NEWS for North Dakotans
Agriculture Communication, North Dakota
State University
7 Morrill Hall, Fargo, ND 58105-5665
July 30, 1998
Low cattle prices and increased risk of financial loss have North Dakota livestock producers looking for innovative ways to ensure profits.
In the Carrington and New Rockford area, nearly two dozen producers have pooled resources in a limited liability partnership to cooperatively feed more than 1,200 head of cattle each year. This "feeding club" is just one of the alternative ways of doing business that livestock producers are considering, says Karl Hoppe, a livestock specialist with the North Dakota State University Extension Service.
"The partnership allows these producers to buy and sell cattle each month," Hoppe explains. "That limits their risk more than buying and selling cattle once each year. Also, the producers are able to take advantage of the efficiencies of a relatively large feeding operation at a minimal entry price."
The newly launched Carrington-New Rockford group may be the only such feeding club in North Dakota, but similar arrangements are common in other plains states where large numbers of cattle are fed. Elsewhere in North Dakota, groups of producers have banded together as cooperatives to own feedyards. One example is the Dakota Prairie Beef Cooperative in southwestern North Dakota.
"Many of these producers have decided that if they're going to profit during this low point in the beef price cycle, they're going to have to do something other than business as usual," Hoppe explains.
The partners in the Carrington-New Rockford enterprise have contracted a custom feedyard operator to handle day-to-day feeding. Several of the members have been selected as agents of the partnership to make decisions for the group. Meetings are held periodically to discuss major decisions, strategy and long-range plans.
Hoppe, who serves as adviser to the group, says it's sometimes difficult for the independent-minded cattle producers to work together. "But they know if they combine their good ideas they're likely to achieve more than if they were working independently."
Developing goals, a business structure and a management strategy are major hurdles for groups to initially overcome, Hoppe says. Provisions of the partnership contract can help provide stability by spelling out how partners enter and leave the enterprise.
"Planning up-front can limit risks and difficulties for the partnership," Hoppe says.
Most of the partners in the Carrington enterprise are cow-calf producers. By joining the partnership, they created a ready market for their calves. "That's changed the perspective of some of these producers," Hoppe says. "They've gone from producing calvesperiodto producing calves that will perform best in the feedlot. Because of their involvement in the feeding partnership, looking ahead to feedlot performance has become pretty important."
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Source: Karl Hoppe (701) 652-2951
Editor: Tom Jirik (701) 231-9629