Fast Money

[Bama]

When some folks figure the profit they make on cattle thay don't look at the whole picture. Lets say I buy a calf for $300 dollars and sell it for $600 dollars. Thats $300 dollars profit, right?. Figure in the fence maintenance, pasture maintenance, vet bills, fuel, feed, utilities, equipment maintenance, minerals, supplies, vechicle depreciation, income taxes, hired labor, animal health and medication, fees and commisions, not to mention pasture rent and hopefully not a lot of borrowed money interest payments, and a host of other expenses I have left out. That $300 dollar profit ain't there anymore.

The $300 is not profit, one must take out the other expenses, depreciation, etc..., but my point was and is: "If there isn't any money in the cattle business, then why do it".

We are each entitled to our opinions, you to yours, and I am certainly entitled to mine. Most people I know that raise cattle make good money at it. Guess they are just lucky or too stupid to know that it is impossible for them to really be making money according to the experts on this board. :lol: :lol:

I didn't say it wasn't possible to make money on cattle. I said it was imposssible to make lots of money fast consistantly. I looked over my records the most I have made on a purchased calf this year is -

#454 Bull
Days on farm was 355
purchase price was $155 - young poor and wormy
Sold for $485.05
Fertlizer lime and chemicals - 12.72
Fuel and Oil - 1.03
Grain - 28.05
Hay - 6.85
Salt, mineral,and protein - 1.89
Seed and plants - 7.20
Fees and Commisions - 15.07
Utilities - 15.02
Vet and Medician - 12.65
Fencing - 10.89
Equiptment repair - 2.16
Supplies - 3.09

Thats $213.43 dollars profit.


That was the best I did on a calf this year. That is not typical. Most of the time it is quite a bit less. Anyone here will tell you after the bottom line we all would be mighty happy to get that all the time. I also have some calves born on my place. For them you have to factor the carrying price of their mothers and the percentage of the carrying price of the bull. That can get into a book keeping nightmare. I do it see where I can get better next year. That calf mentioned above was a high risk calf. More money is made on high risk calves. More money is lost on them also. I would advise against people getting high risk calves unless you have been doing it for awhile. Bottom line is don't expect to get rich in the cattle business unless you invest a lot make that a heck of a lot of money. There are safer options on the stock marker with a lot less effort. I raise cattle because I want to, not to get rich.

 

[Brandonm2]

I think you can make money in cattle; but "Fast" Money is the part I don't like. I view "fast" as meaning "six months or less turn around". If your grand dad died and just LEFT you 150 good acres with no debts, by the time you fertilized and rehabbed the fields, repaired and updated all the fences, repaired/replaced the stock pens, barn, tanks, ponds, farm road, etc you have quite a bit of investment tied up before you bought the first calf. You can make money; but if I want my money back in six months that is pretty hard to do.

My best bet is stockering heifers. Buy good 375 lbs to 475 lb heifer calves in the fall, deworm and vaccinate them, winter them on hay and rye/ryegrass/oat pastures and market them as either good stockers ready to go to the feedlot or as cheap breeding heifers. Of course in Canada, the Dakotas, etc where the winter is not fun, I am not sure you want to be the person wintering heifers.

 

[Caustic Burno]

When some folks figure the profit they make on cattle thay don't look at the whole picture. Lets say I buy a calf for $300 dollars and sell it for $600 dollars. Thats $300 dollars profit, right?. Figure in the fence maintenance, pasture maintenance, vet bills, fuel, feed, utilities, equipment maintenance, minerals, supplies, vechicle depreciation, income taxes, hired labor, animal health and medication, fees and commisions, not to mention pasture rent and hopefully not a lot of borrowed money interest payments, and a host of other expenses I have left out. That $300 dollar profit ain't there anymore.

The $300 is not profit, one must take out the other expenses, depreciation, etc..., but my point was and is: "If there isn't any money in the cattle business, then why do it".

We are each entitled to our opinions, you to yours, and I am certainly entitled to mine. Most people I know that raise cattle make good money at it. Guess they are just lucky or too stupid to know that it is impossible for them to really be making money according to the experts on this board. :lol: :lol:

I didn't say it wasn't possible to make money on cattle. I said it was imposssible to make lots of money fast consistantly. I looked over my records the most I have made on a purchased calf this year is -

#454 Bull
Days on farm was 355
purchase price was $155 - young poor and wormy
Sold for $485.05
Fertlizer lime and chemicals - 12.72
Fuel and Oil - 1.03
Grain - 28.05
Hay - 6.85
Salt, mineral,and protein - 1.89
Seed and plants - 7.20
Fees and Commisions - 15.07
Utilities - 15.02
Vet and Medician - 12.65
Fencing - 10.89
Equiptment repair - 2.16
Supplies - 3.09

Thats $213.43 dollars profit.


That was the best I did on a calf this year. That is not typical. Most of the time it is quite a bit less. Anyone here will tell you after the bottom line we all would be mighty happy to get that all the time. I also have some calves born on my place. For them you have to factor the carrying price of their mothers and the percentage of the carrying price of the bull. That can get into a book keeping nightmare. I do it see where I can get better next year. That calf mentioned above was a high risk calf. More money is made on high risk calves. More money is lost on them also. I would advise against people getting high risk calves unless you have been doing it for awhile. Bottom line is don't expect to get rich in the cattle business unless you invest a lot make that a heck of a lot of money. There are safer options on the stock marker with a lot less effort. I raise cattle because I want to, not to get rich.

Vey well broken down Bama, this should be an example to the wantabes on the true cost of a cattle operation. Well Done.

 

[dph]

So much good advice in this post, I don't even know why I am wasting my time posting, I sure can't add much. But if you want to set a goal for yourself, set a goal that you will make money in years that a lot of guys are losing it, and when everyone is losing it you can at least break even. Granted, it won't always work that way, but if you can get it to work that way most of the time, you are doing pretty good for yourself.

As far as that 40,000 pickup. To each their own. You can justify how it is useful as an expense, but I will also add that new pickup won't do anything a good used one can't do. And it is a lot of expense that isn't going anywhere to improve your bottom line and make you a more effecient producer. For instance, lets say you are in an area where rotational grazing can pay. Think of the fence and water costs that 40,000 would pay for, which in turn would let you increase your carrying capacity improving you bottom line in perpetum.

I do believe in "fast" money in this business. It tends to be the speed your own can go out.

 

[CattleAnnie]

Very good advice from Bama, SF, and dph.

Thanks for the chuckle about 'fast money' tending 'to be the speed your own can go out', dph. Sad, but truer words never spoken! :lol:


Take care.

 

[Texas PaPaw]

Just thought I would get everyones opinion on what is the fastest, most quickest way to make money off of cattle?

Case IH

Lots of good "hit the nail on the head" comments. IMO the words "fast money" & cattle don't fit in the same sentence. However, in my younger days i knew of a couple of area cattlemen who, over 30-40 year period became rather wealthy and the cattle business was their only business. These were folks who started with virtually nothing. In the 70's and early 80's I was in the stocker business and a row crop farmer. Made decent money on stockers, but got tired of subsidizing the farming and borrrrrrrrrowing massive amounts of money, so went into another business for about 15 years(had kids to raise and educate). During this 15 yrs i never quit studying the cattle business, including trying to figure out what made some folks more successful than other. Unfortunately, both of these gentlemen passed away before I started the quest. Fortunately both had sons who were knowledegable about their father's operations. There were a few things I found these men had in common: 1. Avoided short term debt like the plague-no operating loans, financed equipment or vehicles, etc-grew business from own cash flow. 2. Started with leased land-only bought land after building a good sized herd totally paid for. they would use some long term debt to buy land-but only with considerable equity (30-50%minimum). 3. Minimized (avoided) things that rust, rot or depreciate. 1 man never owned a tractor, the other had a 30+ year old tractor. 4. Had ongoing cashflow due to selling almost yearround. They did try to minimze sales during the fall runs to avoid the seasonaly low market One son did recall that his dad would substantially reduce his herd size in late summer in order to accumulate cash for cheap fall purchases and that would also reduce his stocking rate in order to stockpile forage for winter grazing. I believe it would be fair to say that both had what would be considered unconventional operations. This represents my best effort in summarizing the key financial paramenters of their operations.

As to the operational aspects of their business: Their cattle were referred to as "plain" by their more polite counterparts and called 'junk" by the less politically correct. 1. Both personally purchased all of their cattle at area auctions. 2. Both purchased animals that mainstream buyers would not even consider. Needless to say these animals were bought at substantial discounts. The majority were bought during the large fall runs (at even lower prices). Although both bought some cattle yearround. One man bought mostly aged thin cows, both open and short-bred and increased their value ($/cwt) by putting on cheap gain (improves grade/price on packer cows) and selling breds as pairs or heavy springers. The other gentleman mostly purchased what my auctioneer friend describes as "diamonds in the rough"-cattle that were greatly discounted due to various situations such as thin, rough haircoat, injuries that have good possibility of significant recovery, active pinkeye infections-basically cattle that will respond favorably to good nutrition, good management & a little TLC. Obviously both were good stockmen with a "good eye" that was developed over the years. 3. Maintained ongoing cashflow as explained in #4 above. 4. Cheaply wintered their stock-first using stockpiled late summer grass and corn and milo stalk fields, minimally supplemented (just enough to keep the cattle strong & healthy) with cost effective byproducts such as whole cottonseed or corn gluten feed. No bagged feedstore feeds, just byproducts and salt/minerals. After stockpile and stalks were gone the cattle would be moved to wheat fields where they would remain ( and make significant weight gains)until being moved to summer grass.

All of this brings to mind some sayings that i have heard for years:

(condensed version) "Experience is the best teacher"
(longer version) "Good judgement comes from experience, Experience comes from bad judgement"

"In order to suceed, one must first plan to fail INEXPENSIVELY"

A couple of years ago I was fortunate enough to be able to get back in the cattle business. During this time i have been building my business based upon the principles I have just shared. I don't know if I'll get rich, but am slowly building my herd using the cashflow generated by an ongoing program of buying,adding value to & selling the types of cattle described above. In the process, I've made plenty of mistakes (and will surely make many more), providing much experience, and I think, some improvement in judgement. Anyone who attempts to operate in this manner should have pretty thick skin. At least for the first few years till the "old hands" figure out you're for real. ( I think I may be getting near this point-at least I hope so)

I apoligize for the length of this post. I realize you only wanted to know what time it is and I have just described how to build a clock from junkyard parts. Just wanted to share some things i have learned and experienced.

I am not saying this is the correct approach for anyone else to take, just that it has been working for me. Hope this will help and encourage someone out there.

My deepest apoligies to any who may perceive this as a " Hit the nail with my head" post.

Dare to be Different, Think outside the box, and always remember: Following the herd too closely may result in being led to slaughter:

Merry Christmas to All and best regards

Brock

 

[Stocker Steve]

While there are many more complainers than braggers regarding ranching profits - - I have encountered a few folks with interesting and different approaches:

1) Puts together backyard or discounted cows and then sells as a herd (his unfair advantage is that his brother works at an auction barn)
2) Direct sales of meat goats to recent immigrants (his unfair advantage is being close to a local niche market)
3) Grazing sheep behind cattle (his unfair advantage is wintering them outside in a wood lot, and having seven unpaid kids to handle feeding and fencing)

I have been spending my cash on fences, corrals, renovating & reseeding, and stock ponds. I pay for labor - - directing some of this to sons, daughter, or nephews so at least someone in the family is currently showing a profit!

 

[Stocker Steve]

"Thats $213.43 dollars profit.


That was the best I did on a calf this year. That is not typical. Most of the time it is quite a bit less. Anyone here will tell you after the bottom line we all would be mighty happy to get that all the time. I also have some calves born on my place. For them you have to factor the carrying price of their mothers and the percentage of the carrying price of the bull. That can get into a book keeping nightmare. I do it see where I can get better next year. That calf mentioned above was a high risk calf. More money is made on high risk calves. More money is lost on them also."[/quote]

There have been several posts regarding the profit per head possible with high risk cattle. The issue I see with this is finding and handling enough high risk stock to total up to real money. I see a few of the big guys hiring help or custom backgrounders to do this.

Any herd size comments or hired hand comments?

 

[DD RANCH]

I know a guy who buy's the lower priced stock cow's then he find's someone to lease them.He get's 50% of the calves he furnishes bull's and mineral.He has 100's of cattle out on lease he get's all the cull money plus he usally turn's the cows over in matched group's for more money.I know one set of cows he had out on lease a few years ago he had paid $550 a head for them got 3 set's of calves from them than sold the cow's for $800 and he never fed a lick of feed to them.This guy lives in Minneapolis Mn and has a high paying job plus all he makes on cows.But he is kinda playing Banker.Work smart not hard...

 

[Bama]

"Thats $213.43 dollars profit.



There have been several posts regarding the profit per head possible with high risk cattle. The issue I see with this is finding and handling enough high risk stock to total up to real money. I see a few of the big guys hiring help or custom backgrounders to do this.

Any herd size comments or hired hand comments?

As far as the number of head I'll give my usual answer. "one head on each one of them" As far as the hired hand I'd say about $50,000 per year. Man that boy can eat. Naw, seriously its just my 13 year old son. When the two of us are out of town the wife and daughter will feed, just don't expect them to be much help at working time.

I have three herds. One is some limo's that came from 12 cows and 1 bull for less than $1,000 dollars. That sould tell you how long ago. Heck when it rains some of them still stand 2 by 2 looking for an ark somewhere. Those cows are all decendants from that herd that my parents started so many years ago. That herd is the best of my best. I also have a herd that I have bought over the years. These are keepers that are used for replacements and babymakers. The calves are sold or held for replacing those that no longer make the grade in that herd. I also buy cattle that I can turn rather quickly ( within a year ) I buy anything I can make a dollar on. Some are nice calves, some would have to look a lot better to look terrible. Some of these are the high risk group. Buying like this can clean a persons plow. I wouldn't recommend it to most people. I woundn't let anyone buy calves for me. I have another job as a maintenance guy that I work second shift. Working second shift allows me to buy and sell cattle during the day. My 13 year old is getting a pretty good eye for cattle one of these days I may let him buy a few for me. When I buy I put them in a barn for at least a week. I'm watching for any sign of weekness. After that they go into a small lot for about 3 more weeks before joining the others. In talking about the first herd I know it sounds like I was born with a silver spoon. That ain't the case. Those cows of my parents helped put us 5 siblings through college. The only silver spoon is the one we get off our lazy butts and go after. I am the youngest of three boys. Our early years were spent clearing this land. I think the hard work as kids helped us all out in the longrun.