Making money on cattle

[memanpa]

does greenhorn remind you of any one?????????
does me!!!!

 

[Angus Guy]

The thing on most newcomers and some oldtimers in this business forget to add to their expense sheet is what they need to live on (food, car payment, telephone, electricity, ect). This is what makes or breaks most start-ups.

 

[Crowderfarms]

Part of this "Dream" some folks have is, they visit a Sale Barn and see what cattle are bringing, and think they too, can get in on the ground floor and start making money. They have no clue about what it took in the way of Labor, Time, Equipment and sometimes, heartache to get those Cattle up to selling size.A man told me at a sale the other day, that if he had 100 Brood Cows, he'd put 50 Grand a year in his pocket. I asked him how he figured that much, he just looked at me like I was dumb.I'm Still waiting on an answer. Son, this aint no get rich quick scheme.

 

[memanpa]

angus
you forgot those 25 mile trips to the little corner market that charges $1.35 for a loaf of bread that good planning would have cost you $.85 at the grocery store in town!!

used to happen here a lot!!!! changed shopping habits

 

[Caustic Burno]

Reality is if we did everthing that the studies show, feed companys recommend, medical practices recommended, bought all the new gadgets, called a vet at ever sniffle, planted all the "best" grasses, fertilized to the max, paid top dollar for a herd, and tried everthing new that came out we would have to pay more than we make off cattle. Thats why we are hard pressed to jump on any new bandwagon. We know what works best on our perticular operation. Yea, several of us beat the average $100 dollar profit on each calf but a lot of people make less. Them thar ar tha cold hard facts.

As always my eloquent friend from the great state of Alabama has said better than I could.

 

[plbcattle]

here we go again. i am going to try to spell this out as simple as i can for some.
if you buy land,100 head of cattle,tractor,truck,equipment. you go throughout the year paying the note and putting a little back for yourself. you sell your weaned calves as most cow men do. you think at the end of the year that boy I didn't make much moneyBUT here's what most people don't take into consideration:
you land,cattle appreciate in value
your equipment depreciates
you write off the loss on the equipment, which saves money you have to give to uncle sam.
in the meantime your cattle should be on there 2nd calf by now and you note which contains all your land,cattle equipment has been paid down some. in time your cows,truck,tractor,equipment has been paid for.
if you took those paid for cows,trucks,equipment and sold it by the time it is paid for with the way land has appreciated you sell it for more than you paid for it.
I look at a cow as an investment, where else can your investment make it's complete worth every year. by this I mean you pay $1000 for a bred heifer, you sell her weaned calf every year for $600-$750.(minus your per head expense) where else can you do that. I don't want to hear the argument that gas is over 2.00 per gallon and fertilizer is more expensive. cattle prices are at an all time high and far offset these higher operating cost.
I sell my bulls for $2000-$4000
bred heifers for at least $2000
pairs or 3n1's for $$2750 and up
granted these are registered animals that I paid more for them but it is relative to the prices I sell my animals for.
if my accountant came to me at the end of the year,after we sold 100 animals and said we only made $12000 he would need a new client and be recovering from a country ass whoopin

 

[Caustic Burno]

here we go again. i am going to try to spell this out as simple as i can for some.
if you buy land,100 head of cattle,tractor,truck,equipment. you go throughout the year paying the note and putting a little back for yourself. you sell your weaned calves as most cow men do. you think at the end of the year that boy I didn't make much moneyBUT here's what most people don't take into consideration:
you land,cattle appreciate in value
your equipment depreciates
you write off the loss on the equipment, which saves money you have to give to uncle sam.
in the meantime your cattle should be on there 2nd calf by now and you note which contains all your land,cattle equipment has been paid down some. in time your cows,truck,tractor,equipment has been paid for.
if you took those paid for cows,trucks,equipment and sold it by the time it is paid for with the way land has appreciated you sell it for more than you paid for it.
I look at a cow as an investment, where else can your investment make it's complete worth every year. by this I mean you pay $1000 for a bred heifer, you sell her weaned calf every year for $600-$750.(minus your per head expense) where else can you do that. I don't want to hear the argument that gas is over 2.00 per gallon and fertilizer is more expensive. cattle prices are at an all time high and far offset these higher operating cost.
I sell my bulls for $2000-$4000
bred heifers for at least $2000
pairs or 3n1's for $$2750 and up
granted these are registered animals that I paid more for them but it is relative to the prices I sell my animals for.
if my accountant came to me at the end of the year,after we sold 100 animals and said we only made $12000 he would need a new client and be recovering from a country ass whoopin

Land appreciating is not cash unless you sell it, and of course your land was free. The equipment that you depricate, lets say a 40,000 dollar tractor that was free is depricated over five years is 8,000 dollars off of your gross income of 50,000 dollars for a savings on your taxes of of approxiamately 2000 dollars.
So if I have your thinking right if I spend 8,000 dollars a year to save 2,000 I am ahead. Hmm...

 

[plbcattle]

HUGH
you lost me on that one

 

[Wewild]

plb

What are you calculating for the note for the cows, land and equipment?

 

[Greenhorn]

"You do a diservice lying to yourself, its great you want to get to the country life. It's about reality not fantasy."--Caustic Bruno

You truely live up to the caustic part of your name.

"Don't forget us here at cattle today after you make your first million. You know, the ones you asked for information and thoughts then shot us down for trying to help"--certherfbeef

Did you even read my post? I freely admit the odds of anyone making a million are slim. What I object to is when people on this board poormouth the business that they have chosen to be in and disparage newcomers for wanting to be a part of it. I have not shot anyone down who was trying to help. How did your comment help at all?

plbcattle- this is the kind of open mind and optimistic attitude that can help people who want to get into this lifestyle and business. i appreciate your comment.

How can you possibly think that city life is any easier? City dwelers still have bills that outweigh income and have to deal with traffic, crime, pollution and a whole host of other problems. How can you be so negative towards someone who wants a better quality of life (even if it means less income)? you should encourage these people.

Bottom line is if you make so few dollars and (as it seems) dislike your chosen profession so much, move to the city where you seem to think life is so much easier and let the people here who are willing to give help and encouragement do so.

-Greenhorn

p.s.- this post is based on alot of archived posts that gave similar answers, not just this thread.

 

[plbcattle]

my post wasn't meant to stir up the board. it was only to state that you are building more wealth than you think by land appreciation and building up equity in your equipment. Also your initial investment(your cows) will continue to pay dividends each year that in my opinion will outperform other investments. tot to mention the peace and mind I have with my cattle that NO MONEY CAN BUY.

 

[jerry27150]

by the way, the ave farmer is over 50 like me. so we definately need some new blood coming in. if they gave me a million dollars i would keep on farming til i spent it all. they always said if you do something you like you will never have to work!!! i could sell out & retire,but what would i do then. one thing about farming youcan do it as long as you like. not like being forced to retire from some factory & end up working at mcdonalds to make ends meet. some people can make money at what ever they do & make it look easy, but you always have to have an open mind. good luck with what ever you decide. your turn caustic

 

[Caustic Burno]

HUGH
you lost me on that one

Money can be made in cattle just not what you think your making.
Running cattle is a lifestyle, what I was trying to explain to you is yes you can depreciate equipment, you still have the intial cash outflow. you now own a piece of equipment that has value that can be deprciated over 5,7 or 10 years. This is not income on a dollar for dollar basis. The depreciation value is deducted from your annual gross income which is a tax savings of maybe 20 cents on the dollar. Appreciation is not income unless the appreciated property is sold.
AZ could do a much better job at this.
It's great if you want the lifestyle, you need to go in with your eyes open.

 

[redfornow]

There are two ways to "Gather" money.

One is income, the gross amount that you make, ie what you pay your real bills with. in cattle there isnt much, I think a hundred a head is low, but thats really just good business never pay uncle sam more than you have to. I know many businesses that "break even" or a little better on paper.

The second is asset accumulation: land, cattle and equipment.
Now Bill Gates is the richest man on the planet, but he doesnt have it in cash in the bank its mostly in "what he does"
the truth is its that way for all of us.

I say this because I know of a "poor" farmer in my county right now that between herd disersal and selling about 85 percent of the farm is well, going to have a tax problem. lol Its time to retire and he is cashing in on a number of assets.

MD

 

[bigbull338]

in the cattle business all your gonna do is breakeven . if you are starting out buying land cattle an equipment your in debt.cattle sales go to pay your notes. thats why most ppl farm for a hobby. is b/c they have outside jobs. not to bragg but ive always made my living farming.like burno says you farm till you get to old to do it . scott

 

[Craig-TX]

The sad fact is that, in today's land and cattle markets, in spite of low rates, cattle will not pay for land. Even if 100% of your overhead and expenses are already being absorbed by other operations or income – in other words, if the entire gross from your calf crop goes against the land payments – the cattle still won't pay for the land. Not around here anyway. If you get a great buy on land and very favorable terms you can get close, but you're still going to have to feed the new operation. If it would, I would be buying all the land I could get my hands on.

Don't trick yourself into believing otherwise. Like my granddad used to say, any fool can make a million overnight with a sharp pencil.

The days are gone when you could buy a place and make it pay for itself and pay you a living at the same time. The standard of living we have come to expect, coupled with many other factors in agribusiness, not to mention government and taxation, have killed that dream.

If your land and improvements are paid for, and you have enough of it, and not much other debt, and can find satisfaction without a fancy standard of living, it might be a different story. Depends on lots of things.

 

[Wewild]

The sad fact is that, in today's land and cattle markets, in spite of low rates, cattle will not pay for land. Even if 100% of your overhead and expenses are already being absorbed by other operations or income – in other words, if the entire gross from your calf crop goes against the land payments – the cattle still won't pay for the land. Not around here anyway. If you get a great buy on land and very favorable terms you can get close, but you're still going to have to feed the new operation. If it would, I would be buying all the land I could get my hands on.

Don't trick yourself into believing otherwise. Like my granddad used to say, any fool can make a million overnight with a sharp pencil.

The days are gone when you could buy a place and make it pay for itself and pay you a living at the same time. The standard of living we have come to expect, coupled with many other factors in agribusiness, not to mention government and taxation, have killed that dream.

If your land and improvements are paid for, and you have enough of it, and not much other debt, and can find satisfaction without a fancy standard of living, it might be a different story. Depends on lots of things.

Well said.

 

[chrome]

If your land and improvements are paid for, and you have enough of it, and not much other debt, and can find satisfaction without a fancy standard of living, it might be a different story. Depends on lots of things.

Improvements to the land are a yearly thing here. Lime and fertilizer bills are seemingly never ending.

 

[Farmhand]

if you buy land,100 head of cattle,tractor,truck,equipment. you go throughout the year paying the note and putting a little back for yourself. you sell your weaned calves as most cow men do.

I'm lost. What are you using for money to make those note payments and putting a little back with until the calves are born and ready to sell?

 

[bigbull338]

selling 100 calves a yr would make $55000 . based on selling all calves at 550hd. wich means you would be living on your town job. an it would be atleast 6yrs before the farm starts turning a profit the calves would pay the bank note. scott