Grass fed opportunity ?

[tncattle]

I know a man that owns 100 acres about an hour from me and wants to raise grass fed beef, he wants me to be a partner (I know thats a bad word to many) but there must be a way to do this logically. He basically knows nothing about cattle except what he's read and has no hands on experience. He doesn't live on the land and is about the same distance away that I am. The 100 acres has about 60 open acres with decent to good grass and year round water. I'm not opposed to the grass fed thing but not interested in going totally grass fed--but it is his land. He's basically looking to me for direction about the cattle and my experience is almost completely in registered and commercial Angus. I don't care how critical and negative your opinions are, thats what I need to hear. All advice welcome. :welcome:

 

[grannysoo]

Perhaps he should hire you instead of you partnering up with him. An hour away can get to be a mighty long commute. How about he pays you for your time and mileage?

I don't like partnerships...

 

[talldog]

Never turn away from a Dollar---- Make YOUR beat deal, works out great for some !! :banana:

 

[ArmyDoc]

Sounds like you're going to be doing the work, using his land. What about capital for the cattle? Is he buying, or are you? If you both are, are you both retaining ownership of the ones you buy, or do they be come the property of the partnership?

I think you should start by figuring out what you want out of the deal, then see if what he want's is worth the trade. If so, go for it. But what ever you do, write it down in detail. Make sure you write down what happens if you or he, or both of you decide you don't want to do it any more. Don't look at it as planning for failure - just look at it as what happens when your done, or if someone had to move or something like that. Agreements work best when everyone has the same understanding - assumptions are bad news. After you write it all down, then get other people to look at your agreement at a minimum, and ideally get a lawyer.

Best of luck to you,

 

[BC]

Partner with him. Partenerships don't have to be bad deals. One man has land resources but no cattle experience, the other has cattle knowledge but needs more land or finances.

Keep in mind to finish on grass you need high quality forage. Ryegrass-clover mix comes to mind. This means that you are finishing in the spring. Summer grass quality drops in the south due to temperatures.

 

[HerefordSire]

Why not donate your time and experience?

 

[SRBeef]

The problem with 50/50 partnerships is whose opinion wins when there is a decision to be made and you have different opinions. One of you needs to be the 51% operating officer, the other the 49% minority partner and this needs to be agreed in person and in writing. If you can not reach this sort of agreement best to do it as an employee or walk away.

There may be substantial amounts of money involved here and you need to get the operational details down in writing and signed by both parties before you do anything. This has tax effects also. Maybe form an S-corp for limited liability but clear tax responsibilities. Talk to an accountant and lawyer before you do anything.

Good luck.

Jim

 

[cow_crazy_101]

Also you might want to look into where you are going to market grassfed beef. There might be a special commute( I think thats the word) that he/you could sell your cattle to for a higher percentage.

 

[Brandonm22]

He has 60 acres of good grass. What can that realistically support? 30 moma cows/ maybe? Or 40 finisher steers maybe? I have no idea but assume I am guessing right. Lets assume that we buy calves and finish them on grass and there is no cowherd chewing up all the grass. If calves cost $600 and one year later you can sell the finished grass fed steers for (assume a good price) $2000 plus the butcherin costs, then you GROSS $1400. Times 40 and assuming that 2 calves die that is $52,000 GROSS. They need minerals, fence repairs, fertilizer for the grass, dewormer, vaccinations, diesal for the tractor, and then there is the cost of marketing. Let be really OPTIMISTIC and say all that only cost $250 a head. Now our $52,000 is down to ~$42,000. Nobody lives close enough to walk to check on the cows. You are ~60 miles away. For you to visit these steers 3 times a week is 360 miles a week. At 20 mpg and $2.5 a gallon that is ~$2387 just in additional fuel costs not counting the ~18,720 miles you are putting on your truck. Assuming your mileage comes out of your half as his mileage comes out of his half, I am coming up with a maximum payout to you of $18,613 and I think all my numbers are wildly optimistic and I HATE all partnerships. My recommendation is to walk away from this deal; but I don't know the details well enough (stocking rate, rainfall, opportunity cost, selling price, etc) to make that with any degree of certainty.

 

[tncattle]

He has 60 acres of good grass. What can that realistically support? 30 moma cows/ maybe? Or 40 finisher steers maybe? I have no idea but assume I am guessing right. Lets assume that we buy calves and finish them on grass and there is no cowherd chewing up all the grass. If calves cost $600 and one year later you can sell the finished grass fed steers for (assume a good price) $2000 plus the butcherin costs, then you GROSS $1400. Times 40 and assuming that 2 calves die that is $52,000 GROSS. They need minerals, fence repairs, fertilizer for the grass, dewormer, vaccinations, diesal for the tractor, and then there is the cost of marketing. Let be really OPTIMISTIC and say all that only cost $250 a head. Now our $52,000 is down to ~$42,000. Nobody lives close enough to walk to check on the cows. You are ~60 miles away. For you to visit these steers 3 times a week is 360 miles a week. At 20 mpg and $2.5 a gallon that is ~$2387 just in additional fuel costs not counting the ~18,720 miles you are putting on your truck. Assuming your mileage comes out of your half as his mileage comes out of his half, I am coming up with a maximum payout to you of $18,613 and I think all my numbers are wildly optimistic and I HATE all partnerships. My recommendation is to walk away from this deal; but I don't know the details well enough (stocking rate, rainfall, opportunity cost, selling price, etc) to make that with any degree of certainty.

Thats pretty dang good Brandonm considering you only know what I posted. I think you left out hay during the winter for more additional cost. I don't think the land will hold more than 25-30 finishing steers and I don't have any idea how we could sell that many as private treaty is what he's wanting to do. There needs to be another way to sell these finishing steers for a premium (grass fed) as a group. I agree your numbers are probably wildly optimistic but at least a start to get ideas.

 

[cmf1]

You may want to look into the infrastructure mechanics of a grass-fed operation. I'm still learning about it and hopefully will always be. But it requires some initial inputs that can be costly. Cross fencing and water supply. Once you get those out of the way, Ideally, you say good bye to feed, fertilizer, and machinery costs. Gradually.
I think the start-up costs require you to have to make a long term commitment to that type of operation and your partnership to see any real profits.
Probably a standard grass and grain operation that could evolve would be safer for a new partnership.
Either way partnerships are difficult at best.

 

[Brandonm22]

There needs to be another way to sell these finishing steers for a premium (grass fed) as a group. I agree your numbers are probably wildly optimistic but at least a start to get ideas.

You could get $15,000 a steer IF you had two Super Bowl ads. That is the problem, you CAN get a premium; but how much marketing expense will it cost you to get those elusive premiums? Most people who are in the freezer beef business build a word of mouth network that buys their product. How many people do the two of you know? and are you willing to spend a year at Church, at work, at the local diner, at the feed store, at the harware store, at the doctor's office, at birthdays, graduations, family reunions, football games, etc broaching the topic of your quality Tennessee raised beef that you are taking orders for? Newspaper ads, mailouts, signs, business cards, websites etc all cost money. You can afford SOME advertising but not much so you are going to have to do some commando marketing. It is called the best case scenario......I can also do a worst case scenario showing how utterly hopeless this venture and life in general is but most years the truth is probably somewhere between the best and the worst case scenarios.

 

[tncattle]

I sold 4 steers last yr. (grass & grain fed, antibiotic & hormone free) just to co-workers and friends. It wasn't that hard but selling 20-30 head that way seems fairly unrealistic.

 

[cmf1]

I sold 4 steers last yr. (grass & grain fed, antibiotic & hormone free) just to co-workers and friends. It wasn't that hard but selling 20-30 head that way seems fairly unrealistic.

I think what you may find out is that a fair percentage of people that say they want "grass fed" are really searching for "antibiotic & hormone free".
A lot of catch-phrasing these days becomes a catch-all to mean lots of different things.

Marketing as "antibiotic & hormone free", allows you to run your business like you already know how to, and still get a premium from niche buyers. I guarantee you those four customers from last year know at least four more and so on. Take your advertising budget and put it into good stock.

What you really need to be concerned with is what you started this thread with.
Partnerships. If you're going to do them, require everything in writing. Every little thing. Even the things you think will never be issues. Get it in writing.
Did I mention you should get everything in writing?

 

[KMacGinley]

I would guess that a more realistic number for 60 acres would be 10 pairs or 20 steers.

 

[Brandonm22]

He is in Tennessee. Good grass can support a heck of a lot more than a pair per six acres.

 

[gerardplauche]

No matter how you slice it; 60 acres of grass will not generate much profit for two parties. Even if you can squeeze 40 head on it...

Good luck it whatever you choose to do.

 

[chippie]

The thing that bothers me is that you are so far away that it may be difficult to check on the cattle daily.
There was a guy who checked on his cattle weekly. One day he went to his pasture and it was empty. Someone rounded up and loaded his cattle. The tire marks indicated they used more than one trailer and horses. I don't remember if they ever found the cows or caught the rustlers.

 

[djinwa]

I get tired just reading about driving that much. Seems that would get old about the second week, but perhaps I'm just not a normal American.

I also wonder, you being the "expert", what happens if there is a wreck and cattle die or something. Is he going to hold you responsible? Seems higher risk, too, if you're not around them much.

 

[cowmaker]

I am also about to do a partnership. My partner has a grain supply and wants me to fatten up some calves for home grown beef. My plan is to sell him the beef at a wholesale price and let him charge a retail price or whatever he can/and/or is able to charge for the beef. I don't care what he charges/makes as long as I get a profit for providing my time/effort/knowledge/cattle/facilities/ etc....
So, he will be doing the marketing and I will be doing the management.
Partnerships have worked out good for me in the past and I am hoping this one is also a success. It seems obvious, but there has to be a reward for both sides if a partnership is going to work. Alot of push/pull and give/take is required for a good partnership.
I make it a point to keep away from lawyers, but have decided a good accountant is worth knowing.
Good luck!