Big Cow Gross Margin ?

[Stocker Steve]

That your fixed costs/cow goes up to where you can't sell off enough

You need to be able to pay for overhead costs like labor, interest, utilities, depreciation.... So you really need to look at the returns after paying variable costs with different stocking rates or different classes of cattle -- and you also need to cash flow the deeded ranch land and overhead costs.

Progressive Cattlemen put out an article that stated variable costs have increased an average of 5.3%/yr since 2001. But, when revenue dropped producers were not able to reduce their variable costs. I suspect fixed costs did not go down either.
So we need to find a better way.

 

[littletom]

One thing not mentioned are eqt. cost. May have no importance but is cheaper spread over more animals or units.

 

[js1234]

If you can't make money with 10 cows, you won't do it with 100 and vice versa.

I disagree. Efficiencies brought about due to economies of scale on one end and diminishing marginal returns on the other side combine to produce a "sweet spot" in terms of size for most any operation where the profit potential per animal unit is at its highest. On extreme ends of the scale, often on both ends of it, is in many instances, red ink.

 

[Aaron]

If you can't make money with 10 cows, you won't do it with 100 and vice versa.

I disagree. Efficiencies brought about due to economies of scale on one end and diminishing marginal returns on the other side combine to produce a "sweet spot" in terms of size for most any operation where the profit potential per animal unit is at its highest. On extreme ends of the scale, often on both ends of it, is in many instances, red ink.

Your thinking too deep on this one. Maybe I should rephrase it.

If you don't know how to make money with 10 cows, you won't know how to with 100 and vice versa.

 

[dwa]

One thing not mentioned are eqt. cost. May have no importance but is cheaper spread over more animals or units.

Or another way to look at it is if you were stocked to keep cows on grass year round equipment cost would be minimal.

I see it around here. A lot of them say they don't make any money. They cut hay all summer and feed all winter. I'm trying to make a living with cattle. Every time I sell calves I don't want the money going to town to pay for fertilizer, equipment, fuel, etc. I also have to be stocked to where I will always be in the black no matter what. You can't eat a tax write off.

 

[Aaron]

One thing not mentioned are eqt. cost. May have no importance but is cheaper spread over more animals or units.

Or another way to look at it is if you were stocked to keep cows on grass year round equipment cost would be minimal.

I see it around here. A lot of them say they don't make any money. They cut hay all summer and feed all winter. I'm trying to make a living with cattle. Every time I sell calves I don't want the money going to town to pay for fertilizer, equipment, fuel, etc. I also have to be stocked to where I will always be in the black no matter what. You can't eat a tax write off.

Actually you can. Can write off 1/2 of all food expenses - at least up North - not sure about USA. But I never have claimed as I worry about the auditor asking who the 4 other guys were that I was feeding... :shock:

 

[Stocker Steve]

Can write off 1/2 of all food expenses - at least up North - not sure about USA. But I never have claimed as I worry about the auditor asking who the 4 other guys were that I was feeding... :shock:

Have you been loading up on Certified Hereford Beef?

 

[Stocker Steve]

Good article in the online Beef mag today on What Is Profit?

 

[Stocker Steve]

Efficiencies brought about due to economies of scale on one end and diminishing marginal returns on the other side combine to produce a "sweet spot" in terms of size for most any operation where the profit potential per animal unit is at its highest. On extreme ends of the scale, often on both ends of it, is in many instances, red ink.

I agree totally.
I think a grazing based operation can greatly reduce the impact of economies of scale.
I think a variable stocking rate plan can reduce the temptation for provide low return inputs
It would be interesting to project what would happen if we culled off the bottom of the cow herd and replaced them in the spring pasture with retained calves.

 

[Aaron]

Can write off 1/2 of all food expenses - at least up North - not sure about USA. But I never have claimed as I worry about the auditor asking who the 4 other guys were that I was feeding... :shock:

Have you been loading up on Certified Hereford Beef?

It's on the menu several days of the week.

 

[js1234]

Can write off 1/2 of all food expenses - at least up North - not sure about USA. But I never have claimed as I worry about the auditor asking who the 4 other guys were that I was feeding... :shock:

Have you been loading up on Certified Hereford Beef?

It's on the menu several days of the week.

Are you familiar with any yards or marketing avenues for a big string of CHB steers this Spring or Fall?

 

[Aaron]

Have you been loading up on Certified Hereford Beef?

It's on the menu several days of the week.

Are you familiar with any yards or marketing avenues for a big string of CHB steers this Spring or Fall?

No. Secondly, how can anyone even give you an answer if you don't have your location listed?

 

[js1234]

It's on the menu several days of the week.

Are you familiar with any yards or marketing avenues for a big string of CHB steers this Spring or Fall?

No. Secondly, how can anyone even give you an answer if you don't have your location listed?

I live in Central California. I run cows and yearlings here, cows in Northern Nevada and yearlings in SouthWestern Wyoming. I feed cattle in Eastern Colorado and Western Nebraska mostly, though I do feed Mexicans in the Pandhandle of Texas. In our order buying business, we have buyers working in major barns in those states and a couple other States here in the Western US. Being involved with the cattle business in several Western States, geography isn't always the nonstarter for me that it might be for others, IF there is an opportunity to get involved with a certain program or marketing strategy.
The CHB cattle I have in mind are a string of about 850 head of weaned steers that deliver to one of our California ranches early next month. They'll run here until mid May. At that time, I plan to sort them and send the lightest 600 +/- to Summer grass in Wyoming and the biggest 250 directly to a feedyard. I bought the same cattle and 500 of their sisters last year. As I plan to continue with them, I'm interested in looking into CHB avenues. Also, between California and Nevada I've got a Horned Hereford bull inventory around 180 head so expose about 3,600 mother cows to Hereford bulls annually. I'm looking into if the Hereford breed has any marketing angles that could potentially make the resulting 1/2 Hereford yearlings more profitable than they already are going right in with the other 2/3's of our home raised calf crop when we market it.

 

[Stocker Steve]

Made a first pass on 2016 today with the accountant. Looks like we will be paying tax again this year. :nod: Cow/calf and back grounding both showed return to labor and management, but cropping did not. Looks like rwf cows eating **** hay but still producing bwf back grounded calves at 93% of exposed was the ticket in 2016. Still working on 2017. Expecting to reduce stocking rate a little, reduce inputs a lot, and run more yearlings.

 

[RanchMan90]

Made a first pass on 2016 today with the accountant. Looks like we will be paying tax again this year. :nod: Cow/calf and back grounding both showed return to labor and management, but cropping did not. Looks like rwf cows eating be nice hay but still producing bwf back grounded calves at 93% of exposed was the ticket in 2016. Still working on 2017. Expecting to reduce stocking rate a little, reduce inputs a lot, and run more yearlings.

Good job. Turning a profit in the cow calf sector has been a real challenge in 2016.

 

[Stocker Steve]

I think commodity cow/calf financials will continue to be a challenge. Too much protein and not enough culling. Cows will still be a great way to regenerate organic matter. Just need a thoughtful system to leverage higher fertility. Higher cow stocking rate looked good with $2 calves but that was a very brief event. I think the Argentine grain/alfalfa pasture rotation makes cents if you have the right kind of ground.

 

[Ebenezer]

I think the Argentine grain/alfalfa pasture rotation makes cents if you have the right kind of ground.

But isn't a lot of their beef going as select or low grade? Low price but lower quality?

 

[Stocker Steve]

I think the Argentine grain/alfalfa pasture rotation makes cents if you have the right kind of ground.

But isn't a lot of their beef going as select or low grade? Low price but lower quality?

I have some 7 ph hill sides with K over 300 ppm. Alfalfa, and chicory are some deep rooted options for these droughty hill sides. This forage would be for growing, not finishing, cattle.
Alfalfa is not a great grazing plant and I only use it if heavily if clover does not like a location. Cattle are not sold on green alfalfa, the protein can be too high, it needs lots of K, and it doesn't reseed well. The way I work around this with high population stands is to either wrap it wet early, or let it go to full bloom and then pound it flat with cattle. Really pisses off a few folks but the worms have to eat too.