ADC/input costs

[bball]

GB, you asked whats it good for?

Simplest way for me to explain it is this: it allows you to figure the exact cost each cow has while raising a calf. Then you compare that number to calf $ produced.

Example: ADC $1.60
Cow A has a calf on her for 180 days. 180 x $1.60= $288.00 cost to raise this calf
Calf A weighs 490 and sells for $2.20= $1078
1078-288=$790

Cow B has a calf on her for 165 days. 165 x $1.60=$264.00 cost to raise this calf
Calf B weighs 535 and sells for $2.25= $1203.75
1203.75-264=$939.75

Cow B made you $150 more in less time. Thats important to know. The reason i use actual days on cow instead of 365 for this exercise is because, if you just figure the cows yearly maintenace cost, you actually penalize your cows that raise a quality calf in a shorter amount of time. The number of days on mom matter for profitability of each individual cow.

 

[Caustic Burno]

A liability is something that is an outflow of cash. This is no different in paying Uncle Sam as you are paying
on last years income writing off the cost of the land etc because it was a liability until you sell it.
This beats nothing as you get to keep pennies on the dollar spent.
If it doesn't pay income or you don't sell, it never becomes an asset. Again you have no clue on what you owe
Uncle Sam this year until your final income is figured you are operating a year behind.
There is only two categories Income or Loss. Depreciation is just BSing yourself and carrying loss over several years. There is no such thing as a 20 year fence or a 10 year tractor until it last that time frame.

 

[Caustic Burno]

GB, you asked whats it good for?

Simplest way for me to explain it is this: it allows you to figure the exact cost each cow has while raising a calf. Then you compare that number to calf $ produced.

Example: ADC $1.60
Cow A has a calf on her for 180 days. 180 x $1.60= $288.00 cost to raise this calf
Calf A weighs 490 and sells for $2.20= $1078
1078-288=$790

Cow B has a calf on her for 165 days. 165 x $1.60=$264.00 cost to raise this calf
Calf B weighs 535 and sells for $2.25= $1203.75
1203.75-264=$939.75

Cow B made you $150 more in less time. Thats important to know. The reason i use actual days on cow instead of 365 for this exercise is because, if you just figure the cows yearly maintenace cost, you actually penalize your cows that raise a quality calf in a shorter amount of time. The number of days on mom matter for profitability of each individual cow.

Exactly you just found the Better Cow.
I do it a little different it still finds the better cow as the calf has to pay her yearly cost.
The cow cost me 545.00 to maintain and the calf sells for 1000.00 profit was 465.00 dollars.
After the calf has gone down the road she still remains a liability.

 

[Kell-inKY]

Nothing personal but I think all this is irrelevant to the original posters question.

Only he can determine how many gates, what type and how much fencing, handling facilities, type and cost of tractors etc. Not a single person on here can determine this for him, we have no idea what he has to start with and how much he needs. These up front costs will be pretty much the same no matter what type of cattle operation he decides to run.

However, almost every single person on here can tell him what it takes to run each of the following (Cow/Calf, stocker, Feeder, etc.) as far as feed costs, vet bills, mineral etc. and it will be pretty close whatever area you are in. That is how we can help the OP, by helping him decide what type of operation would be the most profitable for him.

Infrastructure will be nearly the same on them all, but feed costs etc. will be different. I'm not sure we are giving the OP enough credit, he knows there will be costs for putting up a fence, new gates, a barn etc. How can we help him determine those costs? I do not think he is asking us that. But back to the original question, I think your lowest input would be to buy 5 weights in the spring, grow them on grass, and sell in the fall.

seems we are arguing over everyone's definition of ADC, just trying to put it into the OP's context.

 

[Caustic Burno]

In my book it will never pencil out to the op original question.
He can only run the cost per year against the cow as a measurement of the operation
to find the most " profitable" for him.
The days are gone like when I started and bought land.
The timber off the land paid for the land, clearing and fencing.

 

[Red Bull Breeder]

Did you find the better cow, or the one that cost the most to keep. Cow b may have consumed a bunch more than cow A.

 

[greybeard]

I didn't sell out--just downsized the total amt of property. If as CB says, the initial cost of the acreage has to debited against the ag operation (and it was) then the income derived from the sale also has to be calculated into the equation.

I understand fully the importance of being able to see how efficient any operation is, but most (I suspect a very high percentage) have no need for a PER DAY cost analysis--on any given day--or even month. Your cow/calf weaning period/weight gain/market weights/market revenue example is a very good one for that time period, but again, you started the equation with a figure ($1.60) that you don't even know until later--at earliest, after that 165-180 day weaning window and final sale, but more likely, at the end of the year when all the calculations for the entire operation are done and divided by 365.
You didn't add and subtract at the end of each day to arrive at that figure. You
you don't know that per day cost until after a much longer time period, and ever expenditure and every receipt (revenue) has to be figured in to arrive at that $1.60 that began the equation. Buy a new trailer or sell an old one, both go into the equation.

There has to be some way to figure in unrealized or 'yet to be realized' profits in your infrastructure, buildings, and equipment side.

 

[greybeard]

In my book it will never pencil out to the op original question.
He can only run the cost per year against the cow as a measurement of the operation
to find the most " profitable" for him.
The days are gone like when I started and bought land.
The timber off the land paid for the land, clearing and fencing.

Which did you do-- credit or debit the sale of the timber against the cattle operation?

 

[bball]

GB, you asked whats it good for?

Simplest way for me to explain it is this: it allows you to figure the exact cost each cow has while raising a calf. Then you compare that number to calf $ produced.

Example: ADC $1.60
Cow A has a calf on her for 180 days. 180 x $1.60= $288.00 cost to raise this calf
Calf A weighs 490 and sells for $2.20= $1078
1078-288=$790

Cow B has a calf on her for 165 days. 165 x $1.60=$264.00 cost to raise this calf
Calf B weighs 535 and sells for $2.25= $1203.75
1203.75-264=$939.75

Cow B made you $150 more in less time. Thats important to know. The reason i use actual days on cow instead of 365 for this exercise is because, if you just figure the cows yearly maintenace cost, you actually penalize your cows that raise a quality calf in a shorter amount of time. The number of days on mom matter for profitability of each individual cow.

Exactly you just found the Better Cow.
I do it a little different it still finds the better cow as the calf has to pay her yearly cost.
The cow cost me 545.00 to maintain and the calf sells for 1000.00 profit was 465.00 dollars.
After the calf has gone down the road she still remains a liability.

I agree with this CB, I just want to point out, if you figure the days the calf nursed vs. a full year In the example, cow B doesn't get credit for 25 dollars of profit from her calf when you figure it for the whole year.. I understand she's a liability for the whole year, but as far as finding your most efficient cows, it helps to grade them out on how many days she fed a calf. The cows that wean bigger calfs in a shorter time frame are what I'm after..if you just figure them all on a full year, some of 5 hose really efficient cows don't get the credit they deserve for weaning a dandy calf in less time...

 

[bball]

I didn't sell out--just downsized the total amt of property. If as CB says, the initial cost of the acreage has to debited against the ag operation (and it was) then the income derived from the sale also has to be calculated into the equation.

I understand fully the importance of being able to see how efficient any operation is, but most (I suspect a very high percentage) have no need for a PER DAY cost analysis--on any given day--or even month. Your cow/calf weaning period/weight gain/market weights/market revenue example is a very good one for that time period, but again, you started the equation with a figure ($1.60) that you don't even know until later--at earliest, after that 165-180 day weaning window and final sale, but more likely, at the end of the year when all the calculations for the entire operation are done and divided by 365.
You didn't add and subtract at the end of each day to arrive at that figure. You
you don't know that per day cost until after a much longer time period, and ever expenditure and every receipt (revenue) has to be figured in to arrive at that $1.60 that began the equation. Buy a new trailer or sell an old one, both go into the equation.

There has to be some way to figure in unrealized or 'yet to be realized' profits in your infrastructure, buildings, and equipment side.

Youre, absolutely right. The 1.60 was just an arbitrary number I used for example. What I actually do, because I don't have another solution, is use last year's ADC as my guide. I figure it up every January or so. But yes, a major purchase rapidly elevates your ADC for the current year. But after several years, and once your out of your initial hole, you can gauge your costs quite closely. Things like fuel, grain, hay costs can and do fluctuate, but several of the expenses tend to stay fairly fixed or increase at a very low rate.

 

[bball]

Did you find the better cow, or the one that cost the most to keep. Cow b may have consumed a bunch more than cow A.

It's an average of all your expenses divided out amongst all your animals.. it's a ballpark, but if your animals are grouped well, your not going to have a large desparity in expense per animal. I'm not running 1400lb cows with longhorns. I have a pretty balanced cow herd. But I see your point if a feller does have a large mix of animals.

 

[SJB]

Very thankful for the input from everybody.

I can see a couple different ways to look at it. I was up late last night with both shoes off doing arithmetic, and none of those ways added up to me making dollar #1!

 

[Kell-inKY]

If you were a row crop farmer would you expect the land you purchase to pay for itself in 1 year?

If you were a landlord, would you expect the house you bought to pay for itself in 1 year?

If you are a small businessman, do you expect that expensive piece of equipment to pay for itself in 1 year?

How is a cattle operation any different? It's not like you are flushing your money down the toilet by making land improvements or fencing. Buying a brand new SUV, or living in a subdivision and putting in a new coy pond is flushing money down the toilet.....

You need very little equipment, fencing is cheap in the grand scheme of things, and you have a market for beef, it's very doable. You can't expect a couple of cows to pay for a farm. But the land should go up in value with inflation, there is value to the land itself, YOU HAVE TO LIVE SOMEWHERE, you aren't throwing it away. The cattle should be able to make a profit though, you don't want to be pushing feed to them and sell at a loss.

 

[Caustic Burno]

GB what you don't get your land, equipment, improvements are all worthless and liability
just like mine is. It has no value until you sell only cost.
Many a man has been land rich and dead broke and couldn't buy a settin of eggs.

As far as the better Cow that some ask actually IMO that is pretty easy
to decide even if you run a pasture that looks like someone poured out crayons.
A cow that can not maintain BCS while raising a calf under my management
and calf doesn't sell within 10% of her peer group is a cull.
BCS has long been recognized difference in an easy and hard keeper.
The hard keeper cost more money.
She is competing against every cow in the pasture.

 

[Caustic Burno]

In my book it will never pencil out to the op original question.
He can only run the cost per year against the cow as a measurement of the operation
to find the most " profitable" for him.
The days are gone like when I started and bought land.
The timber off the land paid for the land, clearing and fencing.

Which did you do-- credit or debit the sale of the timber against the cattle operation?

Timber is an ag asset after it paid off the land, cleared and fenced it
was virtually gone. What was left was in the Ag account.

 

[bball]

Very thankful for the input from everybody.

I can see a couple different ways to look at it. I was up late last night with both shoes off doing arithmetic, and none of those ways added up to me making dollar #1!

The initial investment can be daunting, especially if you have aspirations of turning a profit quickly..it will be very challenging to make dollar one right away..especially when you factor in cost of animals, fence, property, necessary materials for feeding and handling..unless someone is just going to give it all to you (I haven't found that person yet ;-) ) may take some time to build up, in the mean time, enjoy some quality self raised beef as you grow your operation.