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How in the world can you make money in this market?
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<blockquote data-quote="Alberta farmer" data-source="post: 616663" data-attributes="member: 8978"><p>The fact is there is not much money in cattle right now. If you take all your expenses, the fact is the payday is pretty slim?</p><p>If you own everything and have no interest costs you can figure on a profit...but I would suggest even this is false economics?</p><p>For example if you didn't own that $1000 cow what could you get for a return on your money? I have a few bank bonds that are paying 9.5% right now...so that cow is costing me $95 a year in lost opportunity. If I keep that bond at the end of ten years I get my $1000 back. If I keep that $1000 heifer 10 years I might get $700 back? So she depreciates in value $30/year.</p><p>What other opportunity costs do I have. If I am spending 20 hrs. a year taking care of a cow and could be earning $25/hr. instead, then she has cost me $500 in lost opportunity expense! Now if I'm just laying on the couch, that would not apply!</p><p>If you own your own pastures/hayfields etc. what could you rent them out for? This should be included as an expense as it is easier to rent it out and laze about!</p><p>People raise cattle for many reasons. Making a lot of money on them isn't really one of them?</p><p>How much money does a family need to live a fairly good life? Especially a young family. Do you really want to live below the poverty line for twenty/thirty years?</p><p>Now I like cattle but was never too keen in always having the wolf at the door. I realized at a very young age that cattle, or farming in general, just wasn't going to cut it. I found a business I was interested in, worked for several years for someone else in that type of business, and started out on my own. First doing contract work for previous employer as I aquired machinery and capital. Eventually it became a very good little business. I did not grow it beyond what I wanted to do and it lets me indulge in my "agricultural hobby". I do not have any "employees" but do sub contract three other people at $25/hour each. Get away from all the government BS this way.</p><p>Borrowing money is like any other expense. It has to make you money...or don't do it!</p><p>How much real profit do you make on a cow after all expenses(including opportunity expenses) are taken off? I would suggest at $500 a calf you are probably losing money depending on how you figure your expenses? But say you think you are making $100 profit per cow. You would need 520 cows to come up to the national family standard for income of $52,000! Some have wrote on here that they can feed a cow on 3 acres of land per year at a price of $3000/acre. That would be 1560 acres for 520 cows. 1560 acres of land at 3K is going to cost you $4,680,000! To make $52,000? If you had the $5 million plus(cows and land) wouldn't it be easier to just be lazy and invest the money? Even at 1% return you would still make the same amount of money...and not do anything! You might even find some easy job for $10/hr. and make another $20K or so.</p><p>When you are young and full of oats it is exciting to go for a dream and that is a good thing. No one knows the future but it is always good to use your head and think things through and realize what the costs/rewards are likely to be? Work hard, be thrifty, and try to have common sense and you will probably make it. Just my opinion.</p></blockquote><p></p>
[QUOTE="Alberta farmer, post: 616663, member: 8978"] The fact is there is not much money in cattle right now. If you take all your expenses, the fact is the payday is pretty slim? If you own everything and have no interest costs you can figure on a profit...but I would suggest even this is false economics? For example if you didn't own that $1000 cow what could you get for a return on your money? I have a few bank bonds that are paying 9.5% right now...so that cow is costing me $95 a year in lost opportunity. If I keep that bond at the end of ten years I get my $1000 back. If I keep that $1000 heifer 10 years I might get $700 back? So she depreciates in value $30/year. What other opportunity costs do I have. If I am spending 20 hrs. a year taking care of a cow and could be earning $25/hr. instead, then she has cost me $500 in lost opportunity expense! Now if I'm just laying on the couch, that would not apply! If you own your own pastures/hayfields etc. what could you rent them out for? This should be included as an expense as it is easier to rent it out and laze about! People raise cattle for many reasons. Making a lot of money on them isn't really one of them? How much money does a family need to live a fairly good life? Especially a young family. Do you really want to live below the poverty line for twenty/thirty years? Now I like cattle but was never too keen in always having the wolf at the door. I realized at a very young age that cattle, or farming in general, just wasn't going to cut it. I found a business I was interested in, worked for several years for someone else in that type of business, and started out on my own. First doing contract work for previous employer as I aquired machinery and capital. Eventually it became a very good little business. I did not grow it beyond what I wanted to do and it lets me indulge in my "agricultural hobby". I do not have any "employees" but do sub contract three other people at $25/hour each. Get away from all the government BS this way. Borrowing money is like any other expense. It has to make you money...or don't do it! How much real profit do you make on a cow after all expenses(including opportunity expenses) are taken off? I would suggest at $500 a calf you are probably losing money depending on how you figure your expenses? But say you think you are making $100 profit per cow. You would need 520 cows to come up to the national family standard for income of $52,000! Some have wrote on here that they can feed a cow on 3 acres of land per year at a price of $3000/acre. That would be 1560 acres for 520 cows. 1560 acres of land at 3K is going to cost you $4,680,000! To make $52,000? If you had the $5 million plus(cows and land) wouldn't it be easier to just be lazy and invest the money? Even at 1% return you would still make the same amount of money...and not do anything! You might even find some easy job for $10/hr. and make another $20K or so. When you are young and full of oats it is exciting to go for a dream and that is a good thing. No one knows the future but it is always good to use your head and think things through and realize what the costs/rewards are likely to be? Work hard, be thrifty, and try to have common sense and you will probably make it. Just my opinion. [/QUOTE]
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