarrhea virus (PEDV).  This virus affects small pigs, usually pre-wean, the most.  

It's not a new virus; it was first diagnosed in 1971.  It's currently causing large production problems in the midwest, but there are outbreaks in most areas that have pigs.  

This virus is specific to pigs; it represents no risk to any other animals, and the meat is safe to eat.  The basic mechanism that it kills young pigs by is dehydration, and the cure is to infect your entire herd; once a sow has had it, her piglets are then immune.  

This is a virus based illness, so antibiotics don't work, and there's no effective vaccine for it because the cost of curing the virus - infecting your herd and then letting the naturally immune pigs produce more immune pigs - is so low for most producers that the risk/cost of developing a vaccine isn't worth it to industry.  

So this is mostly a short-term problem for a lot of facilities, but there are three things that are going on that are making commercial piglets very expensive right now.  3 week old pigs in iowa are being sold for $90+ each in quantities of 500 or more.  For those places that can produce pigs right now they're basically printing money after years of losses.  

The three things that are combining to raise pig prices are 1) a bumper crop of corn last year, 2) lowered production due to this disease and reduced capacity from low prices in previous years, and 3) normal seasonal variation.  

1) bumper crop of corn:  For those farmers who are raising corn, many have the option to either sell their corn directly into the market, or to sell it in the form of beef, pork or chicken.  More beef and pork than chicken, as most chicken these days are raised by contracted growers.   You also see investors doing that as a short-term direct investment in a commodity.  

There are pig barns for lease in various parts of the midwest and brokers who can buy you the pigs to put them in, and management teams to run the barns.  So if you're sitting on a hundred thousand bushels of corn and soybeans, a few phone calls and you're in the pig business.   With the bumper crop of corn last year -- the biggest corn crop ever harvested in the USA -- the concern is that the price will drop, so having some pork production is a common way to physically hedge your risks.  Sell some corn, sell some pork, spread your risk around a little.

2) lowered production.  Pig farming hasn't been profitable for the last 4 years that I've been watching it carefully, and probably before that.  High feed prices and flat pork prices meant that it was usually worth more money to just sell the corn directly instead of putting it through a pig.  So a lot of production facilities closed, others consolidated, and some just shrank to a minimum number.  In recent years, pigs and pork exports have risen sharply and we're facing a small supply for a pretty good demand for pork.  So I'm seeing weaned pig prices in iowa for $90 each, qty 500 or more -- that's at least 20% higher than the highest price I can recall.  

3) and seasonally, pig prices usually go up in january, so we're pretty much at peak of market.  

Between these three factors, I'm expecting the price of supermarket pork to go up in 6-8 months as these $90 pigs reach market weight.  

Flood warning today

Wind and water are big today.  I've gotten 1.6 inches of rain in the last 24 hours, and its still raining.  The river that forms my north property line is expected to reach flood stage, 14 feet, sometime later today and then recede.  It's at 11.3 feet now, and rising.  The local volunteer fire department siren went off about 30 minutes ago.  When I hear that siren I wonder what they're responding to.  The video was taken at the red dot location on the map picture, below

river at 11.3 from bruce king on Vimeo.

 The picture above is taken at the red-dot location shown below.  The video below that was taken at the blue dot location around Nov 1, when the water was lower as an example. 

I spent a good part of my 20s guiding white water trips all over the northwest and lower BC, and I have nothing but respect for water like this.  Normally the banks are 10' higher than the top of the water, but today, that whole area is full, and it's flowing fast.

If you were to fall into this river, it would be very difficult to get out; the water is flowing through the trees and brush at the top of the bank, and the basic issue is that you'd get pinned against a tree or bushes or a logjam as  you tried to approach the shore.  you'd be safer in the current, but if you're in the current, you're going to go for a long way.  it's going at 8-10mph, and that's very, very fast.  A good swimmer can swim at 2mph

I walk the river bank every couple of hours, and watch the USGS gauge reports so that I can see what 11.3 on the gauge looks like, or 11.5, or 14 -- which it's supposed to reach today.

The house, buildings and animals are well above the flood at this stage; to have water around the house you'd need 15.2 or better -- which this river can reach, but it requires a vast amount of water, more than we've got today, to do that.  As the river rises it floods and widens, so a 1' rise could require 4 to 8 times the water volume, and another 1' would require even more.

Monday, January 6, 2014

The cheapest meat wins, no matter what the cost

One of the local farmers around here writes a blog, and a recent entry talked about how she purchases meat for her pets to eat.  She talks at length about the price of the meat, speculates about its sources, and laments the fact that it's not as cheap as it used to be.

Now I completely understand the choice that people make when they are counting every dollar and feeding their family, and if this was a situation where she couldn't afford food at all, I'd probably give her a pass.  but
this is a woman who spends quite a bit of time and money caring for her flock of sheep (cosmetic surgery on 10 year old sheep!), and appreciates local people who pay higher-than-average prices for her own production -- but doesn't apparently make the connection that her choice to use almost exclusively confinement-based meat on price alone makes her, in my opinion, a hypocrite.

Here's the quote:

"Though I would love to ensure my dogs only eat fresh, local, naturally raised, grass-fed beef; I also can’t justify spending hundreds of dollars a month to feed them! "

How about you put your own money where your customers do?   Right back into the local economy, and to support the local product that you think is the best choice for the dogs and the environment, too?   You don't think that your customers can find cheaper lamb somewhere else, for instance?  Or perhaps you think that the local farmers don't need the business.

She advocates the purchase of either confinement-based poultry from Purdue (who purchased the Draper brand in January of 2013) or ground up downer cattle from doug the meat man.

Of the two meat sources she advocates, I'm more bothered by the downer cattle; if there's any chance at all of a cow making it to the human food chain, and the higher prices that are paid, it'll be sent there.  So I don't know what disqualifies the cows that make up the "not for human consumption" meat that is sold, but I would be concerned that it could be animals that died within required withdrawal periods for slaughter -- antibiotics or other drugs administered too shortly before death for the effects or drugs to wear off -- sick animals, animals that couldn't stand or walk, or animals that have parasites that can be transmitted to humans or animals that have had their carcasses condemned as inedible for all sorts of reasons.  Since it's ground beef, whatever the causes of each animals death doesn't really matter because it's usually made in large batches, so in most meat packing plants every batch gets some of every animal that is being processed -- you get the full meal deal with every package!  The website for the meat company lists "respiratory failure due to exposure" as the cause of death of most of the beef, but I'm not sure exactly what that means.

The chicken that she advocates consuming is very probably contaminated as well.  I discussed this with her at length, in the comments section of this post.   Bottom line is that I like the chicken better because it has the USDA inspection possibility.  With the downer cows there's no human-level food inspection at all and the standards for animal food are lower.  Who knows that that plant looks like.

On the website for her farm she gives some pointers for how to pick a farm you buy your lamb from:

"...if you can, visit the farm and evaluate: is it clean and well-run? Are the animals healthy and well cared for? Does the farmer appear to know a lot about sheep? Sometimes people farm as a hobby and don't mind if they lose money; in this case, you might be able to buy a nice lamb for $100. Most often, those $100 lambs are priced low for a reason- the farmer needs to get rid of them quick, out of desperation, or before they perish because they are in ill health! So buyer beware, one bad meat purchase can turn you off for a long time. It pays to be careful where you buy!..."

But the worst part about this is that I'm pretty sure that those standards don't apply if you are buying on price alone.   Downer cattle are sick, diseased and by definition unhealthy.  That's what you should buy.  But she advocates not buying on price because... well, higher prices mean better quality?  I'm confused.

There is something to be said that exposing everyone in your household and farm to contaminants constantly will have an effect on your immune system, but she takes it to the length that she doesn't wash her hands much, which I can't imagine myself doing.  First thing I do when i get done working is wash my hands.     Here's the quote:

"... I actually try not to wash my hands too much. I subscribe to the theory that if you keep your challenge load high, your immune response is better than by constantly trying to protect yourself from exposure to any and all pathogens."

The bottom line appears to be that the cheapest meat wins.  Contamination, cost to the environment, animal health and human health and providing a market for the factory-farm rejects -- none of that matters.  Price is the only criteria that makes the cut.

Oh, but wait.  Buy local sheep because they're raised local and by someone who cares!

You can read the post that inspired this one here.

Saturday, January 4, 2014

Goals for 2014

This year is the first full year I've got on the new farm, and I'm pretty excited by that.  It means that I can plan out a full crop year and plantings, which I'm really looking forward to.  

So here's my list of goals for 2014

Plant all trees that I'm likely to want for the next 15 or 20 years this year.  Design orchards around tree types, and group trees that have fruits that birds love (cherries, nectarines, apricots) so that they can be protected by netting when they start producing.  

Establish a berry yard -- marionberries, blueberries and raspberries.  Just personal consumption quantities, but these three berries are what I like to eat most, and they all grow very well around here.  No reason to buy them from the store.  

establish 3 vinyards:  Concord grapes, because I love them fresh or juiced, champagne grapes because I love to eat them and... well, that's a talk for the future, and a variety of grapes that I found here on this farm that has done very well, call it the native grape vine.   Probably 30 or so vines of each variety.  

Plant 3 acres of organic silage corn and see what it takes to get a good crop.  How much and what type of tillage.  See what the yield is like vs the conventional corn grown last year.  

Plant 2 acres of clover for the bees and the critters both.  

Designate some of my land for native species.  Last year I let 2 acres of my land go fallow, and was surprised by the native bugs and butterflies and other critters that used the plants that grew up.  I'd like to make sure that there are local-friendly areas on my farm for the natives to call home.   

Have a good kitchen garden  -- move towards growing most or all of the vegetables that I eat over the course of the year.  Particularly those things that are either covered in pesticides and herbides when conventionally grown, like potatoes, or things that cost a lot relative to how they grow here.  If it's expensive and grows here, I'm going to take a stab at it.  

Plant stuff for the pigs to eat.  Pumpkins and acorn squash -- whatever doesn't make it to the market will be used by some happy critter.  

start producing forage; this is the year of the mower and the rake and the baler and the bale grab.  

expand my cow herd to 20 by hears end, with 10 of those being good quality dairy heifers.  

Complete the perimeter fence, and start rotational grazing of ruminants in earnest.  

automate the feed handling on the farm; feed goes into the bin, and then out of the bin and into the barns where needed.  Automate all waterers.  Reduce the feeding/watering chore substantially.  

Put sides on my big barn

Friday, January 3, 2014

Do you plan for the end?

I'm 50 years old this year, and while that's a bit younger than the average farmer age in the united states, it's been interesting for me to note that my span on this earth as a farmer has an end, and the end is in sight.

Here's what I'm saying:  I figure that I have about 20 more years to do whatever it is that I'm doing on my farm; and that the next 20 years will include a slow decline in the things that I can do physically.  I don't have a timeline, and there's no event that I'm looking at that makes it more apparent, I'm just pretty sure that I'll age just like everyone else does, and that aging will take predictable paths.  Part of nature; something that every person on this earth will face at some point.  

So I got a comment about the trees that sparked this posting.  

October Rose said : 
"Bruce, If you're thinking fruit enterprise for the long-haul, you might consider some standard-sized trees as well. They're a little more work and take a couple extra years to come into production, but they'll serve you well 30+ years vs. 10 or 12 "

I don't think that I'll be here in 30 years, and while I like the idea of things outliving me, most of my farm plans are more immediate; in the next 5 to 10 years.  Like buying dairy cows; their useful life will be shorter than my likely stay on the farm, so I can take them on without too much concern about not being able to care for them.  I think the same way about dogs and cats or pets of any sort:  If I was unlikely to be able to care for them for their entire lives, I wouldn't take them on, either.  

I've thought about building lifespans, too.  One engineer I worked with and I were talking one day about housing; and he talked about a house design he liked, (and eventually did build).  Doug mentioned that the house had a likely lifespan of 30 years.  "Why would you want to build a house that only lasts 30 years? "   "I'm not likely to be around after that, and it suits the purpose while I'm here.  

Doug was an unconventional thinker.  One day he commented that he was getting fat, and I made the usual noises that he wasn't, and asked him what he was going to do.  "Get bigger clothes", with a completely straight face and in all earnestness.  And he did.   

So my hoop barns are an offshoot of this sort of thinking - the fabric cover has a 15 to 20 year lifespan which suits my farming lifespan, too.  By the time they need a new cover I'll be moving on.  

For some farmers, the endgame is to hand the property over to their children or heirs, for others, the sale of the farm provides money for living and care at the end of life.  Sale of farm property for development is often seen as a tradegy (for the farm) but it's often done as a way for someone to be able to afford to retire.  Farms don't offer a 401k plan.  They don't have a defined benefit pension.  And they aren't insurance policies -- the only way that the farm can support the farmer at the end is by sale or loan.  And development is often the top sale dollar, at least in urban areas.  

When I was younger the end didn't see like it would come; it was so far out there that it wasn't worth considering.  But as the years go by and it gets harder and harder to make new old friends... it's visible.   Its coming.  

Wednesday, January 1, 2014

The state of legal Marijuana in Washington

In November of 2012 the voters of Washington state approved a citizen initiative #502 to legalize the production, processing and sale of marijuana for recreational use.   Over the next year, the Washington State Liquor Control board held a series of public comment periods and hearings and consulted experts and stakeholders in the existing medical marijuana business and formulated a set of rules and regulations which were finalized in December of 2013.

Initiative 502 provides for the licensing of three marijuana businesses; a producer, who grows the plants, a processor who packages or adds value to the plants via incorporation in food or processing into hash oil, and a retailer who provides a point of sale for Marijuana for the general public.  

The number of licenses for producers and processors is unlimited but the total size of all grows is capped at 2 million square feet of canopy space.  The number of retail outlets is capped at 334.  

The Liquor control board has stated that in the event that more retail applicants are received than there are licenses available that they will have a lottery to award the licenses.  In the event that more than 2 million square feet of canopy (leaf) space is applied for, that they will reduce the space allocated proportionally for all applicants.  

Applications vastly exceed WSLCB expectations
Using the latest data available (12-31-2013) the total number of retail applicants is  1,313; the applications are not evenly distributed; some locations are very popular, some less so, mostly corresponding to the population. 

Using the same data, the total number of producer licenses applied for is 2,114.  Each producer is required to indicate the size of their grow in "tiers".  Tier 1 is less than 2000 square feet.  Tier 2 is 2000 to 10000, tier 3 is 10000 to 30000.  

If each license applicant applies for the maximum space in their tier, the total canopy space that has been applied for exceeds 2 million square feet substantially.   Here's the totals for each tier:  

Tier 1:   503 licenses applied for, 1.06 million square feet
Tier 2:   794 licenses applied for, 7.94 million square feet
Tier 3:   815 licenses applied for, 24.45 million square feet

Total canopy space applied for:  33.39 million square feet, and this number will probably increase as the license backlog is processed and added to the publicly available list.   Canopy space authorized:  2 million square feet.  

If the liquor control board allocates space as they've described each applicants proposed share will be reduced proportionally.  Since more than 16.5 times the allocated canopy has been applied for, it would seem reasonable for people to get 1/16.5 of the space they've applied for, or roughly 6%.  

So if you applied for a 2000 square foot grow, you'll get an allocation of 120 square feet -- about the size of a small bedroom, 12x10.  If you applied for a 10000 square foot grow you'll get 600 square feet.  A 30,000 square foot grow will get 1800 square feet.  

Grower requirements expensive
Each grower will be required to have cameras and security system which allows law enforcement or regulatory access 24x7, a  sight-obscuring 8 foot fence, a shipping quarantine area, signage and security plan.  In addition growers will have to carry commercial liability insurance, undergo background check and fingerprinting, prove the source of the funds they use to finance their operation and maintain an inventory system that is accessible to law enforcement at all times.   They will also pay a 25% tax on the gross amount of each sale, which will be at a minimum 25% from producer to retailer.  The retailers collect a 25% tax on sales to the public.   Growers will also be required to test their production with an independent lab and to conform to various requirements related to fertilizer, herbicides and pesticides used.  

Using these figures, I don't think that tier 1 growers (limited to 120 square feet) will pencil out; it is difficult to contemplate making enough profit on that small a grow to pay for all of the costs involved in operating.  

Tier 2 growers at 600 square feet have a shot at producing enough Marijuana to support a full time person, but again it becomes difficult to see how they'll actually make enough profit to cover the operating costs and taxes.  

Tier 3 growers at 1800 square feet will provide enough revenue to run a 2-3 person business.  

Prices expected to fall substantially
Marijuana prices in Washington state for medical marijuana have been steady at $11/gram.  The liquor control board's expert expects that price to fall to $5 a gram next fall.  At $5/gram, that's a retail price of $2,165/lb.  I would expect wholesale prices to be less than half of that, or $1080/lb.  Production costs/lb for indoor grown marijuana are between $650 and $800 a pound.   Indoor production is estimated at 2lbs per 1000 watt light and optimum conditions and no crop failures (mold, mites, human error), 3 crops per year.

Maximum gross revenue per tier:

Tier 1, 160 square feet, 10 lights produces 60lbs/year, $64,800
Tier 2, 600 square feet, 38 lights, produces 228lbs/year $246,240
Tier 3 1800 square feet,  112 lights, produces 675lbs/year $729,000

Projected profit per tier ($800/lb production cost)
Tier 1:  $16,800
Tier 2:  $63,840
Tier 3:  $189,000

In terms of gross revenue, even the largest Marijuana producer has less revenue than an average fast food restaurant, and by most business standards would be considered a very small business.  

Risks that producers face
As with any farming venture, you run a substantial risk of crop failure or human error that costs you either all or some portion of your crop.  You also have regulatory risks in this industry; the federal government, changes in state law and the producers will be forced to plant crops without having any idea who of the 800 applicants for retail will actually receive licenses.  Once the licenses have been awarded it will take some time to figure out which of those people will be successful, and how much marijuana they can sell, so there's a pretty substantial risk of substantial price fluctuations, both up and down.  

Authorities relied on for this post

Honeybees in winter

I keep a few hives of bees on my farm because I like the honey, and I like having the bees around to pollinate stuff that needs it.  Having a few of my own hives means that I don't have to rent bees, and I enjoy them; most of the year they're just out quietly doing their thing, with occasional bits of excitement when they swarm.  
What you don't want to see when a hive is open.  
 I entered the fall with four hives; and one of them didn't survive; it looks like it swarmed early in the year, the new queen didn't get fertilized, and the bees eventually just died out, leaving a hive full of honey and dead bees, but nothing else.  It's a shame, but it does happen.  After careful examination, I extracted the honey and ended up with 18 pints of honey.
Full combs of capped honey, but no bees
 A month or so later, I was looking at another hive, this one had done really well this year, and noticed a fair number of dead bees outside.  There is usually some loss of bees in the winter; the colony reaches its smallest numbers around now, but it's worth investigating; I pulled the dead bees out and washed them in alchohol and then looked for varoa mites, a common problem.  I didn't see unusual numbers, and a quick peek inside showed a good mass of bees that were buzzing at the intrusion, so the jurys out.  this hive may or may not survive.  they're sitting on 60lbs of honey, so it won't be from lack of available food.
dead bees at entrance to hive; inspection time

flecks of bees wax from consumed honeycomb
The final hive I checked looked good.  These little brown flecks are the wax from the top of honey that's been consumed.  There's a few mites there; you can see them as little black specs, and so I may have to do some mite control with this hive, but they're balled up and buzzing, with plenty of food, so I'll leave them be for now.

Varoa mites are a common problem, and usually can't be completely eliminated from honeybees because they breed in the bee larvae.  I control them by having the bees raise combs of drones (I supply drone wax, which has holes larger than standard bee holes) and then remove those combs for inspection after the larvae is capped.  If it shows varoa infestation on inspection, I'll freeze that comb and then return it to the hive; the bees will remove the dead larvae and clean the comb and raise another set.

If the drone comb inspects clean, I'll return it to the hive; hoping that this particular strain of bees is more varoa-resistant, and to ensure that there are plenty of drones to fertilize any queens that need it.

Treatment for varoa in the winter that I use is to shake all the bees into a "package" box in late winter, and then liberally coat the bees with powdered sugar.  The sugar causes the mites to lose footing and the bees to groom each other, and the result of this powdering means that most of the adult varoa are removed.  This only works at times when there are no brood in the hive, such as when you get a new package of bees to establish a hive, or in late winter before the queen starts laying for the new year.