Deal or no deal on this herd

[thatdoggJake]

Deal or No Deal
Here is what I am looking at and let me have all the feed back you want to throw.
Part 1: I am looking to buy the whole herd. 60 cows, 3 bulls, and some calves on the ground right now. $25,000. This is a pretty good group of cattle. I might have to cull 5 or 6 cows. The man thinking about selling them is having trouble letting go of his herd, but he is getting older in his age and doesn't want to/can't keep up with them anymore. I would lease his place out for $10 an acre, 500 total acres, for $5000 a year, all connected property. He told me that in the last ten years he has not dropped one cube nor one bale of hay on the place. They are all grass cattle. He even told me I had to mow it twice a year (half one time of the year and the other half another part of the year).
Part 2: I have a good family friend and long time employee who works for the family business (25 years) who got my foot in the door with in this deal. I offered ,for his superior knowledge and help, to let him run 10 of his show cows on the place and one of his show bulls. I would be responsible for selling the current three bulls (around $750 each) and buying one more bull at about $3500 to get up to the show quality he is looking for. Moreover, I would let him have first choice at as many steer/bull calves that he wanted to buy at fair market value or $450 each, depending on which is higher. In return he has the means of working the cattle, moving the cattle, making timely decisions, and helping me get started. Without him there would be no deal as well, because the older man is very close to this friend of mine.
Part 3: This is kind of how I broke it down.
For Me:
60 cows
50 calves per year
50*mrkt price 450 = $22,500 revenue per year
Less $5000 lease, $1250 medical, $1500 mowing, $1200 loss cows, $1000 gas
= $12,500 a year given these numbers finish close to this (maybe it would take me three years to break even???)
For him:
Possible 10 calves per year* mrkt price $450 = $4500, plus each calf he buys from me and sells for show steers.

Other variables??? Maybe aveerage age of the cows in the herd??? The fence looks good to me. Also, my family business is in the fencing industry so that's not that big of a deal. Everything would be in my name. Should I put it in my name??? or set up a LLC??? I also am the one thinking up these terms. Nothing was suggested to me.
Thanks for the help.

 

[Angus Cowman]

Are you the one doing the mowing or are you hiring it done the figure you listed won't cover it either way
it cost more than $3 per acre if you do it yourself and in my area I charge anywhere from $10-$15 per acre or $65 per hr depending on the ground and how fast can cover it

You never mentioned fertilizer on 500 acres at $300pr ton fert prices I would say you would be looking at $37.50 per acre which is a yrly cost of $18,750 per yr

so the break even point moves farther every yr
you didn't say where you were located in my area 8.33 acres per cow is really poor ground in some areas that is really good ground
Goodluck AC

 

[1982vett]

Sounds like a good deal for around here (don't know about their cause I don't know where their is) on a stand alone deal. I have an exception about your partnership. I just don't have the information to make a judgment about a partnership between two people I know nothing about. Alot work and alot don't.

 

[TheBullLady]

It's very hard to make a partnership in cattle to work for both parties. The only successful ones I've ever seen are the ones that one person runs everything, the other is a "silent" partner only. It's very VERY hard to come to an agreement on how things will be run as time goes by, as things will change, and one or the other will want to change the initial agreement.

If you do go through with it, please PLEASE make sure you have it in WRITING. There are fewer misunderstandings if you have it in writing and signed. It may not be a bad idea to put something in the agreement about one or the other having the option of buying out the other partner.

A lot of stuff to consider!

 

[chippie]

Who would be doing all of the work? You, both of you or your friend?
Who is responsible for equipment maintenance and repair cost?
Will you be splitting the cost of maintaining the pasture and fencing?
What about the cost of veterinary care?
Are you going to have a written contract spelling each party's responsibilities?

One thing that bothers me is that you will be raising show quality animals. You sell them to your friend for $450 and he sells them for $1000 and up. An average show steer sells for $1500 to $2000. Commercial crossbred show heifers sell for a premium too. If you have some really good calves, and your friend gets all of them, you will be selling yourself short. It seems like your family friend is getting the better part of the deal.

 

[grubbie]

I would think letting him run his 10 cows in return for a little help/advice would be plenty. You can't give anything away in this business, it's hard enough to make a profit as it is. YOU are the one with all the risk and money involved. I have some good friends, but none so good that I am willing to lose money (on a business deal) in the name of friendship. Won't be such a good deal on those cows if you give too much away. Maybe some don't agree with that kind of thinking, that's just my opinion. Good luck, I hope it works out for you no matter how you do it.

 

[bird dog]

You will need more than two bulls for the 70 cows you will have together.

 

[thatdoggJake]

A little more information. I am on the Texas Gulf Coast, south of Houston. The property is spilt on two counties so as far as show steers go they is the potential to have county breed steers for two different counties. I know very little about show steers and without help from this guy I would know nothing. He gets first choice for any/and all the steers he wants at market price. That still leaves me with the heifers if I choice to do something with them. Maybe I could think about keeping one or two for myself, but that would just seem to complicate things. But, maybe it is something I should think about a little further. I also think he would be getting a very good deal as he is risking practicly nothing. He would be bringing one of his very good bulls to the table saving me from buying another bull. I figure by using better bulls hopefully I will have better calves for market.

I can do the mowing myself. Nothing about fert has been mentioned. I would think that fert would put this whole thing back to scratch.

Anyone know about how long it would take to mow 250 acres ata time with a 15' mower?

 

[houstoncutter]

Bout a week and thats if you dont have a lot of brush or chinese tallow to mow

 

[Angus Cowman]

Anyone know about how long it would take to mow 250 acres ata time with a 15' mower?

on good smooth ground with no brush you can average about 5 acres pr hr so you would be looking at 50 hrs approximately

 

[1982vett]

Anyone know about how long it would take to mow 250 acres ata time with a 15' mower?

on good smooth ground with no brush you can average about 5 acres pr hr so you would be looking at 50 hrs approximately

Don't forget about the cost of the fuel.

 

[chippie]

I live in Fort Bend County and if you are talking about animals being shown at the Fort Bend County Fair, your family friend is definitely getting the better deal. I am on the Livestock Committee there and know many of the Ag teachers. The kids who show steers pay a pretty penny for their animals. Some of the parents pay $4000 + because the high prices the steers bring at the auction. We are a 4H family (this is our 18th year).

I wonder about not having to feed hay. The grass is dormant now and even our friends who run large operations are feeding hay. Right now we are so muddy, the pastures are in bad shape. My husband planted wheat and hopefully we will be able to turn the cows out on it next week.

Who knows, we may know each other. We've lived in Fort Bend County since the 70's.

ETA: A steer or commercial heifer does not have to be born in Fort Bend County to be eligible to show at the fair. There are steers shown that are purchased out of state.

Also, if you are unfamiliar with the pasture grasses in the area, see if the county extension agent can come out and look at it. There are some nasty grasses in Fort Bend and Brazoria county. You look like you have a lot of grass and the reason you do is because the cattle don't eat it unless they have to.

Good luck.

 

[KMacGinley]

I would take the deal and under NO circumstances would I go in with your "friend" on it. If you do you will not continue to be friends for long. I see no benefit to you, there is plenty of free advice to be had and it seems to me that you will be paying out the nose for his. This is a wonderful opportunity for you. Take it and avoid a ton of trouble in the future by being the Lone Ranger on this.

 

[Phil in Tupelo]

Well I don't know if it is a good deal or a bad deal. The cattle, the lay of the land, pasture condition, facilities along with other things are all unknown to me. This I do know from my experience is that no matter the plan, detail of the plan or experience with putting the plan together, when it comes to farming and cattle, things can change daily (if not hourly). I put up with it for years because I liked/loved it and I had 60 acres of old home place that I needed to do something with. Did I every make money (living 30 miles from the farm). Not much! Did I have fun! Yeah, I did, or I wouldn't have worked so hard and so long. I still have the farm and still live 30 miles away, I just don't have the cows anymore after 25 plus years. Yes, I miss it every day. I just don't have the money to blow on it right now.

Again, make your plans, in writing or in your mind, and then throw it out the door as the last time I checked, cows can't read and they don't care what you think. But if you like cows, a challenge and love working from can to can't, then jump in with both feet. Just be expecting to step in or fall into some crap! Good luck!

 

[greatgerts]

If you cannot get at least 94% calf crop out of 60 cows you do not need to be in the business. I have between 94 and 100% calf crop every year. You will not make a profit with less than that.

Is this percent after you preg check? I am almost always near 100% calf crop if I do not take into account the opens that I had culled at preg check time.

 

[Phil in Tupelo]

gg,

I think to be honest you have to count all cows exposed to the bull. If they are found open later that will impact your percentage. In the real world, 94% calf crop is really, really good. If you don't count your opens, it is impossible to determine a true percentage. Anything less than 80% means you have a lot of work to do or you are going broke. Many herds that are poorly maintained may have only a 50% calf crop which doesn't pay the bills.

 

[greatgerts]

gg,

I think to be honest you have to count all cows exposed to the bull. If they are found open later that will impact your percentage. In the real world, 94% calf crop is really, really good. If you don't count your opens, it is impossible to determine a true percentage. Anything less than 80% means you have a lot of work to do or you are going broke. Many herds that are poorly maintained may have only a 50% calf crop which doesn't pay the bills.

I understand that Phil. This year, we were about 92%. Not wonderful, but I am not complaining because some of those cows had been exposed longer than others.

 

[drycreek]

I would take the deal only if I were doing it alone....
Partnerships usualy go south way south in this type of a deal.
And as far as profit goes, kept good records for 35 years and the average was only $35.00 per cow unit. I hear people talk about clearing $100.00 to $350.00 per cow unit but when you start asking questions they did not count labor, fuel, equipment cost, equipment repair, fence building, fence repair, the cow that died, the calf that died, or the staples etc. etc. etc.. You can say I didn't do very good but I'm proud that after 35 years I can say I came out with a profit.

 

[Jeanne - Simme Valley]

Oh, yes! another "I am perfect" statement :banana:

 

[Phil in Tupelo]

As Dun said so aptly commented in another thread "OH OH, now you've jinxed it."

100% calf crops are not easy as it requires a great deal of work and a large helping of luck. Luck sometimes comes from hard work and sometimes it just happens. Dealing with cattle takes a lot of hard work and yes sometimes luck. 100% calf crop one year could be luck. 100% calf crops in multiple years takes hard work, a dose of luck and the blessing of the Good Lord, IMHO.