Changing gears from cow/calf to stockers...? Opinions??

[Z&J Cattle]

Hello all. First off, I want to apologize in advance for the long post, but here it goes. My dad and I have about 80 acres of pasture that we bought about three years ago. We are currently running a cow/calf operation with 25 momma cows. With the added cost of fuel, hay in this area (as I'm sure with all areas) is set to skyrocket this year. Here is what we are considering, and I want to get some opinions from those of you who have more knowledge/experience than myself. My dad suggested that we look at selling our herd this fall when everybody calves so that we can sell them as pairs, then waiting until March or so (the start of our growing season here in Arkansas) and buy a group of 40-50 stocker calves to run on the summer pasture, then sell them in September or October. Every year we face a struggle of finding enough hay to get us through the winter, so that is the first positive for me in this deal is that I won't have that stress because we won't need hay for this operation. We have put a great deal of time and money in getting our pastures up to par the last few years and we have a very good stand of native grass (mostly fescue/bermuda). We will still fertilize of course, and have the expense of weed control, but the big expense that we will not have will be hay. With the price of grain, to me, feeders is not an option. I don't see how feeder operations are making ends meet with grain as high as it is. We have some debt on equipment that we would be able to clear if we sold our herd, then we could just use the line of credit that we have with our bank to buy the first round of calves, then pay that off at the end of the summer and have profit left over. At this point, we are BARELY able to break even with the cow/calf deal and I only see it getting more difficult as everything continues to go up in price (except calves apparently). The other bonus to me is that this will be a 6-7 month endeavor as opposed to the momma cows which is a 365 day job. We both work full time jobs and I live on the farm, doing most of the day to day chores. I just feel like we could have a lot less work load and still make the same (or probably more) net profit. What do you all think? How much gain per hd/day might we expect on average with good pasture and a good mineral program? We will utilize rotational grazing as we already do now. I understand that there will be downsides to this as with anything, we will lose a calf or two from time to time, etc..... But, compared to how it is going now, I just think the good will outweigh the bad. At the present, it seems to be more the other way around. I'm open to any and all suggestions that you may have.

Thanks in advance,

Zach

P.S. When we were crunching numbers, we were figuring on a 1.25 to 1.50lb gain per day. Are we being realistic in that expectation starting with 400lb. size calves?

 

[novatech]

Sometimes it works sometimes it don,t. Depends a lot on market price buying and market when you sell. Of course you have to figure in all other variables, like rain.

 

[Jalopy]

Lots of pros and cons each way. I can say that I used to do stockers and moved to cow calf. Two reasons I had were, one, the purchase cost to sales price ratio can be variable from year to year and those two items can make or break your budget for the year. The second reason was that calves/ stockers were always looking for a cow herd, even with good fences they were constantly looking to join up with any cow herd they could hear. I understand your not wanting to look for hay at these prices but if you go to stockers protect your investments with insurance or puts. JMO-JLP

 

[Frankie]

You can make money or you can lose your shirt, depending on the market when you buy and when you sell. Have you considered grazing other people's calves? They pay you for the gain, but you're not hanging out on a limb if the market drops. If you decide to buy stockers, be sure they're from a herd with a good health program. A few sick or dead calves will absorb any profits.

 

[Z&J Cattle]

Thanks for the replies everyone. One more thing. Our pasture supports our 25 momma cows (and their calves during early spring). How many stocker calves might we expect to be able to run on the same pasture? Do you all think that my expectation of 1.25 to 1.50 lbs per hd/day is a realistic gain rate on good grass?

 

[somn]

Can your pasture sustain 85 head if so before buying the calves check the price on a Sept put and see if it works on paper first. If not I would say don't gamble with it rent out the pasture to someone with a sharper pencil. A Sept 08 today for $116 will cost you $6.77 before commission.

 

[Texas PaPaw]

Z&J

Good luck with your transition to stocker cattle. In essence you are changing from a manufacturing (calf factory) to a value added margin (buy/add value/sell) operation.

There are some books that I suggest you read before you make this change. They are listed in the order I feel are most helpful, however all 3 will give you a better perspective of a profitable stocker operation.

1. "Thoughts and Advice from an Old Cattleman" by Gordon Hazard

2. "Knowledge Rich Ranching" by Alan Nation

3. "Pasture Profits from Stocker Cattle" by Alan Nation

I was able to by all 3 books from Stockman Grassfarmer a few years ago, however Gordon Hazards book is not currently listed by them. Would suggest you call them at 800-748 9808 to see if they have it or can tell you where to get it. IMO Hazards book is the best there is on managing a stocker operation. He has been doing it profitably for over 50 years with minimal hay. "Pasture Profits" is written mostly about Gordon Hazards operation but Gordons book does a better job explaining the details.

Here's a link

http://www.stockmangrassfarmer.net/Bookshelf.html

Also, I would suggest you look seriously at selling your cows before mid September as cow prices usually start declining in September. Also it will allow you to stockpile grass in order to buy calves before spring greenup. Calves can usually be bought cheaper in fall/winter than spring. Hazards book does an excellent job of explaining this. BTW Gordon Hazard is in northern Mississippi at West Point, so his situation should be similar to yours. These books also explain how to financially structure your operation to minimize the risk of market price fluctuations.

Just my 2 cents worth.

 

[newrancher]

Sharpen your buying skills, and figure about 1lb per day avg, if they do better great.Lots of risk, you still need hay for drouth and winter or to holdem if the market slides.Make a deal to take a neighbors calves.Fresh weaned calves WILL test your fences.If your place is supporting 25 mommas you should have no problem with 40 hd calves.

 

[Jogeephus]

Don't know what type job you have but when you first get the calves in you might have to live with them for 2-3 weeks until they get straightened out. If you can buy them all from one or two farms like Newrancher suggested you will be better off - especially if they are weaned. Bringing one sick calf onto your place can be quite challenging if its contagious and minor death losses will hurt your bottomline tremendously.

 

[mnmtranching]

I think with the lowering trend on cow numbers in the US, might be better to stay with the cows. You know what you got. On the other hand stockers would be less work, and the price on heavy feeders is likely to be better then calves.
Most figure 2 stockers the same as a cow/calf pair. 1 1/2 pounds of gain on a stockers should be realistic with good grass. I f I were to buy stockers I would try to buy a group of from the same producer. 35-40 head should not be a problem. And I would give them some medicated feed for a couple weeks. If you get calves that have been weaned a while, health shouldn't be a big problem.

 

[Stocker Steve]

Can your pasture sustain 85 head if so before buying the calves check the price on a Sept put and see if it works on paper first. If not I would say don't gamble with it rent out the pasture to someone with a sharper pencil. A Sept 08 today for $116 will cost you $6.77 before commission.

The old rule of thumb was that you should clear $100/head. If you talked to an stocker operator who did not buy insurance like Somn is recommending, has been at if for a while, and kept good books - - they made as much as $200/head on a good year and then lost their shirt some other years.

Some things that effect stockering more than cow/calf are:

1) marketing - you usually buy and sell multiple groups per year so there are a lot more transactions
2) grass quality - 4 wt. stockers need good grass to get over 1.2# /day and very good grass to get over 1.7 #/day on a long grazing season, 5 or 6 wts are more bullet proof but you can not graze as many per acre...
3) receiving husbandry - purchased calves are under a lot more stress than home raised
4) price risk - see above

If you can do all these things well - - then you will make more $ atockering than buying in cow hay and you will have more time to go hunting in the fall. Go for it if you can find a mentor and he approves your budget.

 

[Central Fl Cracker]

I also looked at stockers and if you run the numbers there is only a gross profit of about $ 150 per head. That is based on buying a 400 lb steer and selling it at 800 lb's. It might be a little more than $ 150 per head. One thing is you have to have plenty of grass come spring and the death loss can be high on weaned calves.
So $ 150 x 40 steers = $6,000 Gross
Less fertilizer
Less lease
less start up feed
Less etc.

Another thought I have.
So during the spring green up let's say your calves are weighing about 250 lb's. You already know during the spring and early summer your cows/calves usually can not keep up with the spring growth. So with that said you could buy 20 or 30 steers of the same weight of your current calves and sell them in the late fall with your other calves. Your fixed cost pretty much remains the same in regards to fertilizer and land lease and you put out no hay.

 

[Central Fl Cracker]

Any thoughts on my idea about buying stockers if and when the grass starts growing.

 

[bigbull338]

i hate to tell you this but its to late to buy stockers even if you get the rain.because you would have to let your grass grow 2 or 3wks before turning cattle on grass.then youd have to sell them in oct.not to mention having to dr them.an get them feed bunk broke an feed some hay.

 

[Stocker Steve]

My favorite economist likes to show that you can not make money grazing stockers. His basic plan is to buy 6 wts. (rather than lighter) at green up (rather than before) to graze a short season (rather than long).

The best time to buy stockers here is when there is snow on the ground. This approach may have to be modified a bit for the south...