Law of Diminishing returns

[Logan52]

I was only a full time farmer for about ten years. Without immediate family involved in farming and owing for the price of the farm and equipment, it became clear that if I was going to be able to marry and raise a family, I needed a job with steady income and a pension plan of some type. I let the job pay for my living and the farm pay for itself.
With over 50 years of experience of trying to make money on the farm, I have found the law of diminishing returns has proved true over and over. Short on time and help, I found that cutting back often made me more clear money than pressing the land towards its limit. I often found that methods developed for the full time farmer were not suited to my situation and created more work and less profit.
I am impressed by the operations of many here on this board. The large scale of their operations, their knowledge and will to work are to be commended. I am thankful I found a niche that worked for me, perhaps it could for others.

 

[Brute 23]

I found the same to be true on the cattle side. The sweet spot was to actually cut back. The little amount of extra juice did not justify squeezing harder. It just brought my return per juice down.

 

[Travlr]

I found the same to be true on the cattle side. The sweet spot was to actually cut back. The little amount of extra juice did not justify squeezing harder. It just brought my cost per juice down.

It seems like there is a tough spot to climb over between being a single, self employed cattleman... and being big enough to afford help. Once you have enough profitable cattle and all they take in terms of infrastructure to support a hired hand it may get easier. But that's a hard hill to climb.

 

[daneg]

The trick to being profitable in cattle is minimizing debt, usually that takes several years to accomplish the second generation and onward can be comfortable if they are careful.

 

[1982vett]

I was only a full time farmer for about ten years. Without immediate family involved in farming and owing for the price of the farm and equipment, it became clear that if I was going to be able to marry and raise a family, I needed a job with steady income and a pension plan of some type. I let the job pay for my living and the farm pay for itself.
With over 50 years of experience of trying to make money on the farm, I have found the law of diminishing returns has proved true over and over. Short on time and help, I found that cutting back often made me more clear money than pressing the land towards its limit. I often found that methods developed for the full time farmer were not suited to my situation and created more work and less profit.
I am impressed by the operations of many here on this board. The large scale of their operations, their knowledge and will to work are to be commended. I am thankful I found a niche that worked for me, perhaps it could for others.

Absolutely! Agribusiness men need you to squeeze blood out of turnips. If you try, theywill likely make more than you.

 

[Brute 23]

It seems like there is a tough spot to climb over between being a single, self employed cattleman... and being big enough to afford help. Once you have enough profitable cattle and all they take in terms of infrastructure to support a hired hand it may get easier. But that's a hard hill to climb.

That's in every business. You can stretch yourself pretty thin trying to grow to that point. The same thing happens when you feel like you have to take on more, in case you loose a piece of what you have.

 

[1982vett]

I found the same to be true on the cattle side. The sweet spot was to actually cut back. The little amount of extra juice did not justify squeezing harder. It just brought my cost per juice down.

Yeah….same here. Generations before me survived off what they could produce on a couple hundred acres. Dad did it for about 50 years before the tide turned on him. Lucky for him mailbox money showed up about that time. Never came close for me.

 

[Brute 23]

Yeah….same here. Generations before me survived off what they could produce on a couple hundred acres. Dad did it for about 50 years before the tide turned on him. Lucky for him mailbox money showed up about that time. Never came close for me.

My brother and I are discussing this now as things are transitioning to us. How do we maintain what we have. Our grandparents may have lived off it, our parents maintained the properties and had a little cream to skim off here and there. It's not looking good for us unless some thing changes. To be continued....

 

[Lucky]

It's a tough deal to keep improving and make it worth doing at the same time for sure. We always try to improve a little and move forward. Not saying we spend a ton of money but do improve. I've found the key is to spend money on things with return first. Haybarns, feed storage, feed troughs, corrals, and fencing definitely show a return. Tractors, fancy equipment, trailers, entrances, and roads not so much. I'm not sure what the answer is but it's definitely not to do nothing. Our big delima now is pasture grass improvement......will seeding and fertilizer pay for itself in a grazing herd is like asking if it'll rain next summer.

 

[Logan52]

This farm, along with church and family, has been the love of my life. First slowly, then all at once it became harder to do all the hard physical work required to keep it going.
With it paid for, I have cut back production and seem to make about the same clear profit I did when I worked it harder.
My grandsons are still too young to take part, but seem to love time spent here.
My plan for now is to try and still keep it looking nice and have enough stock to keep it grazed down. I am not looking at making any more major expenditures than what is absolutely required.
Who knows about the future?

 

[hillbilly beef man]

Sadly overall in agriculture i believe we have become a victim of our own success. My grandfather started building this farm after WW2. He worked a plant job and paid for 3 farms with 40 cows and 7 acres of burley tobacco. Until we got a round baler in 1994 very little had changed on the farm since the beginning in how things were done since the 1940s. We wintered cows on square bales and corn silage that was loaded and fed by hand with a fork. It took 4 of us working every day, and many hired hands working during hay and tobacco season. Feeding in the winter would take about 6 hours every day.

Now my wife and I run the same number of cows and put up the same acres of hay as grandpa did. Thanks to advancements in equipment we do this with no help other than each other. In terms of man hours we probably do not spend a 10th of what grandpa did to take care of 40 cows. Me and her will put more hay in a barn by ourselves with round bales, loader tractors, and trailers than grandpa did with square bales, a crew of 4 men, and pickups. As a kid it took us 6 hours a day to feed, now i put out enough hay to last a week in 4 hours. We wintered 20 steers in a barn and it would take 4 of us a week to clean it out with pitchforks. Now it takes me a day by myself with a rented skid steer. If you account for inflation I am probably not even making half per head as grandpa did. Given what you make per head and the increase in land cost today I could not pay for one of those farms, much less three.

It seems in agriculture the more acres or head that a person can take care of as technology advances the less per acre or head we make. In the 40s and 50s there were plenty of people who made a good living off of a couple hundred acres of cropland or a 40 head dairy. Now 10 times those numbers are needed to make a living.

 

[greybeard]

Absolutely! Agribusiness men need you to squeeze blood out of turnips. If you try, theywill likely make more than you.

That's in every business.

If you think that is bad in Agribusiness, you probably already also know the oil patch will chew ya up and spit you out if ya let em.

Remember Boys, you ain't a Texan till you've lost your rearend in cows or 'awl'. You ain't a Real Texan till you've done it in both.
I accomplished the first before I was 18. (damn registed Black Angus and bred (to what?)) registered polled hereford heifers)
It would be another 25 years before I reached the zenith of heartbreak. When this one folded, it broke my heart, my bank account and almost my spirit...



I, like most others tho , survived ..

 

[1982vett]

My brother and I are discussing this now as things are transitioning to us. How do we maintain what we have. Our grandparents may have lived off it, our parents maintained the properties and had a little cream to skim off here and there. It's not looking good for us unless some thing changes. To be continued....

Upside for us is we have the opportunity to cash out.... to those that "farm" asphalt and concrete.

 

[1982vett]

If it weren't for those, I'd still have to be pounding nails. While they didn't get us filthy rich like some around here, I did manage to parlay that mailbox money into "early retirement". Now those Austin Chalk wells were some good wells in their day and some 23 - 40 years later still trudging along. Still hoping to see the Eagleford Shale pay out on something like a .01828752 but not complaining at all about the .00027099 and the .00004456 from the wells we have gotten.

 

[Warren Allison]

A lot of family farms can trace back to pre-WWI, some even longer. This was back when you got to keep all the money you made. This was before federal income tax, Medicare, Social Security, government housing, food stamps, Affordable Care Act (referred to as Obamacare) and Lifeline (referred to as Obama phones), "free" school lunches for ALL children, "free" daycare and the 100's of other federal programs....including farm subsidies and grants... that are in violation of our Constitution.

Even when I was little, there were families in which the man worked a menial job...... grocery stores, hardware clerk, carpenter's laborers, and textile mill hands....and the mother stayed home and raised the kids. Most all families were single-wage-earner families. Yet these people owned houses, and cars, neither of which were financed. People " saved up" to buy things they needed, or wanted. Nowadays people struggle with two incomes to make ends meet. The price of all of these government programs has created a tax burden, that a middle-class couple can not withstand. At 66 yrs old, I will probably see the end of the family farm or ranch in my lifetime.

No way has anyone in any kind of cattle business, ever made more net profit than we did with the Kudzu Corriente operation. There was NO work (except one-day of banding and tagging and one day of sorting and hauling to the sale) NO inputs other than a few bags of mineral salt a year. This year if we had not sold out, the 120 calves would have brought us north of $90k. Even if we were young and healthy enough to take that 120-cow herd to a 1200-cow herd, we would not be able to afford the land to do it.

We bought those 230 acres in 1979 for $11,000. Today that much land would cost about $5.75 mil., and we'd probably need 400 more acres, so about $11.5 mil to buy the land, and then you got to fence it. And clear it and the original 230 acres, and sow it, and fertilize, etc. You couldn't run 1200 British or Continental cows on 600 acres, more like 600 head. You would need at least 30 of that 630 acres for hay, and you'd have to irrigate and fertilize to specs at each cutting. Those calves may bring $1k instead of $750 each, but still, at a $600,000 calf crop every year, it would take 20 years to pay for the land, not counting the fencing, etc.

To run a conventional cow-calf operation, with British or Continental cows, where the cows would cost 4 times more, and with the cost of worming and vaccines, and with the cost of hay and feed...there is no way a person other than a billionaire could get in that business today. If Scott and I were 20 years old instead of nearly 70, we would have to work it full time, and not have an outside job. To start a farm from scratch these days, you gonna have to make your millions in another business and raise cows for a tax shelter.

It would be hard for Scott and me to get back in it now, with Corriente selling for 3 times as much, or more than they were even last year. That would still be the most profitable way to go, But we'd be selling a calf for what his momma cost now, instead of 2-3 times what she cost in years past.

 

[Dave]

It has been said the 2 fastest ways to go broke are. Forgetting what Grandpa learned. And doing things the way Grandpa did. I figured that hauling a few at a time to the local sale barn is probably another way to go broke.

Back nearly 20 years ago when I first got on CT Dun was talking about how people he was involved with put together a group. They brought their calves together at a specific location. They all used the same agreed on vaccination program. Calves were weaned, sorted into load lot groups and sold directly to feedlots.

I have a son in law who use to rep for Superior. Again a group of smaller ranches sold their calves together on the video. The calves needed to be similar size and breeding with the same vaccination program. They were weighed in the trailer at a grain elevator. Unloaded in a pen and the empty trailer weighed to get the calf weight. He would end up writing 6 or 8 checks for each semi load of calves.

Both of they methods would take neighbors cooperating. But both are proven and would make the smaller operators more money than trucking them to the local sale yard.

 

[BFE]

View attachment 33093If it weren't for those, I'd still have to be pounding nails. While they didn't get us filthy rich like some around here, I did manage to parlay that mailbox money into "early retirement". Now those Austin Chalk wells were some good wells in their day and some 23 - 40 years later still trudging along. Still hoping to see the Eagleford Shale pay out on something like a .01828752 but not complaining at all about the .00027099 and the .00004456 from the wells we have gotten.

A little oil well probably saved my dad from bankruptcy in 1983. It was mostly played out in 2-3 years and finally pulled around 20 years later.

Oil has made some wealthy folks around here, maybe not JR Ewing rich but rich enough. It also cost some everything.

 

[farmerjan]

We have a group here that got together to do just that same thing @Dave . They have a protocol for the vacs, and if you have 1 or 20, each gets put into the weight range with others of like size, and you can benefit from the "group price"... we have participated a couple times but find that the vac protocols do not always work for us, and we put together groups now by buying singles and odd sized bulls and working them and then putting together our own groups. But the principle is the same... get groups together to sell of similar sizes, weights, types.. and they just usually sell better..
With the high prices now, even bulls are selling really good if they are good ones, but some of the less than "top notch" ones will benefit from getting castrated, wormed, and fed and grouped until we have what we want to sell...

 

[Mountaintown Creek Ranch]

A little oil well probably saved my dad from bankruptcy in 1983. It was mostly played out in 2-3 years and finally pulled around 20 years later.

Oil has made some wealthy folks around here, maybe not JR Ewing rich but rich enough. It also cost some everything.

My father was a roughneck for Dresser Atlas drilled a bunch of wells in that area in the 60's.

 

[Logan52]

Graded sales would seem to be a way for the smaller operator to get the advantage of larger uniform groups of calves. They just never took off here and it always seemed my calves were hurt by the quality of the calves penned in with them. ( or at least I thought so)
Our best option for selling lambs is a state supported graded sale. I usually sell a couple of loads each summer, nice quality black-face wool lambs. They rarely go into the graded lots but sell as a pen of their own and listed as (one man's lambs). The yards manager has found they tend to sell better this way.
There are no easy or simple answers to this question.