If You Want to be a Cowboy Get a Job

[rocfarm]

But you forgot to add to it the money you DIDN'T get by NOT selling her at weaning. And, you said it doesn't make sense to pay $1500 for a replacement, Well, actually the cost would be $1500 minus what you could have sold the heifer for.

Great point. And there are reasons to buy replacements, especially if one is trying to upgrade genetics or manage a small herd properly.

But, as far as the above scenario, add back transport, auction fees (mine were 4.4% total last sale), and the lack of knowing the heifer's development, and the extra shots and care/labor you'd have to give to the unknown heifer to make her safer for import, then the cost is still a bit above that. And I calculated the above price to include grass up to selling a calf a day 205 after calving at 24 months. So, if a producer paid 1500 for a 650 weight heifer, the cost to selling the first calf would not be 1500. It would be closer to as follows:

Heifer cost: $1500
Tub: $ 30
Mineral: $ 21.50
Grazing: $ 427.50
Breeding: $ 50
Shot: $ 2

So $2031 to get to the sale of the first calf. If I could sell my heifer for 1500 net, then it could be the same or even cheaper to buy. But really, the producer is just exchanging like for like. If one comes out ahead, there, then it's because of savvy trading.

I think the caveat here is that if a small producer likes his heifer and his breeding side is stable, then it makes more sense to keep back and simply pay himself for the grass and peace of mind.

I think a big part of it also is knowing what the health situation of the mother and the feed background of the heifer. If the one you buy is coming out of a feedlot/creep feed/uncared for cow situation, it can make a difference.

I'm pretty sure I'm missing a point about cash flow here, though. Haven't had time to play with that side of the equation.

 

[rocfarm]

@Warren Allison I found the answer to the cash flow issue! Check it out in pic. Not sure it helps a guy with a small herd, except that it tends to indicate that I should raise my own if I don't need the cash flow or improved genetics if I'm shooting for profitability.

 

[Dave]

If I wanted to buy replacements, I'd buy 300 weights and still pay myself for the grass.

If I were buying replacement either to keep or raise to sell I darn sure wouldn't buy a 300 pound heifer. Here that is one of about two things. A dink that didn't grow. Not the genetic I want to breed. Or she is a late calf. Born late because her mother didn't breed on time. Again I want the most fertile genetics not those who raise late calves.
When I did buy and breed heifers to sell. I bought the best heifers I could find weighing 750 pounds in March. Figured on breeding them May 1. You should figure on breeding heifers at 2/3 of their mature weight. Thus breeding at 800 pound makes for a 1,200 pound cow. Certainly not an exact science but ball park close. Buying in March means very little winter feed. Also a heifer that size that time of year the grazers don't want her because she is too big. Going to the feedlot she will be fed through the hottest time of the year and be finished at what is traditionally the lowest market of the year. So the price is generally good.
Buying that 300 pound dink is going to take close to a year to get her to breeding size. That needed 500 pound divided by 356 days is 1.36 pound per day. Time is money.

 

[rocfarm]

If I were buying replacement either to keep or raise to sell I darn sure wouldn't buy a 300 pound heifer. Here that is one of about two things. A dink that didn't grow. Not the genetic I want to breed. Or she is a late calf. Born late because her mother didn't breed on time. Again I want the most fertile genetics not those who raise late calves.
When I did buy and breed heifers to sell. I bought the best heifers I could find weighing 750 pounds in March. Figured on breeding them May 1. You should figure on breeding heifers at 2/3 of their mature weight. Thus breeding at 800 pound makes for a 1,200 pound cow. Certainly not an exact science but ball park close. Buying in March means very little winter feed. Also a heifer that size that time of year the grazers don't want her because she is too big. Going to the feedlot she will be fed through the hottest time of the year and be finished at what is traditionally the lowest market of the year. So the price is generally good.
Buying that 300 pound dink is going to take close to a year to get her to breeding size. That needed 500 pound divided by 356 days is 1.36 pound per day. Time is money.

Can understand this logic, but it seems to me that, if I learn how to look at cattle, there are opportunities here. And I am a fall calving herd, not spring. It's working so far.

But the last time I went to auction in central Texas in July I saw a guy selling his herd of Herefords in July. The cows weighed about 1100 to 1200. They split the 300 weights off of them. They sold for between 750 and 900, and looked to have potential.

Buy three of those, plan on getting two bred by the next fall a month ahead of my cowherd, and selling the other at about 750#—it could work out. And the positive thing about this way is that it's not really costing more grass in a wet year like this year, anyway. My cows can't keep up, and winter stockpile is basically already in this year.

I don't really have feed costs, except for a cooked tub every now and then, salt, and mineral. I'm just paying myself for the grass.

As far as buying those heifers at 750#, if calf prices drop 20% or more in the next few years, those prices get real iffy on making a profit. Even more so for bred heifers. Watched the San Angelo auction this week. Gets real hard to make those heifer prices pay if the price drops. Like @Warren Allison said, if a producer is trading, things are different on the economics side. But I couldn't pull the trigger to get in on those prices.

Seems the principles are:

If prices are high, destock a bit and raise your own heifers and maybe stretch your older cows for another calf. If prices low, either keep more heifers or be willing to buy a few more, and preemptively cull some older cows, even if you think you might get another year out of them.

Try to have an operation that doesn't depend on consistent cash flow if possible. Ability to go long periods without realizing profit tends to help, it seems.

 

[Dave]

Can understand this logic, but it seems to me that, if I learn how to look at cattle, there are opportunities here. And I am a fall calving herd, not spring. It's working so far.

But the last time I went to auction in central Texas in July I saw a guy selling his herd of Herefords in July. The cows weighed about 1100 to 1200. They split the 300 weights off of them. They sold for between 750 and 900, and looked to have potential.

Buy three of those, plan on getting two bred by the next fall a month ahead of my cowherd, and selling the other at about 750#—it could work out. And the positive thing about this way is that it's not really costing more grass in a wet year like this year, anyway. My cows can't keep up, and winter stockpile is basically already in this year.

I don't really have feed costs, except for a cooked tub every now and then, salt, and mineral. I'm just paying myself for the grass.

As far as buying those heifers at 750#, if calf prices drop 20% or more in the next few years, those prices get real iffy on making a profit. Even more so for bred heifers. Watched the San Angelo auction this week. Gets real hard to make those heifer prices pay if the price drops. Like @Warren Allison said, if a producer is trading, things are different on the economics side. But I couldn't pull the trigger to get in on those prices.

Seems the principles are:

If prices are high, destock a bit and raise your own heifers and maybe stretch your older cows for another calf. If prices low, either keep more heifers or be willing to buy a few more, and preemptively cull some older cows, even if you think you might get another year out of them.

Try to have an operation that doesn't depend on consistent cash flow if possible. Ability to go long periods without realizing profit tends to help, it seems.

But buying a 300 weight calf you are still a year until you are breeding her. And you want fall calves which means breeding about December. No way that 3 weight calf bought in July is old enough or big enough to breed come December. So if you plan to use her for fall calves it will be a year and a half until you breed her. So a year and a half until you breed her, 9 months until she calves, and another 6 or 7 months until you sell that calf. You are out nearly 3 years. By then the market will have tanked.

 

[rocfarm]

But buying a 300 weight calf you are still a year until you are breeding her. And you want fall calves which means breeding about December. No way that 3 weight calf bought in July is old enough or big enough to breed come December. So if you plan to use her for fall calves it will be a year and a half until you breed her. So a year and a half until you breed her, 9 months until she calves, and another 6 or 7 months until you sell that calf. You are out nearly 3 years. By then the market will have tanked.

I can see how you are right about the timeline. I simply calculated total cost to selling first calf, and didn't consider selling 2 calves in the time it takes to sell one.

I was looking at it in terms of risking less money in this high market, so thanks for pointing out that hole in my thinking.

Hope the market doesn't tank, though.

 

[Dave]

I can see how you are right about the timeline. I simply calculated total cost to selling first calf, and didn't consider selling 2 calves in the time it takes to sell one.

I was looking at it in terms of risking less money in this high market, so thanks for pointing out that hole in my thinking.

Hope the market doesn't tank, though.

The market will tank. It is not a question of will it happen or not. The only questions are when will it happen and how far down will it fall.

 

[SDgrampa]

The market will fall when two college educated economists tell use it sure can't go lower

 

[SDgrampa]

The market will fall when two college educated economists tell use it sure can't go lower

 

[kenny thomas]

The market is already way down on some calves. Fat, short, off color, thin, horns, spots from pinkeye are already going down pretty bad. I got 2 weaned black steers yesterday weighed 423 and cost 1.61. They needed wormed and grass to eat. That type calf is way off on price. Even the best calves are cheaper.

 

[kenny thomas]

And its not even October yet.

 

[rocfarm]

Hopefully it won't be as bad as last time. Found this video by Kenny Burdine in Kentucky on the YouTube channel KY Forages over the weekend. He seems to know his stuff.

 

[Dave]

I don't have an hour to listen to some college professor so I looked up his resume. The vast majority was about when he went to college and the degrees he received. The only mention of cattle is where it says he was raised on a tobacco farm where they also had cattle and sheep. Would want to know how many cattle has he actually owned and how long he has been in the business. I find the advise from someone who has actually had skin in the game much more valuable than someone whose knowledge all comes from books.
At a seminar one time I listened to a retired extension agent from Minnesota who had a PHd. He said after he retired he went back to look up the farmers who had followed his advise. To his surprise every single one who did what he told them to do went bankrupt. A learning lesson for me.

 

[Warren Allison]

I find the advise from someone who has actually had skin in the game much more valuable than someone whose knowledge all comes from books.

Dunno what the Schools of Agriculture at colleges up there are like, but down here as well as other SEC colleges, Ag majors in the beef cattle concentration, will handle AI-ing, IVF, vaccinating, calving, feeding...whatever......more cattle in that 4-5 years than most anyone on here does in a lifetime! Probably 20% or less of your time is spent in lectures/class rooms.

 

[rocfarm]

I don't have an hour to listen to some college professor so I looked up his resume. The vast majority was about when he went to college and the degrees he received. The only mention of cattle is where it says he was raised on a tobacco farm where they also had cattle and sheep. Would want to know how many cattle has he actually owned and how long he has been in the business. I find the advise from someone who has actually had skin in the game much more valuable than someone whose knowledge all comes from books.
At a seminar one time I listened to a retired extension agent from Minnesota who had a PHd. He said after he retired he went back to look up the farmers who had followed his advise. To his surprise every single one who did what he told them to do went bankrupt. A learning lesson for me.

Around 46 minutes in the video he talks about his own operation. He's making money.

 

[Brute 23]

The real value in retaining heifers is not in those numbers. You have to do them to keep you costs in check but ultimately, it's going to be about a wash.

The good and the bad to retaining heifers is you are going to magnify your herd, and ultimatly your abilities.

If you have easy keeping, big calf growing, breed back in 30 days, good natured cows... you can build a low input, money making herd.

On the other hand, it can also magnify a producers delusions. If you have have feet issues, bag issues, cows that keep falling back when breeding, etc... you will look up in 5 or 10 years and have a mess.

There is a huge difference between selling a calf and building a herd.

 

[Brute 23]

On the cash flow discussion, split the business. Have one account write a check to the other to purchase the heifersat weaning. Then let that one feed them, rent land, etc to raise them. Have at a target price and time sell them back to the other account.

It's a great operation to let kids handle under your guidance. They can feed them and settle them in while getting paid labor. For us, it also helps make sure the cattle are exposed to kids early on.

The other thing to keep in mind is it is only cash flow issue if you have a hole and then try to raise a heifer to fill it. Most of us are raising x amount (usually a range) every single year. Some if that is for loss, some age to move out the herd, and some is to cut off the bottom end of cows for what ever reason. It may be performance due to breeding up. After all that if there are still heifers left we may sell them and make money on them.

We don't wait for a cow to die, then go pick a heifer calf out, and then wait 3 years.

 

[rocfarm]

The real value in retaining heifers is not in those numbers. You have to do them to keep you costs in check but ultimately, it's going to be about a wash.

The good and the bad to retaining heifers is you are going to magnify your herd, and ultimatly your abilities.

If you have easy keeping, big calf growing, breed back in 30 days, good natured cows... you can build a low input, money making herd.

On the other hand, it can also magnify a producers delusions. If you have have feet issues, bag issues, cows that keep falling back when breeding, etc... you will look up in 5 or 10 years and have a mess.

There is a huge difference between selling a calf and building a herd.

Some day I'll have that herd in miniature, hopefully. Want to do the cash flow thing with my grandkids some day.

 

[rf744]

My favorite book on the cattle business is If You Want to be a Cowboy get a Job by Stan Parsons. The book is long out of print and unavailable. It is well worth reading so every few days I am going to share an essay from the book.

Hi. Please keep the chapters coming. Thank you.

 

[StrojanHerefords]