Farm crossroads

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herofan

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My brother and I currently have a 20 cow/calf beef herd on about 134 acres. We revived this operation about 7 years ago and are currently making some money because we don' owe one red cent. The farm has been in our family for years, so its paid for as is the few pieces of equipment.

We are, however, getting to the point that we could use some new equipment and a few upgrades to continue running smoothly. The issue is, I just can't see borrowing money to do all this stuff because I don't think we would ever make it back.

We currently like the idea of not being under pressure to make a payment and making a few bucks at the same time. Being that we both have public jobs, my brother says our bank accounts would be much better off to just sell out. He said if I had a better plan to let him know. So far, I don't.

I see others around me with not many more cows than we have, and they have every piece of equipment known to man, but I'm not sure how one pulls that off.

Does anyone here have any suggestions? I'm wanting suggestions purely from a financial standpoint. I know that some of you couldn't imagine a life without a cow in it, but I'm just looking at the financial aspect.
 
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herofan

herofan

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Clodhopper":2g63m7on said:
What kind of equipment and upgrades are you talking about?

We could use a disc mower, rake, and a more powerful tractor wouldn't hurt. We currently have a 45 hp. We have three old barns that serve the purpose, but the boxing is getting old and starting to deteriorate. I suppose covering those in metal would be good.
 

Jogeephus

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One thing I believe you should consider is how much will it cost to maintain the property if it were cowless. You can find all sorts of good information on how to increase a herd's productivity but little attention is given to finding that sweet spot where the cows basically do the farm upkeep themselves and you have little input whatsoever. Surprisingly, this later option is often the most profitable in many situations.
 
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herofan

herofan

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Jogeephus":oy99n3nx said:
One thing I believe you should consider is how much will it cost to maintain the property if it were cowless. You can find all sorts of good information on how to increase a herd's productivity but little attention is given to finding that sweet spot where the cows basically do the farm upkeep themselves and you have little input whatsoever. Surprisingly, this later option is often the most profitable in many situations.

We had wondered about this often. We figured there has to be a magic number of cattle for our acres and available pasture. Are there websites that address this?
 

Son of Butch

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Bigfoot":stg70n5h said:
Let him sell his half. That'll leave ya with 10. Just buy hay.
Adding anything with wheels gets spendy and is often hard for a small operation to justify.
Maybe your brother culls 4 and you buy the other 6 makes getting by with what you have with 16 instead of 20
a bit more doable for you without adding any wheels.
 

M-5

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Question I would have is if your making a profit why would you not reinvest those dividends to pay for what you need. You both have public jobs so if you sell out you get no revenue so your obviously not depending on the income.
 

Jogeephus

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herofan":2pf88s4f said:
Jogeephus":2pf88s4f said:
One thing I believe you should consider is how much will it cost to maintain the property if it were cowless. You can find all sorts of good information on how to increase a herd's productivity but little attention is given to finding that sweet spot where the cows basically do the farm upkeep themselves and you have little input whatsoever. Surprisingly, this later option is often the most profitable in many situations.

We had wondered about this often. We figured there has to be a magic number of cattle for our acres and available pasture. Are there websites that address this?

None that I am aware of. Most of the university studies are directed toward maximizing yields however yields don't necessarily equate to profit. I used to work on the coastal plains grazing station where the USDA did a lot of research on minimal inputs and sustainability before sustainability was a catch word. When they shut this down and turned it over to the university all this research was mothballed and put in a basement where I doubt it will ever see the light of day and that may be well enough because the numbers are not easily quantifiable and its more of an art than a quantifiable science that can be put into a pamphlet or some cookbook recipe.

This idea differs greatly from what you will read in cattle magazines or extension journals and I'm not saying it is the right way only another way to do things. I'll try and outline some of the general principles so you can think about them.

First off comes your land and the type of forage it is capable of producing. Take for instance my land. I have a variety of forage types ranging from fast producing to slow producing forages. While different, each is capable of producing the same amount of tonnage per acre in a years time. Take my Tift85. It can easily produce 17,000 lbs/acre of terrific forage in 3-4 months whereas my bahia will produce roughly the same amount of forage in 9 months. Which is better? Neither really. Each is important in its own right and each has its limitations.

Another thing is fertilization and mono cultures. This method relies on little of these because it relies on forage diversity. Take T85, if my whole place was covered in this I would fertilize and be able to carry five pairs an acre for 4-5 months but then I'd be screwed for the rest of the year. Another thing this method recognizes is the wastefulness of some fertilizer applications. Here, many people will jump out and fertilize all their pastures in the spring of the year. This produces excellent forage quality for a brief period but after 29 days the forage starts going backwards and will require mowing, haying or your just having your cows eat low quality forage. So why fertilize it all at one time? Or why even fertilize if you are going to grow more than they can keep trimmed down. This is where the art comes in. Finding that balance and having the cattle eat what is fertilized naturally by nature's nitrogen cycle.

Gains. A lot of emphasis is put on gains. Its nice to see a calf grow off fast but if you are not into breed stock production why does it matter how fast your calves grow as long as they are healthy? Afterall, your cow is only going to produce one calf per year so what's the rush?

Productivity of your land. Everything boils down to your soil and what it is capable of producing. In my situation, my soil can produce 8.5 tons of forage an acre a year without a lot of inputs. Knowing the cow needs 3-4% of its body weight in forage is simple enough, however, the timing of the forage growth is where it gets tricky. I have this covered for 9 months of the year but its those three that are a real bytch and why I've often said if I could only grow fescue I'd have it licked - but I can't so I have to deal with this challenge. Some deal with this void by stockpiling grass or planting winter grains like wheat or rye but in most cases the latter - when used with brood cows - is an expensive, money losing proposition and offers more in the way of convenience than economical food value because if you cannot get 120 days of grazing off the planting you are losing money. (here anyway)

In this method it is important to govern your production of both forage and cattle and I'm fixing to commit sacrilege here by saying a controlled breeding season is the last thing you want. Nothing wrong with a controlled breeding season if you are raising pot loads and need uniformity but if you are not why bother when its only going to hurt you. I say hurt you because your land has an average monthly production it is capable of producing. A carrying capacity so to speak. This is the sweet spot I mentioned earlier. For a simple example I'll use my bahia. It will produce roughly 1900 lbs of forage per month. One brood cow will require at least 700lbs of this per month. Put a 600lb calf on her side and you are looking at 1240lbs/month which is beginning to push the limits here. Expand this over a whole herd and you will see there will be times of plenty and times where the fences will get strained if all the calves are born at the same time and heaven's forbid a drought or something come along and stress things further. When that happens you will surely be selling calves light and not getting what you should for them - not to mention the stress and sleepless nights or the calves getting out of your fences seeking greener pastures.

However, this is easily remedied by having an open breeding program. With this you will probably find in time you'll have a fall and a spring calving season. What this will give you a more steady consumption of your forage and keep your yearly pounds of beef grazing to a more constant and controllable level. Not only does this offer better insurance on hard times it provides you with the luxury of carrying more weight in the fields during the ideal times and you will rarely be forced to sell prematurely.

This method also avoids monocultures in some respects and unlike many cattlemen who want to spray herbicides every time they see a weed you look at these weeds and determine what if any nutrient value they have and when they do you learn how to manage them and use them so rather than spending money on eliminating them you let the cattle convert these weeds to money. This is a hard thing to get your head around I admit. I have one pasture that surely won't win any extension awards for beauty but the diversity of the plants in the field makes it one of the most productive fields I own. It took me a while to realize how good it was but if you watch the cattle they will teach you a thing or two about what they like.

Bottom line is cows are magnificent animals who can turn worthless forage into money if you will just let them be cows. However, a cow will eat all the food you can afford to feed them also so don't rush them and don't work with a sharp pencil just relax and let them do their thing. I went to this method after I stopped trying to fill potloads and its worked out pretty well for me and its a lot less stress and less job like. I figure everything on a per acre basis so I can compare apples fairly and the year before last my net after expenses with the cattle was $800/acre which I thought was pretty good. Granted, I do not charge the cattle with the land taxes because in my mind I would have this expense whether I owned cattle or not but in the end they did pay the land taxes and they did keep things groomed well with little headache overall.

If you are interested and this makes a little sense to you I'll look for a book I think would be helpful in understanding these forage production cycles. Its good information and while it doesn't address this directly you might be able to draw some inferences from the information which would apply in your situation because each situation is different but in general we all face the same challenges.

I apologize for being so wordy. Didn't mean to be.
 

wacocowboy

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With regular jobs you should be turning any profits back into the land, barns, and equipment and after that start building up a rainy day fund. Unless you have a lot of hay to bale or you are doing jobs for others don't bother buying hay equipment it is a money pit. I do agree you need a bigger tractor but you don't have to go buy a JD off the lot. There are lots of quality used tractors with lots of life left in them at a reasonable price.
 
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herofan

herofan

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M-5":3jf5uj77 said:
Question I would have is if your making a profit why would you not reinvest those dividends to pay for what you need. You both have public jobs so if you sell out you get no revenue so your obviously not depending on the income.

We are making a small profit compared to what new equipment would cost. It would take years to pay for the equipment with what we make, even thought it is a nice yearly sum of "extra cash."

I guess I should clarify that when I said sell out, I meant sell farm and all. That would be a nice chunk of change.

You are correct, we are not depending on the income, and we are not in debt. So, does it make sense for us to invest anything more or just sell out while we are ahead? That's what we are pondering.
 

melking

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Jogeephus":1gin60nd said:
herofan":1gin60nd said:
Jogeephus":1gin60nd said:
One thing I believe you should consider is how much will it cost to maintain the property if it were cowless. You can find all sorts of good information on how to increase a herd's productivity but little attention is given to finding that sweet spot where the cows basically do the farm upkeep themselves and you have little input whatsoever. Surprisingly, this later option is often the most profitable in many situations.

We had wondered about this often. We figured there has to be a magic number of cattle for our acres and available pasture. Are there websites that address this?

None that I am aware of. Most of the university studies are directed toward maximizing yields however yields don't necessarily equate to profit. I used to work on the coastal plains grazing station where the USDA did a lot of research on minimal inputs and sustainability before sustainability was a catch word. When they shut this down and turned it over to the university all this research was mothballed and put in a basement where I doubt it will ever see the light of day and that may be well enough because the numbers are not easily quantifiable and its more of an art than a quantifiable science that can be put into a pamphlet or some cookbook recipe.

This idea differs greatly from what you will read in cattle magazines or extension journals and I'm not saying it is the right way only another way to do things. I'll try and outline some of the general principles so you can think about them.

First off comes your land and the type of forage it is capable of producing. Take for instance my land. I have a variety of forage types ranging from fast producing to slow producing forages. While different, each is capable of producing the same amount of tonnage per acre in a years time. Take my Tift85. It can easily produce 17,000 lbs/acre of terrific forage in 3-4 months whereas my bahia will produce roughly the same amount of forage in 9 months. Which is better? Neither really. Each is important in its own right and each has its limitations.

Another thing is fertilization and mono cultures. This method relies on little of these because it relies on forage diversity. Take T85, if my whole place was covered in this I would fertilize and be able to carry five pairs an acre for 4-5 months but then I'd be screwed for the rest of the year. Another thing this method recognizes is the wastefulness of some fertilizer applications. Here, many people will jump out and fertilize all their pastures in the spring of the year. This produces excellent forage quality for a brief period but after 29 days the forage starts going backwards and will require mowing, haying or your just having your cows eat low quality forage. So why fertilize it all at one time? Or why even fertilize if you are going to grow more than they can keep trimmed down. This is where the art comes in. Finding that balance and having the cattle eat what is fertilized naturally by nature's nitrogen cycle.

Gains. A lot of emphasis is put on gains. Its nice to see a calf grow off fast but if you are not into breed stock production why does it matter how fast your calves grow as long as they are healthy? Afterall, your cow is only going to produce one calf per year so what's the rush?

Productivity of your land. Everything boils down to your soil and what it is capable of producing. In my situation, my soil can produce 8.5 tons of forage an acre a year without a lot of inputs. Knowing the cow needs 3-4% of its body weight in forage is simple enough, however, the timing of the forage growth is where it gets tricky. I have this covered for 9 months of the year but its those three that are a real bytch and why I've often said if I could only grow fescue I'd have it licked - but I can't so I have to deal with this challenge. Some deal with this void by stockpiling grass or planting winter grains like wheat or rye but in most cases the latter - when used with brood cows - is an expensive, money losing proposition and offers more in the way of convenience than economical food value because if you cannot get 120 days of grazing off the planting you are losing money. (here anyway)

In this method it is important to govern your production of both forage and cattle and I'm fixing to commit sacrilege here by saying a controlled breeding season is the last thing you want. Nothing wrong with a controlled breeding season if you are raising pot loads and need uniformity but if you are not why bother when its only going to hurt you. I say hurt you because your land has an average monthly production it is capable of producing. A carrying capacity so to speak. This is the sweet spot I mentioned earlier. For a simple example I'll use my bahia. It will produce roughly 1900 lbs of forage per month. One brood cow will require at least 700lbs of this per month. Put a 600lb calf on her side and you are looking at 1240lbs/month which is beginning to push the limits here. Expand this over a whole herd and you will see there will be times of plenty and times where the fences will get strained if all the calves are born at the same time and heaven's forbid a drought or something come along and stress things further. When that happens you will surely be selling calves light and not getting what you should for them - not to mention the stress and sleepless nights or the calves getting out of your fences seeking greener pastures.

However, this is easily remedied by having an open breeding program. With this you will probably find in time you'll have a fall and a spring calving season. What this will give you a more steady consumption of your forage and keep your yearly pounds of beef grazing to a more constant and controllable level. Not only does this offer better insurance on hard times it provides you with the luxury of carrying more weight in the fields during the ideal times and you will rarely be forced to sell prematurely.

This method also avoids monocultures in some respects and unlike many cattlemen who want to spray herbicides every time they see a weed you look at these weeds and determine what if any nutrient value they have and when they do you learn how to manage them and use them so rather than spending money on eliminating them you let the cattle convert these weeds to money. This is a hard thing to get your head around I admit. I have one pasture that surely won't win any extension awards for beauty but the diversity of the plants in the field makes it one of the most productive fields I own. It took me a while to realize how good it was but if you watch the cattle they will teach you a thing or two about what they like.

Bottom line is cows are magnificent animals who can turn worthless forage into money if you will just let them be cows. However, a cow will eat all the food you can afford to feed them also so don't rush them and don't work with a sharp pencil just relax and let them do their thing. I went to this method after I stopped trying to fill potloads and its worked out pretty well for me and its a lot less stress and less job like. I figure everything on a per acre basis so I can compare apples fairly and the year before last my net after expenses with the cattle was $800/acre which I thought was pretty good. Granted, I do not charge the cattle with the land taxes because in my mind I would have this expense whether I owned cattle or not but in the end they did pay the land taxes and they did keep things groomed well with little headache overall.

If you are interested and this makes a little sense to you I'll look for a book I think would be helpful in understanding these forage production cycles. Its good information and while it doesn't address this directly you might be able to draw some inferences from the information which would apply in your situation because each situation is different but in general we all face the same challenges.

I apologize for being so wordy. Didn't mean to be.

Thank you so much Jo, Posts like this are the reason I joined the forum in the first place.
 

Jogeephus

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herofan":2uo3z7ja said:
I guess I should clarify that when I said sell out, I meant sell farm and all. That would be a nice chunk of change.

IMO, this would be a mistake unless you could trade your place for a larger place. They are printing more money everyday but they are not making more land. Money is wealth but so is land and land can build wealth. In my job I see this happening all the time and it just makes me cringe when I see grandkids sell off the family land. Its as if they have no appreciation for the sacrifices it took of others to acquire the land and though its not liquid it is wealth and it does appreciate in value and pay dividends if managed properly.
 

Aaron

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herofan":3o5jyq6a said:
I see others around me with not many more cows than we have, and they have every piece of equipment known to man, but I'm not sure how one pulls that off.

Debt. Loads higher than the barnyard shyt pile of debt and sometimes off-farm money from wifey if she agrees to work like a slave for hubby's 'passion'. I can show you farms, including mine, where the cows paid for the equipment and it looks like a terrific line-up, if the year was 1970. In know one guy my age, same number of cows, with a jaw dropping line of equipment and off-farm job. His debt was $500k when I quit keeping track of what he was doing.

Don't sell the land. That is one of the dumbest decisions a person can make. Sell the cows and offer the pastures and hay out to your neighbors. Or maybe just pasture it all if there are fences around all of it. Can make a fair chunk of change. June 1 to October 1 pasture rental for one yearling will be $70 here ($50 US) double that for a cow/calf pair. Half paid up front and remainder when animals are pulled out.
 

JW IN VA

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We are making a small profit compared to what new equipment would cost. It would take years to pay for the equipment with what we make, even thought it is a nice yearly sum of "extra cash."

I guess I should clarify that when I said sell out, I meant sell farm and all. That would be a nice chunk of change.

You are correct, we are not depending on the income, and we are not in debt. So, does it make sense for us to invest anything more or just sell out while we are ahead? That's what we are pondering.[/quote]

Three words to think about: Capital Gains and Tax
 

Nesikep

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I think you'd be crazy to buy NEW equipment.. besides the endless BS with computers, etc on this new stuff, you're absolutely right that 20 cows can't ever pay for it
Look at the Massey 255 I bought, paid $5500 CAD for it with a loader, 55 hp, good rubber, needed some paint and some routine maintenance (replace some seals, etc), but it runs like the day it left the dealership.. 3500 hrs, I'll be hard pressed to wear it out in my life on this place... 15 years ago we bought a Massey 165, same price, 1800 hours, it hasn't lost a penny of value (appreciated most likely), and it's done a lot of work for us. Get GOOD used equipment from 1985 or earlier.. stuff that hasn't been beat up or houred out.. no dairy barn demucking tractors that everything is totally rusted out on.
At the auction I was at recently there was a IH 454 with cab and loader, moderate shape that went for $3600.. If I didn't just buy that 255 I'd have jumped on it.. Lots of good equipement out there, just take your time to find it, sit on your hands if it isn't the right piece at the right price.

I agree with Jo as well.. They're printing money so fast these days, and conveniently leaving Real estate out of the inflation index, so the supposed 1.5% inflation rate is no where close to accurate.. Selling now and not *immediately* buying some place that suits you better (without debt) is a net loss in the long run.

My cousin bought a house in the city 5 years ago for $400K... She sold it a month ago for $880K.. $40K above asking price, and 90 people visiting the open house... They're going to go sail the world.. Not the greatest idea in my mind, but sounds exciting, they have no kids, so what the heck.. no use dying rich
 

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Jogeephus":1cyohu31 said:
herofan":1cyohu31 said:
I guess I should clarify that when I said sell out, I meant sell farm and all. That would be a nice chunk of change.

IMO, this would be a mistake unless you could trade your place for a larger place. They are printing more money everyday but they are not making more land. Money is wealth but so is land and land can build wealth. In my job I see this happening all the time and it just makes me cringe when I see grandkids sell off the family land. Its as if they have no appreciation for the sacrifices it took of others to acquire the land and though its not liquid it is wealth and it does appreciate in value and pay dividends if managed properly.
I don't have a dog in the fight, but don't sell the farm! That chunk of dirt will always be there, money has a way of slipping away. A cattle herd is also a long term wealth builder.
I agree with the others, buy hay and/or get it custom baled. I can't afford a new moco or John Deere baler, but my hay man can justify it. I get use of the best equipment every year.
I would agree that you could use a larger tractor, but you can find them used. No need to buy new.
Most of all, if you have a love for the game, stay in. If you do, you'll be kicking yourself if you sell out.
 
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