Alright Hobby Boys

[backhoeboogie]

no i was in the drought zone as well as other ppl.an only had to buy 25 bales of hay.but thats b/c i was gambing on it raining.an sold off 310 rolls of hay.an had carry over hay as well.so i ended up spending less than $500 on hay.but wont gamble that tight again.

I learned a hard lesson. I won't be selling any until I have "carry over" myself.

Congratulations. Sounds as tho you planned well.

 

[S.R.R.]

cost - If owning land in america is important - and I agree totally - and land usually appreciated - do you credit the bovine for maintaining the land. Weed control. reduced taxes - free fertilizer. tools for educating offspring.

Bovines don't maintain anything destructive beast, I would get the same ag break growing timber.

I have to disagree with you on that Caustic. The first Highlands I got turned my land from over grown brush and weeds into acceptable pasture in only a few years. I wish I had some before and after pics to show you it was impressive. Now grant it not all breeds of cattle would have do such a good job.

caustic is right to a point you can take a 100 acre pasture and go any where on it and set a fence post. its like a magnet to cows they will have it knocked over are push out of line. what they can't break they sht on. ;-)

:lol: :lol: Had that fence problem before I added the hot wire. Not anymore. They still $h!t on everything though! It cost me $350 a cow this year. I had to pay double for hay ($45 a bale) so cost went up.

 

[C HOLLAND]

Caustic wrote: Mine was 392.00 a cow this year fuel and Rita skewed it up 25-30 bucks a head.[/quote]

Caustic, what about us hobby people that get all their tax money back from the full time job, (tax write off from farm) ???does that count.
That is one of the biggest parts of my income from my small herd.

and 1 ???? just what determines if you are a hobby farmer. I don't look at it as a hobby and I own less than 50 head. I am a purchasing manager by trade and spend millions each year and I approach my cattle business the same as I would with any type of operation. I have researched and asked questions and will keep asking and learn more each day. A person can lose at this in a big way or a small amount. The one thing I see is the man that has to depend on the farm for his sole source of income has to be better at managing the dollars than the little guy (hobby farmer) I know if all I accomplish is to break even, the enjoyment I get from it is more than worth it. I work a 40 hour week in the office and when I get home I usually am out tending to cows or facilities until 7:30 each night and from sun up to sun down on the weekend. I am never to tired to work on my small (hobby) farm and when it's not fun anymore I will give it up.

just my 2 cents worth

 

[Central Fl Cracker]

My actual, out of pocket costs for 2005 (per my tax return) were about $180 per mother cow....

- $72/head Hay = I raise my own bermuda grass, cost was about $18 per bale including fertilizer and custom baling (I mow and rake, a neighbor charges for the baling). 4 bales per head gets them through the winter fine in my part of the country.
- $45/head = Fertilizer & Winter wheat/pasture mix planting.
- $55/head = Range Cubes
- $8/head = Fuel/equipment maintenance.

* Didn't have any vet/med costs last year on my breeding stock (lucky year).
* No fencing/barn costs. Invested in those too many years ago to bother including anymore.
* I/family own the land. I didn't include any cost of land in my amount as I view that asset (land) as an investment of its own which appreciates in value over the years.

Since I have not quite got started yet would cows from the south use $55/head for range cubes. I thought cubes were just an easier way to round up cattle.

 

[NorCalFarms]

What my cost per unit is doesn't really matter to anyone but me, the most important thing is I KNOW exactly what it is. We have expanded quite a bit in the last few years because the return has been good, but the market may be peaked so we are planning on culling hard this year, maybe up to 30%. Biggest reason is feed costs, I can feed so many head real cheap, the more I expand the more hay I have to buy at market price. Since we feed hay about 6 months out of the year this is a big expense. I have access to quite a bit of off quality hay I can buy cheap (I might be buying it from myself but it still cost $$$) but it isn't an unlimited supply.

My cost per unit is higher than most, but I include everything. I also lease 98% of pasture and rent all machinery I need from my farming operation. Including everything and keeping everything seperate allows you to know your true costs. Being young, leasing allows me to manage risk to a certian degree, and have the flexibilty to cut back if I don't like the return I get. It might be more expensive in the long run, but over the past few years there is no way I could have expanded like I have if I was buying land. It simply doesn't pay. Instead I bought more cows outright, and they have shown me a good return. If that return starts to drop, like I am starting to see signs of, I can sell them and be way ahead. I don't need to keep an extra 100 pair because I bought a ranch that stocks 100 pair and it needs the mortgage paid. I think some people that have a real low cost of production are forgetting something: How much mileage did you put on your pickups checking cows? Your hours checking/feeding? If you own your land did you pay yourself ligitimate rental rates? It all adds up, and if you hide those costs from yourself you can end up in trouble. Just my strange way of looking at things :shock: :shock: 8)

 

[OklaBrangusBreeder]

Since I have not quite got started yet would cows from the south use $55/head for range cubes. I thought cubes were just an easier way to round up cattle.

I think range cubes are an important source of protein. I feed them sparingly in the summer (really just to keep them coming to the corral) but daily in the winter. So yes, I would say you should plan on something around that amount for cubes. But then, things may be different for you in Florida....

 

[sillco]

No it is feed, fuel, fencing, meds, taxes, total cost to keep that cow for a year.etc.

i assume you are pretty much a commercial operation. i am not saying that amount is bad or good, just trying to see where this takes us.

if your cow cost is $392/hd and you have a 95% conception rate and let's imagine that a calf costs nothing. i realize how impractical this is, but just ride it out.

that makes your cost to produce a calf: $392 / .95 = $412.63/calf.

selling at the 400 lbs i think i recall you saying you sell at gross would be $600 / calf @ $150/cwt.

so at best, profit per calf would be $600 - $412.63 - calf cost.

estimate calf cost @ $10/calf in vaccinations etc. so $177/calf profit?

sounds like good results to me and still above average for an upcycle year. what did i miss?

I use a program called COW COSTS to figure my cost. It only cost me about 60.00 to purchase and it ask all the right questions to give all the cost. It says a commercial producer should keep their production cost below 300 per producing cow to be the most profitable. You know the good times are now, but how about in another 3 or4 years from now? The prices will be much less for that calf then, maybe as little as 65 to 70 per hundred weight or less. Then you must know your cost to stay in business. The IRS could be asking how you are doing it, what will you say if you are going to stay a business instead of a hobby?

 

[sillco]

I do not think we ever definded ranching versus hobby in another post or did we?

If you are not calculating every penny it takes to maintain that cow for one year then you don't know you are making or loosing money or don't care. If you are not operating like a business then you have an expensive hobby.

I have always figured the best way to messure any business is to see what you have in the bank by the end of the day/week/month/year and with that said i deal with #'s every day and i also deal with what i call fuzzy math a lot
and i do admit i am a hobbyfarmer since it it not even close to be my main income and no matter how i try to up my numbers i can not get mine any higher than $296.00.

I don't know how many breeding age cattle you have but you should be experiencing a 95% calf crop from the cows exposed and at lease 90% weaning calf crop to sell. If you are not then you may not be in the cattle business to make a profit, according to the IRS. To do that you must give the cows all they need to make those production requirments. If not, mine, as Dun saids, grow wheels.

 

[sillco]

This is a great thread! I will be the first to say I have no idea really what it cost for my few head. We started it as just keeping show heifers, and that is way to expensive to ever figure what it cost for fear it would make you cry. Any money earned either goes to buy more show animals or kids college funds. Cost come out of cleaning toilets.

But It is interesting reading the post, because I plan on moving more into the commercial area, keeping say 10 head to breed for show calves until my kids are done with showing. And the rest commercial.

Wondering how you factor in say fence cost on a given year? Say you put up $5,000.00 in fencing a given year. Do you divide that amount amongst each cow that year? Or do you depriciate the fencing out over say 5 year only deducting $1,000 amongst the cows for each of those 5 years?

The feed, hay, vet bills, gas all those cost are easy to see how to figure into a cows profit. But not sure how a person figures in the Barn, Equipment, Fences and things like this on profit and loss sheets.

Remmber, use the exposed cows to figure cost. The rest are free loaders and add to your cost.

 

[endebt]

iIfigured ours 2 years ago and it came to , for every calve i sold i had to make $300.00. At that income per calve i just broke even on our ranch. To do anything extar on the ranch like fencing , equip upgrade , upgrade bulls, or build something i had to make more.
With the fuel cost, taxes, this years hay prices i can only think i am way in the hole for income. I know there is no money for anything extar now.

 

[redfornow]

About a dollar a day here, more some years less if all goes well.
But for budgeting thats the number I throw out and it hasnt failed me yet.

I still dont see how the national average is just a hundred bucks a head of profit? With prices the way they are I have averaged alittle under 250 a head the last few years. Now I wouldnt spend that money before you get it as we all know prices go up and they ALWAYS come down.

The other side is the ag tax exemption is saves me three grand a year. Now I know I could grow trees raise goats, you name it. But the fact is I have cattle where does the money I save go? Because I am sure not selling my place for less taxes, so those are real dollars also.

Interesting post, much to learn right here.

MD

 

[sillco]

My actual, out of pocket costs for 2005 (per my tax return) were about $180 per mother cow....

- $72/head Hay = I raise my own bermuda grass, cost was about $18 per bale including fertilizer and custom baling (I mow and rake, a neighbor charges for the baling). 4 bales per head gets them through the winter fine in my part of the country.
- $45/head = Fertilizer & Winter wheat/pasture mix planting.
- $55/head = Range Cubes
- $8/head = Fuel/equipment maintenance.

* Didn't have any vet/med costs last year on my breeding stock (lucky year).
* No fencing/barn costs. Invested in those too many years ago to bother including anymore.
* I/family own the land. I didn't include any cost of land in my
amount as I view that asset (land) as an investment of its own which appreciates in value over the years.

The land should be considered as opportunity investment. What could you make with the money if you sold the land? Therefore the land should be considered in the cost, even if it is paid for. If it is not paid for, what is the annual note and taxes?

The point is if you hadn't invested in land you possibily could not be in the cow business. Of course you could lease, which is a cost factor. Don't kid youself, land is a cost to consider.

 

[mitchwi]

My actual, out of pocket costs for 2005 (per my tax return) were about $180 per mother cow....

- $72/head Hay = I raise my own bermuda grass, cost was about $18 per bale including fertilizer and custom baling (I mow and rake, a neighbor charges for the baling). 4 bales per head gets them through the winter fine in my part of the country.
- $45/head = Fertilizer & Winter wheat/pasture mix planting.
- $55/head = Range Cubes
- $8/head = Fuel/equipment maintenance.

* Didn't have any vet/med costs last year on my breeding stock (lucky year).
* No fencing/barn costs. Invested in those too many years ago to bother including anymore.
* I/family own the land. I didn't include any cost of land in my
amount as I view that asset (land) as an investment of its own which appreciates in value over the years.

The land should be considered as opportunity investment. What could you make with the money if you sold the land? Therefore the land should be considered in the cost, even if it is paid for. If it is not paid for, what is the annual note and taxes?

The point is if you hadn't invested in land you possibily could not be in the cow business. Of course you could lease, which is a cost factor. Don't kid youself, land is a cost to consider.

I have to disagree, just a bit Harry. If you had to buy the land the outlay of $ affects your cash flow, but, like you said it is an investment. So if it is bought on a note, less cash available to you, interest and taxes, yes...cost to consider, principal...no. Agree oppotunity lost as investment somewhere else, and as an investment you are hoping appreciation of that investment, I would not consider that appreciation of land value as "income" would you? So if you don't add your appreciation of value into the equation, how can you add your cost of land into the equation? Also agree, if you lease land, that is a cost to consider (much on the same lines as the taxes and loan interest for land owned.)

 

[Farmhand]

I have to admit I don't know my cost. I am quilty of falling into the trap of "this is how my daddy and granddaddy did it and they were ok". I also fall into the trap of "the bills are paid and we eat so it's ok". Definately need to get out of those traps.

Caustic - thank you so much for this post and giving me something to think about. I, too, noticed T&S didn't join in on the serious cattle talk he wanted.

Bez - thank you so much for posting your decision making process(your first post). Am thinking there are a few things I need to change. Would like to ask you a question. Please do not take offense. I am actually curious and wondering. You guys have been hit hard. Did this change your process any or did you use the same principles to run your operation before hard times hit? Were you doing things different before like maybe giving an animal another chance before culling or destroying? I do understand that things have to be culled or destroyed but sometimes I allow for "exceptions". I quess I'm wondering if you allowed "exceptions" before or if this has been standard operating procedure? No offense intended. Thanks.

 

[sillco]

My actual, out of pocket costs for 2005 (per my tax return) were about $180 per mother cow....

- $72/head Hay = I raise my own bermuda grass, cost was about $18 per bale including fertilizer and custom baling (I mow and rake, a neighbor charges for the baling). 4 bales per head gets them through the winter fine in my part of the country.
- $45/head = Fertilizer & Winter wheat/pasture mix planting.
- $55/head = Range Cubes
- $8/head = Fuel/equipment maintenance.

* Didn't have any vet/med costs last year on my breeding stock (lucky year).
* No fencing/barn costs. Invested in those too many years ago to bother including anymore.
* I/family own the land. I didn't include any cost of land in my
amount as I view that asset (land) as an investment of its own which appreciates in value over the years.

The land should be considered as opportunity investment. What could you make with the money if you sold the land? Therefore the land should be considered in the cost, even if it is paid for. If it is not paid for, what is the annual note and taxes?

The point is if you hadn't invested in land you possibily could not be in the cow business. Of course you could lease, which is a cost factor. Don't kid youself, land is a cost to consider.

I have to disagree, just a bit Harry. If you had to buy the land the outlay of $ affects your cash flow, but, like you said it is an investment. So if it is bought on a note, less cash available to you, interest and taxes, yes...cost to consider, principal...no. Agree oppotunity lost as investment somewhere else, and as an investment you are hoping appreciation of that investment, I would not consider that appreciation of land value as "income" would you? So if you don't add your appreciation of value into the equation, how can you add your cost of land into the equation? Also agree, if you lease land, that is a cost to consider (much on the same lines as the taxes and loan interest for land owned.)

Respectfully, I must state land is to be considered. For Example, If we were buying or have bought stocks in the stock market and we were planning our personnel buget for that year we would need to buget for the stock purchase just like you have to buget for the land purchase. Neither investment will return anything for appreation until you cash out, but the use of the land should be included in each enterprise that is using the land on a per acre basis to get to your full cost of operation. With out the land you could not operate and the cost must be included on a prorated basis. For example, to keep it simple, say you own 100 acres and you are grazing all of it. If the land is paid for you would use the current value of the land and amertize it over a thirty year period as if you were making payments or renting it. You should then use the annual payment/lease payment as the cost of the land in your operating cost. This will tell you if you are getting a return on you invertment while still owning the land, like stock divends. Owning land has a cost to be considered. If you don't it would be like the farmer that grows his own corn for sillage and uses the cost of growing the corn instead of using the value of the corn. He should sell the corn to himself for the same price he would get if he sold in on the open market. That would be his corn enterprise sell to his beef enterprise or dairy enterprise.

 

[OklaBrangusBreeder]

Regarding the whole land thing. (IMHO)

Example:
- I buy 100 shares of stock for $4,000. I sell that stock after 10 years for $8,000. That stock was an investment that rose in value 100% over the given time frame.
- Do I have any reason to "expense" a portion of that original $4,000 investment against my Wages (that I earn in my day job) over the 10 years that I owned the stock? Can't think of why I would.
- Should I reduce my "day job" earnings by the amount of money I might be able to earn had I chosen a different profession? Can't think of why I would. I make the same amount of money each pay check regardless of what I should have done for a living.

Likewise:
- I buy 80 acres for $40,000. Since the time that my family bought that land, it has risen to be worth about $80,000. That in and of itself is a sufficent return on investment in my opinion.
- For my "labor" of owning and running cows, I have no reason to amortize a portion of the original $40,000 land investment as that is not an economic expense to me.
- Economically, I can spend what I sell my cows for less what it costs to raise them. Accruing some implicit cost of land ownership against that net ecconomic earnings has no bearing on what I have left to spend after the cow sale check arives.


I think there is an argument that perhaps you should allocate your resources using a "highest and best use" type of principle. In that way, it may not make sense to own farmland as an investment. I mean, there are probably more higher producing investments out there than farm land. But that is completely independent of whether I decide to run cows on that land.

I guess there might also be an argument for using an "incremental earnings" approach to cattle. In other words, you only "make" on cows what you earn less what you could say lease out the land for that you are using to run cows. That frankly makes no sense to me, but seems like some on this thread are arguing for that kind of approach.

(IMHO)
I can see no justification for accruing an "expense" in my cost calculation for something that is NOT an economic cost to me. If I own the land, there is no "expense" to running cows on it.

 

[memanpa]

does where you live and run your cattle make a difference?
i think it does!
i run a nice little operaton in oklahoma (bout 60 head) cost per head figuring the lease that managed to pick up last yr my ok cost was about (notice i said about) $379 hard to actually figure as i have my son in law running that plale and everything is paid for except for their utilities etc that thay pay for

here in az i run a small feed lot for custom fed beef all feed to has to be bought and i do not run but a couple of cow/calf pairs and the cost of them is not pretty my hobby that is not a hobby
sorry caustic

 

[Caustic Burno]

I have to admit I don't know my cost. I am quilty of falling into the trap of "this is how my daddy and granddaddy did it and they were ok". I also fall into the trap of "the bills are paid and we eat so it's ok". Definately need to get out of those traps.

Caustic - thank you so much for this post and giving me something to think about. I, too, noticed T&S didn't join in on the serious cattle talk he wanted.

Bez - thank you so much for posting your decision making process(your first post). Am thinking there are a few things I need to change. Would like to ask you a question. Please do not take offense. I am actually curious and wondering. You guys have been hit hard. Did this change your process any or did you use the same principles to run your operation before hard times hit? Were you doing things different before like maybe giving an animal another chance before culling or destroying? I do understand that things have to be culled or destroyed but sometimes I allow for "exceptions". I quess I'm wondering if you allowed "exceptions" before or if this has been standard operating procedure? No offense intended. Thanks.

I am begining to think old ladingaling is in cohoots with T&S he follows my threads like a dog to try and pick a fight. He avoid this one like the plauge until enough posted to give him a number. Had to poke him out of the coffee shop, you go back and read the Caustic post in the coffee shop and you decide.

 

[Beef11]

My actual, out of pocket costs for 2005 (per my tax return) were about $180 per mother cow....

- $72/head Hay = I raise my own bermuda grass, cost was about $18 per bale including fertilizer and custom baling (I mow and rake, a neighbor charges for the baling). 4 bales per head gets them through the winter fine in my part of the country.
- $45/head = Fertilizer & Winter wheat/pasture mix planting.
- $55/head = Range Cubes
- $8/head = Fuel/equipment maintenance.

* Didn't have any vet/med costs last year on my breeding stock (lucky year).
* No fencing/barn costs. Invested in those too many years ago to bother including anymore.
* I/family own the land. I didn't include any cost of land in my
amount as I view that asset (land) as an investment of its own which appreciates in value over the years.

Land is a seperate enterprise. If you own the land or lease it really doesn't make a difference on an enterprise budget. Cows pay rent on the grass as if it was custom grazed. Family land or inherited land or bought and paid for land could all be leased out and earning a return. $15-$20 per AUM is pretty standard if you graze out 8 months that runs from $120-160. I figure fencing is paid for by the land unless otherwise specified as well as taxes. The good thing for the land is that it is credited with all hunting proceeds and can recieve rent from multiple enterprises. It also appreciates in value (sometimes).

Hay is also subject to the same opporitunity cost budget. If it costs you $100 bucks an acre to lease the ground and you get 5 tons then you figure in the cost of harvesting. Then you figure what the hay would sell for if you raised it for less than you could sell it for. That margin is called profit and it has Nothing to do with cattle. The cow enterprise has to buy the hay at fair market price. This type of accounting shines light on types of things that would be better not done.

The other thing missing in "low cost accounting" is cows open. If ten percent of your herd is open and sold or worse kept. These animals have to be carried by the rest of the cows as well as the difference made up before you can profit from your venture.

Interest on my invested also needs to be subtracted because simply it is costing you that much to have it invested. Right now with interest rates high its not a significant amount but when you could put your money in a CD and get 10% on a Hundred thousand bucks thats 10k. Alot of people are hard pressed to make 10% on cattle.

Labor seems to be missing from budgets also. Fuel? Truck? Trailer? Squeeze chutes? Horses?

Anyhow if you figure the true cost to raise cattle and claim anything under $200 you need to go get a new pencil cause that one is lyin to you. Unless you have some very unusual circumstances.

 

[Farmhand]

I have to admit I don't know my cost. I am quilty of falling into the trap of "this is how my daddy and granddaddy did it and they were ok". I also fall into the trap of "the bills are paid and we eat so it's ok". Definately need to get out of those traps.

Caustic - thank you so much for this post and giving me something to think about. I, too, noticed T&S didn't join in on the serious cattle talk he wanted.

Bez - thank you so much for posting your decision making process(your first post). Am thinking there are a few things I need to change. Would like to ask you a question. Please do not take offense. I am actually curious and wondering. You guys have been hit hard. Did this change your process any or did you use the same principles to run your operation before hard times hit? Were you doing things different before like maybe giving an animal another chance before culling or destroying? I do understand that things have to be culled or destroyed but sometimes I allow for "exceptions". I quess I'm wondering if you allowed "exceptions" before or if this has been standard operating procedure? No offense intended. Thanks.

I am begining to think old ladingaling is in cohoots with T&S he follows my threads like a dog to try and pick a fight. He avoid this one like the plauge until enough posted to give him a number. Had to poke him out of the coffee shop, you go back and read the Caustic post in the coffee shop and you decide.

Have and agree with you!