make money
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I am trying to figure that out for myself and I have been in the business for about 3 years. I am telling you I have worked extremely hard installing fences, hauling and working cattle, buying feed as cost effectively as I can, and let's not forget maintaining pastures. If I pencil everything in it is defiantly a loss even with the prices being up. I have about 50+ head now with about 16 heifers coming into production next year, but all I can say is that it is a hard business to make money in and I guarantee you that most people who hold a normal job never think about putting the sweat into a cattle farm like you have to when developing one.
Let me give you a prime example of my income this past year…. I grossed 16,500 dollars this past year. As I said earlier I held back 16 heifers so my income could have been a bit higher. Now I got to get through the winter feeding 70 head of cattle. In addition to that I we have had a drought so I have to buy most of my hay. Lets say I can buy my hay at 45 dollars…. And it may take 4 bales per head to get through the winter so that is 12,600 dollars right there. Now they also need some added protein like corn gluten and soy hull pellets. Add another 4,000 by the time I get to march when my clover I planted (1,670 in seed cost alone) grows enough for them to graze. Now discount my time, and my tractors, medicine, and it is a break even proposition even with the increase in prices. I don't see how people are fed beef the way the business model is set up. And don't get me started on your land costs because they are not included.
Let me give you a prime example of my income this past year…. I grossed 16,500 dollars this past year. As I said earlier I held back 16 heifers so my income could have been a bit higher. Now I got to get through the winter feeding 70 head of cattle. In addition to that I we have had a drought so I have to buy most of my hay. Lets say I can buy my hay at 45 dollars…. And it may take 4 bales per head to get through the winter so that is 12,600 dollars right there. Now they also need some added protein like corn gluten and soy hull pellets. Add another 4,000 by the time I get to march when my clover I planted (1,670 in seed cost alone) grows enough for them to graze. Now discount my time, and my tractors, medicine, and it is a break even proposition even with the increase in prices. I don't see how people are fed beef the way the business model is set up. And don't get me started on your land costs because they are not included.
Its easy to make money... the hard part is spending less than you made. ;-)
dcara
Well-known member
A significant expense for me this year has been equipment maintenance. Which is probably going to increase even more since I want to get a second tractor. Every winter I get more concerned about an equipment failure that would prevent me from feeding hay.
I have thought about setting up 2 additional feeding areas/paddocks, each preloaded with a weeks worth of hay that I could open up one at a time during an equipment breakdown so that I could have up to a couple weeks to get the equipment repaired without impacting feeding.
I have thought about setting up 2 additional feeding areas/paddocks, each preloaded with a weeks worth of hay that I could open up one at a time during an equipment breakdown so that I could have up to a couple weeks to get the equipment repaired without impacting feeding.
It goes with the territory. It is hard to afford decent equipment on such a shoe string budget. On cold days I have to change out my battery to fire up my old tractor to feed out in the winter. I am sure there are ways to make money in the cattle business. Perhaps the stocker operation has better margins, but the cow calf operator is at the bottom the food chain. A guy working at McDonalds makes more than me in my cattle operation, and I run a really tight ship.
Goodlife
Well-known member
Why do you think there is such a disconnect in the expense of a cattle operation and the wholesale price of beef cattle? Barely squeeking by is a life long tale of a rancher. My grandfather operated under the same tiny (and sometimes negative) margins we are under today. It seems to me it must have something to do with the Chicago Exchange setting future prices. When Ford needs to raise their costs they raise the price of the end product. How do we realize this sort of control over the result of our production? Simply put, cattle futures need to be higher and the price of a steak at the store needs to go up a little as a result.
Farmerjon
Well-known member
I only have 10 cows, so am no means a large herd. But, I found selling the calves as calves provided me the least money in my pocket. I have spent some time, blood, sweat and tears getting a freezer beef business going. Now I don't have to worry, my return customers are in line waiting (they pay $200.00 non refundable deposit each spring). People call about getting a freezer beef and are put on a waiting list. This has afforded me the highest profit margin but it does mean I have cows in one pasture, feeder calves in another pasture and right now I have weaned calves in the barn and an adjoining set of corrals. I haul to slaughter 11-11-11. I am charging this year $2.25 a pound hanging weight, customer pays their processing. I provide a history of their calf, birth, any shots and they can visit the farm but only a couple customers have with their children. I don't have a sow herd anymore, but do sell usually a minimum of 12 hogs per year also. Hogs this year were $1.90 a pound hanging weight customer paying processing.
dieselbeef
Well-known member
extremely slowly
Great thread and interesting conversation.
I too would like to know how to make a real living in the cattle business. Can one achieve a reasonable livelihood with 100 head? 150? 200?
I understand there are tons of variables but if the land and facilities (barns and fences) were already in the family and paid for as well as tractors and most of the necessary equipment how many head would need to be maintained to turn a respectable profit?
I too would like to know how to make a real living in the cattle business. Can one achieve a reasonable livelihood with 100 head? 150? 200?
I understand there are tons of variables but if the land and facilities (barns and fences) were already in the family and paid for as well as tractors and most of the necessary equipment how many head would need to be maintained to turn a respectable profit?
Crazy Farmgirl
Well-known member
Grandpa's favorite saying was "show me a rich farmer and I'll show ya a liar!"
bpwagner115
Well-known member
This is a very interesting post. I realize not all situations are the same and many sell calves as feeders but we always debate whether to sell calves in spring and sell grain or feed them out. We always feed. And sometimes I wonder why.
We calve out just over 100 head and finish them. Currently have 98 head in our yards ranging from 1100-1250lbs. Right now feeding somewhere around 2500 pounds of shelled corn per day. (via 5 gallon buckets. Ridiculous, I know) If average daily gain now is say....4lbs for a nice even number, these 98 cattle are putting on 392 lbs a day and we can contract this moment for 1.21/lb. Thats 475 dollars every day in gains.
2500lbs of corn is gonna get us near 42 buschel a day and somewhere near $275 every day in feed not including hay. Thats 200 dollars profit left to split between hay, machinery and fuel. Might be lucky to have $150 (That STILL needs to be taxed) left at the end of the day. Lots of factors not accounted for here obviously (DDG, MGA, feed supplements, death, etc.) but it's interesting to look at how small the margin for error really is.
Dad always jokes that if we put a pen and paper to them you're losing money on every head. Why keep doing it?!? Can the numbers lie?
We calve out just over 100 head and finish them. Currently have 98 head in our yards ranging from 1100-1250lbs. Right now feeding somewhere around 2500 pounds of shelled corn per day. (via 5 gallon buckets. Ridiculous, I know) If average daily gain now is say....4lbs for a nice even number, these 98 cattle are putting on 392 lbs a day and we can contract this moment for 1.21/lb. Thats 475 dollars every day in gains.
2500lbs of corn is gonna get us near 42 buschel a day and somewhere near $275 every day in feed not including hay. Thats 200 dollars profit left to split between hay, machinery and fuel. Might be lucky to have $150 (That STILL needs to be taxed) left at the end of the day. Lots of factors not accounted for here obviously (DDG, MGA, feed supplements, death, etc.) but it's interesting to look at how small the margin for error really is.
Dad always jokes that if we put a pen and paper to them you're losing money on every head. Why keep doing it?!? Can the numbers lie?
TennesseeTuxedo":2mo64jgk said:
You really have to define profit the same way the IRS does. What that means is if you start from nothing like I did and have to buy everything little by little it doesn't help you on your taxes to amount to anything.
Considering that you have most of the stuff already your way ahead but...making a living on 200 mama cows will be tough. Probably need health insurance :2cents:
dieselbeef
Well-known member
actually make enough profit to live of off..i dont hink not owning alot of stuff already..cows/land for ex..that you could make it oweing anyone anything
ive got only 20 hd and id be happy enough if they could support themselves..which theyre dam close right now but i dont count the house/land/tractors.
only the lease and the feed/meds/etc//they almost cant do it if they hafta buy fuel..or fencing...but i sell enough as pkg'd beef that its real close and they keep me greenbelted
ive got only 20 hd and id be happy enough if they could support themselves..which theyre dam close right now but i dont count the house/land/tractors.
only the lease and the feed/meds/etc//they almost cant do it if they hafta buy fuel..or fencing...but i sell enough as pkg'd beef that its real close and they keep me greenbelted
Goodlife
Well-known member
Gotta love it SirLoin!
It is hard to explain why anyone wants to do this, especially in a small operation like I am starting where making a profit requires alignment of all the stars combined with luck of the weather. And even then we're talking just enough profit to cover payments on an old used pickup. I suppose the answer is that raising cattle is the cost of living the country lifestyle.
Ed
It is hard to explain why anyone wants to do this, especially in a small operation like I am starting where making a profit requires alignment of all the stars combined with luck of the weather. And even then we're talking just enough profit to cover payments on an old used pickup. I suppose the answer is that raising cattle is the cost of living the country lifestyle.
Ed
dieselbeef
Well-known member
gotta have alot of em
hillbillycwo
Well-known member
Always been told a cattle man is only rich once in his life and that is when he is laid out at the funeral home!
OK I watched you'll kick this one around long enough.
Here is the answer to making money in the cattle business.
Do it the same way those who are successful in it do it.
One word! "INCORPORATE"!! Form an LLC.
You own everything, the LLC leases or rents everything from you.
The LLC will have a loss and it is carried over to your personal income, which should make your other taxable income tax free. If it doesn't, you need to raise the rent on the LLC.
Remember, everything you ever heard about benefits and golden parachutes for the big boys, can legally also be yours if you only incorporate.
Most people think of a corporation as being "taxed twice " but in reality it is really being "paid twice".
The key is that you must have other taxable income.
If you don't, then there is no need to incorporate except to avoid liability to protect your personal assets.
Think about it!!
SL
Here is the answer to making money in the cattle business.
Do it the same way those who are successful in it do it.
One word! "INCORPORATE"!! Form an LLC.
You own everything, the LLC leases or rents everything from you.
The LLC will have a loss and it is carried over to your personal income, which should make your other taxable income tax free. If it doesn't, you need to raise the rent on the LLC.
Remember, everything you ever heard about benefits and golden parachutes for the big boys, can legally also be yours if you only incorporate.
Most people think of a corporation as being "taxed twice " but in reality it is really being "paid twice".
The key is that you must have other taxable income.
If you don't, then there is no need to incorporate except to avoid liability to protect your personal assets.
Think about it!!
SL
I follow your logic there Sir Loin. Makes perfect sense.
The bottom line however, sounds like I'd better not quit my day job huh?
The bottom line however, sounds like I'd better not quit my day job huh?
Re:
The last I read the average commercial herdsman makes $40 per head off his calves.
So if you want to live on $30,000 per year, at that rate, you will need to produce 750 calves per year. So you will need to run 750 plus cows per year.
Can you do that?
SL
You tell me!
The last I read the average commercial herdsman makes $40 per head off his calves.
So if you want to live on $30,000 per year, at that rate, you will need to produce 750 calves per year. So you will need to run 750 plus cows per year.
Can you do that?
SL
