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How in the world can you make money in this market?
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<blockquote data-quote="ddg1263" data-source="post: 615974" data-attributes="member: 8445"><p>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. </p><p>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.</p></blockquote><p></p>
[QUOTE="ddg1263, post: 615974, member: 8445"] 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. [/QUOTE]
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