Stocking Rate and the Hay Demon ?

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Stocker Steve

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The talking heads having been hammering on hay cost for a while. Now they are projecting low cow/calf profits for several years. For a low profit hay feeding cow calf operation - - what prevents them from reducing their stocking rate and extending the grazing season for several months? Potentially making money on half a herd vs. breaking even on a full size herd? The only big issue I can see is spreading OH costs.
 
I might be way off base, but I'd like to take a crack at your question. Based on my limited experience, I see cow/calf as a volume game not necessarily strictly on a hefty margin. Selling fewer calves for an assumed commercial producer is likely not the answer (IMHO).

The start up costs are what CAN be the determining factor to keep folks out of the industry. Once you've footed the bill for animals, fence, infrastructure etc. why would that same producer then limit the number of cow/calf units and sell off headed into a potentially down market?

Instead, if a person could find a way to potentially graze additional days in winter via planting cool season pasture one should be able to capitalize and then increase their number of cow/calf units during a lower price environment and become more efficient while decreasing the amount of hay required through winter.

Somewhere, there may be a point of diminishing returns but if a person was really successful it would create ample opportunity to expand at a lower entry point.

Again this is my very humble opinion and a plan in which I have set out to execute myself. It's a hell of a lot easier said than done. But, if it works out somebody just might cut a fat hog in the A$$ during the next uptick in the market.

**Disclaimer I am not an accountant, but the above makes sense to me.
 
Stocker Steve said:
The talking heads having been hammering on hay cost for a while. Now they are projecting low cow/calf profits for several years. For a low profit hay feeding cow calf operation - - what prevents them from reducing their stocking rate and extending the grazing season for several months? Potentially making money on half a herd vs. breaking even on a full size herd? The only big issue I can see is spreading OH costs.
Click to expand...

If that comes to be, you won't have to worry about low prices for long because 1/2 the cows on the continent will be gone. Guys in their 60's and over outnumber everyone else 3:1. And I haven't met one yet that will give share their pension fund with the cows to keep them going.
 
The start up investments costs can be large, but it makes no sense for everyone to maximize production at break even pricing. This just depresses the commodity price, unless you manage to hang on long enough to become the last man standing. Packer profits aside, it would be OK to reduce the NA herd size.

The alternative to making it up with volume, is finding a more efficient approach for your operation. For cow/calf this could be based on crop residue and/or stock piled grass and/or leased pasture and/or sell buy margin/or a complementary enterprise. Could be a whole new business model.

You see the new business models in dairy - - where some empty stall barns (which have previously been added on to several times to make it up with volume) have been put of business by new approaches. The guy with the most tie stall cows made plenty of infrastructure investments but did not win.
 
You hit the nail on the head Steve, maximize efficiency, particularly in the herd, but in other areas also.
 
My experience with sewn winter pasture is that it's a lot of work and cost for limited returns. Work your arse off for a nice stand of wheat (for a crop), turn the cows in on it and the first thing they do is check the fences. So "herd mentality" sets in and the lot goes running around the entire acreage checking the fence. Then they stop and start grazing....take a bite and walk 10 paces, take another bite and walk another 10. Next thing you know all your pretty crop is stomped in the ground and the cows are rolling their eyes at you and bawling for something to eat.

Next thing is water. Winter is usually rain. On flat ground that means soggy pasture. Add the above to that and you just have a big mess. I'll take hay, crummy hay at that (with cubes or Molasses tub).
 
Texasmark said:
My experience with sewn winter pasture is that it's a lot of work and cost for limited returns. Work your arse off for a nice stand of wheat (for a crop), turn the cows in on it and the first thing they do is check the fences. So "herd mentality" sets in and the lot goes running around the entire acreage checking the fence. Then they stop and start grazing....take a bite and walk 10 paces, take another bite and walk another 10. Next thing you know all your pretty crop is stomped in the ground and the cows are rolling their eyes at you and bawling for something to eat.

Next thing is water. Winter is usually rain. On flat ground that means soggy pasture. Add the above to that and you just have a big mess. I'll take hay, crummy hay at that (with cubes or Molasses tub).
Click to expand...

Not to derail the OP's topic but I understand trampling, etc to be a concern leading to loss of the crop. I am drilling a small amount of graze out wheat pasture today for supplemental grazing this winter. Seed is $12.50 for 50# bag and drill rental is $10 per acre. At 100# seeding rate, that's the cost (less fuel and time) of a lower quality round bale in these parts.

Depending on the success of the stand, I plan on utilizing this wheat every other or every third day to reduce the amount of cubes fed for a portion of the winter. May also strip graze it instead.

For supplemental grazing wheat, a grazing day is considered 5hrs to eliminate crop loss from cows trampling/laying and manure.

I have selected a portion of pasture to drill near my entrance that has been overgrazed and becomes nearly bare in the winter so the additional standing residue is an added kicker for my operation in that regard as well.
 
Stocker Steve said:
The talking heads having been hammering on hay cost for a while. Now they are projecting low cow/calf profits for several years. For a low profit hay feeding cow calf operation - - what prevents them from reducing their stocking rate and extending the grazing season for several months? Potentially making money on half a herd vs. breaking even on a full size herd? The only big issue I can see is spreading OH costs.
Click to expand...
"Here" there are lots of small pocket pastures around and I wonder if a guy would be better off stockpiling some of these patches and moving cows through them during the winter? Let the cows do the hay harvesting. I ran the numbers on one 22 acre hay patch I have, and I will have 30-40 dollars a roll in a 5x5.5 roll not counting my time and fuel to move it to the home farm. I could have 15 cows moved there in half a day. The limiting factor for me is having to run temp fence around the place.
 
southernultrablack "Here" there are lots of small pocket pastures around and I wonder if a guy would be better off stockpiling some of these patches and moving cows through them during the winter? Let the cows do the hay harvesting. I ran the numbers on one 22 acre hay patch I have said:
In the day frugal dairy guys here would walk 10 to 15 heifers from small pasture to small pasture. Back then almost everything was fenced so herding down the road was easier.

We truck some cattle a couple times per year to balance cattle and forage. Could do it more on one cut and graze ground. An optimizer could take one weedy cut during spring flush and then graze the regrowth. :cowboy: Issue here is the bucks are running does by Halloween and any temp fence will knocked down. So a fall thing while you stockpile at home.
Click to expand...
 
When you stock heavy, you are literally at the mercy of mother nature, period. Gains can be had and profits can be made, if she cooperates. Let the buyer beware.
 
The calender in a normal year. Before climate change - - MN rain would shut off after July 4th, pastures would stop growing in late July, and yearling would be sold in August. Holding them into September October was usually a loser because gains were low on washy fall grass and yearling prices dropped due to selling completion from sucking calves.

And a sell buy guy would be calculating the price premiums along the way. : cowboy:
 
I've been thrust in to a situation, where I have to think about the finances of my cattle. There was a time, I could afford to operate at a loss. Those days are gone for me. I've cut corners, and rethought every thing I do. Less cows just won't work for me. No cows would work better than less cows. I've got to run at maximum production and maximum efficiency. Had convinced myself that I would make a few bucks this year. Weather was great, calf crop looked god........Then the prices started dropping like a stone down a well. I don't think there is room for one more cow on my place, and I also don't think I cut any more expenses. I also don't think I can make anything this year. It'd be a lot worse if hay was short. Fighting the urge to quit. I love it so much, but at some point it has to become a function of economics.
 
Retail beef prices keep climbing but the cattleman's check has stayed the same over last 20 years. But packers are making more and more every year.

You can't reduce your herd or winter crop your way out of that.
 
There are people making good money in the cattle business, but they are probably not cow/calf producers. The overarching issue is that asset prices and input prices usually increase more than calf prices. So either you produce for no profit, or you find a way to reduce overheads.
 
Stocker Steve said:
Stocking heavy is OK as long as you have a destocking plan. Mine is having a hay carry over, and selling off yearlings as required.
Click to expand...

Agree.....Here a 400 to 500 lb steer brings about the same per lb. as a 700 to 800 lb steer. I see a lot of light weight calves going thru the sale ring. I am thinking about keeping most of my steers over winter on stockpiled fescue into spring and sell at a heavier weight and just keep a modest amount of cows instead of every cow that I possibly can.
 

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