How in the world can you make money in this market?
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The price has not hit .33 yet. But they are in the low .60's in places. 550 x .60 = 330. Looking at some of the sales yesterday, there were sales in the 70's. So that means they will get 385. Granted I am not deducting the commission. So if the final price hit at say .73, your net would be 385ish. There is some cheap beef out there.
Caustic Burno
Well-known member
Nothing has changed it is still about controlling input cost. You have to learn you are a grass farmer and all cows need is grass and minerals. It is about planning as well, you should keep a two year hay supply on hand.
You should be able to hold a calf crop in price downturns as the one we had this fall. Learn what the carrying capicity on your place in bad times drought's etc. you will have another one if you stay in this business.
Enough for now as this thread could generate a lot of good ideas.
We are the only business men that pay retail and sell wholesale nothing has changed.
Some are just getting the experience for the first time this has been a breeze compared to the late 70's early eighties.
You should be able to hold a calf crop in price downturns as the one we had this fall. Learn what the carrying capicity on your place in bad times drought's etc. you will have another one if you stay in this business.
Enough for now as this thread could generate a lot of good ideas.
We are the only business men that pay retail and sell wholesale nothing has changed.
Some are just getting the experience for the first time this has been a breeze compared to the late 70's early eighties.
CattleHand
Well-known member
Cant say I know too much about this topic. There is a big difference in being born into it and starting from scratch. however, when my grandpa first started he and his wife both had outside jobs. She was a nurse and he worked in the sale barns (helped him gain connection for buying and selling cattle and getting good deals).
Another thing that I think helps increase your chances of profit is being able to diagnose and fix problems in cattle most people dont want. I know my grandpa buys alot of calves that need a bit of this or that before they are par or above par. Since he knows what to do it aids in making a profit. Other than that I think sustainable profit in commercial cattle is only seen with large herds. just my thoughts.
Another thing that I think helps increase your chances of profit is being able to diagnose and fix problems in cattle most people dont want. I know my grandpa buys alot of calves that need a bit of this or that before they are par or above par. Since he knows what to do it aids in making a profit. Other than that I think sustainable profit in commercial cattle is only seen with large herds. just my thoughts.
cattlepower
Well-known member
A friend of mine did sell 4 steers last year straight off the farm direct to the customers. The problem as he sold many in 1/4 instead of all 1/2 or whole was: when you start selling a bunch of 1/4 sides of beef the logistics and record keeping can get ridiculous. Also, it seems the more you sold that way the less chance you have of taking a bunch at the same time to the processor. You can definitely make a profit this way but to do real good it seems you need a very large customer base and you would be making many trips to the processor with small numbers of cattle. There is probably an easier way to sell direct so if someone can expand with better ideas please do.
Caustic Burno":2jrovkt0 said:
You are right on CB... Its called planning, and bite the bullet most of the time. Hard for some to do, though. I keep telling some of the younger ones starting out, you dont need alot of the stuff that retail people are selling, but mainly good grass, water, and a few minerals to sustain the bovine. Anything else is just extra in my opinion.
Caustic Burno":1ke9p3f3 said:
You are right on CB... Its called planning, and bite the bullet most of the time. Hard for some to do, though. I keep telling some of the younger ones starting out, you dont need alot of the stuff that retail people are selling, but mainly good grass, water, and a few minerals to sustain the bovine. Anything else is just extra in my opinion.
Caustic Burno":2v7kq1k6 said:
You are right on CB... Its called planning, and bite the bullet most of the time. Hard for some to do, though. I keep telling some of the younger ones starting out, you dont need alot of the stuff that retail people are selling, but mainly good grass, water, and a few minerals to sustain the bovine. Anything else is just extra in my opinion.
Caustic Burno":2ldeaf7x said:
You are right on CB... Its called planning, and bite the bullet most of the time. Hard for some to do, though. I keep telling some of the younger ones starting out, you dont need alot of the stuff that retail people are selling, but mainly good grass, water, and a few minerals to sustain the bovine. Anything else is just extra in my opinion.
backhoeboogie
Well-known member
cattlepower":1i5a7wny said:
Halves are a problem too when you have an odd number. I had 9 1/2 sold and finally told the last person they were either going to have to find someone to take the other half, or else wait until next time. He found somebody, who found somebody else who also wanted a half, and it put me at 10 1/2. I bought another freezer and took a whole instead of the half I was going to take for myself.
Well I think some are missing the point of what I am saying. Every business has its problems, and the cow business is no different. But the difference is this, there is no one here on this board who can enter the cow business in a cow/calf operation and make enough money to pay for all the input cost no matter how hard you sharpen your pencil. If we want to call ourselves a grass farmer, then you need land to farm that extra grass. What is the going price of farm land nowadays 3k+ an acre? So if your cows can hold their own on 4 acres you will have at best 12k in the cost of the land for that one cow. I put 4 acres in the price to account for an acre of hay that you will harvest each year to carry her through the winter. This does not include fertilizer, tractor, or hay equipment or any labor. The cow will sell nowadays for say 400 dollars a calf. Interest on that land is 12,000 x 7.5 % = 900 dollars a year. Lets say your cow lives forever and never has a problem calving. You will loose 500 dollars every year that the cow is alive. I know many people rent pasture land, but I wanted to show everyone that every other business in the world typically has to account for a substantial purchase of their property to operate. If you own a McDonalds restaurant you would be able to buy a 1,000,000 lot to sell the hamburger on and pay for it in 10 years. But the poor old cow farmer who makes it possible to eat that Big Mac can't even buy pasture land to grow grass on. I know in today's world your family has got to have had a farm in it forever in order to have an edge, but there will come a time where that farm has either got to pay inheritance taxes on it or reset in value in order to transfer ownership. I know property taxes have already gone up on many so I am sure the rent will increase. And please know there is always an exception to the rule where someone can hit the market just right and trade cows in and out of the market. My focus is basically on a cow calf operation to make beef.
I am not sure what to do about it. I have some ideas but our government has set requirements on processing plants in order to facilitate the large capital guys. I guess the rich get richer and the poor get poorer! I know I am in it for at least 5 years, but being my first year in business, things look really bad. Not because of the market downturn, but because of the spread between retailers and wholesalers even when demand is there. Selling direct to the public is the way I am going to go.
I am not sure what to do about it. I have some ideas but our government has set requirements on processing plants in order to facilitate the large capital guys. I guess the rich get richer and the poor get poorer! I know I am in it for at least 5 years, but being my first year in business, things look really bad. Not because of the market downturn, but because of the spread between retailers and wholesalers even when demand is there. Selling direct to the public is the way I am going to go.
HerefordSire
Well-known member
Good Post. All of your posts are good and they are true. This biggest obstacle I face is a land payment. The ranchers that don't have a land payment have a competitive edge over me. It is almost as if the market has no land payment already priced in.
RD-Sam
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That was the point I was trying to make, sell direct if you can. This is coming up on my first year too and all I see is money being spent faster than I can make it. I have bought land, cattle, fencing materials, semen, and equipment. I don't expect to see any profit for a long long time, but hopefully I will be able to retire from my regular job later on and make a living with a small farm, hopefully.
Caustic Burno
Well-known member
There are several things you can do to save use hay racks versus rings saves hay.
Controll Army worms and Grasshoppers as both are eating cow feed (grass) these two critters consume huge volumes of grass cutting stocking rates.
Use 2-4-D and not Grazon have your pastures in the south planted with annual Rye and Red clover, if you use Grazon it kills the seed and you have the cost of reseeding winter pasture.
Minimize fertilizer in hay field and supplement protien which was cheaper than fertilizer this year.
Don't overstock, most that get into trouble stock their pastures like every year is going to be a good one.
Cull hard anything that doesn't produce a calf every 12 months haul her to the salebarn.
Never sale hay there is no such thing as having too much hay.
Keep inputs to a bare minimum learn to be the best grass farmer in your region.
I had a fellow ask one time what is the best grass the kind that grows in my pasture with the least upkeep cost.
If the cow can't maintain BCS with a calf on my grass and hay I am changing the cow not the grass.
Don't retain heifers as this is very costly as you are feeding two cows for two years that returned nothing to the bottom line.
There is no reason for the commercial cattleman to retain as there is no genetic advantage you can buy good heavies cheaper than raising a heifer to production.
Controll Army worms and Grasshoppers as both are eating cow feed (grass) these two critters consume huge volumes of grass cutting stocking rates.
Use 2-4-D and not Grazon have your pastures in the south planted with annual Rye and Red clover, if you use Grazon it kills the seed and you have the cost of reseeding winter pasture.
Minimize fertilizer in hay field and supplement protien which was cheaper than fertilizer this year.
Don't overstock, most that get into trouble stock their pastures like every year is going to be a good one.
Cull hard anything that doesn't produce a calf every 12 months haul her to the salebarn.
Never sale hay there is no such thing as having too much hay.
Keep inputs to a bare minimum learn to be the best grass farmer in your region.
I had a fellow ask one time what is the best grass the kind that grows in my pasture with the least upkeep cost.
If the cow can't maintain BCS with a calf on my grass and hay I am changing the cow not the grass.
Don't retain heifers as this is very costly as you are feeding two cows for two years that returned nothing to the bottom line.
There is no reason for the commercial cattleman to retain as there is no genetic advantage you can buy good heavies cheaper than raising a heifer to production.
bigbull338
Well-known member
yes you can pay for a place with cattle.we payed for 400acs an all the improvements an equipment.but the trick is you have to run enough cattle to make it work.as well as selling every live calf that hitts the ground.an even then you wont make much profit.paid a custom baler $3700 to bale hay.an that hurts the check book.the cows dont clear that much.an theres dang near 100hd in the pasture.only selling the bull calves.keep all the heifers.an im still buying cows every year.so i do it all for fun.you want money go be a dr lawyer .but do not get into cattle for money.
Alberta farmer
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I have to agree with Custic Burns. Become a low cost producer. Consider every purchase, ask yourself will this make me money? If the answer is no then don't do it.
In Canada we have a much better tax system in regards to inheritance taxes. We also have a capital gains excemption of $750,000 per farmer. I will be able to give my son all that I own without paying any taxes. You need to plan ahead though and start the transfer before you are dead or senile! I see many farmers who don't know when it is time to start giving up control and ownership and let the younger generation have their turn! My son just turned 30 and basically he makes all the decisions...with a little advice from old Dad! But then I taught him to think like me so we don't have too many disagreements! I had to get him straightened out a bit after he came home from university with a bachelor of Commerce degree. I don't think some of those professors had a real clue about how business works!
I guess a person could make a lot of money by getting into direct marketing of beef? My only thought on that is do you want to be a rancher or a packer? Might make more sense to just be a packer and forget the cows...buy someone elses cattle for the cheap prices?
On the cost of land: Cows will never pay for the land. However land usually appreciates over the long term? Don't know if it offsets the interest or not? You should not include land costs in whether that cow is making money. Land is a seperate investment.
The low cost producer will generally outlast the high cost producer. The best cure for low prices is just that...low prices! When enough guys go broke the supply dwindles and the price goes up. If you can outlast the rest you will reap the rewards. My old grandfathers quote on low prices "You have to own them when they aren't worth anything if you want ring the bell when they are worth a fortune".
In Canada we have a much better tax system in regards to inheritance taxes. We also have a capital gains excemption of $750,000 per farmer. I will be able to give my son all that I own without paying any taxes. You need to plan ahead though and start the transfer before you are dead or senile! I see many farmers who don't know when it is time to start giving up control and ownership and let the younger generation have their turn! My son just turned 30 and basically he makes all the decisions...with a little advice from old Dad! But then I taught him to think like me so we don't have too many disagreements! I had to get him straightened out a bit after he came home from university with a bachelor of Commerce degree. I don't think some of those professors had a real clue about how business works!
I guess a person could make a lot of money by getting into direct marketing of beef? My only thought on that is do you want to be a rancher or a packer? Might make more sense to just be a packer and forget the cows...buy someone elses cattle for the cheap prices?
On the cost of land: Cows will never pay for the land. However land usually appreciates over the long term? Don't know if it offsets the interest or not? You should not include land costs in whether that cow is making money. Land is a seperate investment.
The low cost producer will generally outlast the high cost producer. The best cure for low prices is just that...low prices! When enough guys go broke the supply dwindles and the price goes up. If you can outlast the rest you will reap the rewards. My old grandfathers quote on low prices "You have to own them when they aren't worth anything if you want ring the bell when they are worth a fortune".
bigbull338
Well-known member
i dont reckon it cost me anything to inherit my share of the farm 18yrs ago.
Good thread going here...
It can be done. My sister and her husband bought 100 acres 7 years ago, and bought some "heavies" along witha few that were given to them. They have paid for all their cattle now, and even have made their land payment. (100 acres did not cost them 3k, but only $300 per acre) The land wasnt that great, but had a pond on it, and they have cleared many many trees from it. They try hard to keep everything low cost as I do also with my operation. I do NOT fertilize my pastures.. never have, never will. You also have to know what capacity your land will carry. Do not overstock, and as CB says, never can have too much hay. Keep your vet costs as low as possible, and try to do everything you can on your own. (vaccinations, doctoring, etc) And keep all the "extra" costs down to a minimum or none at all. You dont need expensive tractors or new dually trucks. I bought a really great older (1997 Chevy) diesel dually 1 ton for 4K several years ago, and it is still doing the job for the big loads. Buy only used good tractors, there are plenty of old ones out there that are in great shape. Cows are pretty basic animals, and only need basic things. I know alot of folks on this board might not agree with me, but I only vaccinate my cattle twice in their life-time. Once at weaning, and then once again for a follow-up; and my herd is very healthy.
Now, can I make a living off of my cattle operation? NO. I have had to have a main job while working my cattle.
Can I retire and live off of my cattle profits? I doubt it, unless I increased my herd size. (which I am slowly doing)
It can be done. My sister and her husband bought 100 acres 7 years ago, and bought some "heavies" along witha few that were given to them. They have paid for all their cattle now, and even have made their land payment. (100 acres did not cost them 3k, but only $300 per acre) The land wasnt that great, but had a pond on it, and they have cleared many many trees from it. They try hard to keep everything low cost as I do also with my operation. I do NOT fertilize my pastures.. never have, never will. You also have to know what capacity your land will carry. Do not overstock, and as CB says, never can have too much hay. Keep your vet costs as low as possible, and try to do everything you can on your own. (vaccinations, doctoring, etc) And keep all the "extra" costs down to a minimum or none at all. You dont need expensive tractors or new dually trucks. I bought a really great older (1997 Chevy) diesel dually 1 ton for 4K several years ago, and it is still doing the job for the big loads. Buy only used good tractors, there are plenty of old ones out there that are in great shape. Cows are pretty basic animals, and only need basic things. I know alot of folks on this board might not agree with me, but I only vaccinate my cattle twice in their life-time. Once at weaning, and then once again for a follow-up; and my herd is very healthy.
Now, can I make a living off of my cattle operation? NO. I have had to have a main job while working my cattle.
Can I retire and live off of my cattle profits? I doubt it, unless I increased my herd size. (which I am slowly doing)
