More cattle =more profit?

[denoginnizer]

I think I have read some of you say you figured you made 100 profit per calf? I was wondering if you think increasing the herd size would increase the profit? My goal is to have about 140 momma cows. So far I have about 50. If I reach my goal of having 140 cows should I still expect to only make 100 per calf or is my profit likely to increase . I am thinking the same tractor, trailer, truck etc and eqiupment I use for 50 will work for 140. Thanks for your thoughts.

 

[Beefy]

Factor into the equation more intensive management of pastures, fences, etc. Take into account "opportunity costs?" b/c you will spend more time feeding and checking on cows and stuff like that. I personally think you can make just as much money with fewer quality animals than a buttload of average ones. but all this is just my opinion so take it for what its worth to you.

 

[Craig-TX]

It's a good question. As you get more cattle you will still have the same finite amount of time that must be spread across them. Or, you will have to hire help. Either way, according to theory, the extras should make you as much per unit as what you have now because of economy of scale. But it doesn't always work that way. It depends on a lot of factors that affect your ability to manage efficiently.

Say you're leasing five extra places and putting 20 cows on each. That will be a lot more time/work/expense than leasing one bigger place where you could put all 100. Especially if the five places are very far apart.

There are a hundred other considerations but efficiency is the key. It would pay to evaluate your expansion options based on the extra time required, how much more work will be involved, and how much money you can afford to put into it. Regardless, I wouldn't do it for less per head than 50 is getting you now.

Craig-TX

 

[Campground Cattle]

Through the years I have found it takes 3 calfs to take care of 5 cows.
Yes you make more money but it still takes the same ratio. Cost go up wormin, hay, diesel, etc. Have to sell old brokenmouth cows and keep replcements that are two years from returng a profit, and they didn't live for free. I think I read somewhere the national average is 75 dollars a head profit.

 

[Wewild]

Not rocket science in this.....

Maximizing your fixed cost (i.e. equipment and land) to their full extent while minimizing your variable cost (i.e. your time and feed) will increase your profit per unit.

 

[dun]

We played the expansion game years ago and found that we did net more actual dollars the per animal net went down. The killer for us was having to hire help.

dun

 

[jerry27150]

if you have land available or have to pay high rent makes a big difference. if you have money to buy cows or have to grow bigger, also makes a difference

 

[la4angus]

Does anyone ever consider the market price that cattle are selling for.
On a 500 lb calf $15.00 cwt can cost $75.00 per hd. That leaves $25.00 per hd profit.

 

[Running Arrow Bill]

There are two "Laws" of Business:

* The Law of Diminishing Returns
* The Law of Economy of Scale

If these aren't in proper proportion, things can get pretty nasty.

On a sidebar:

We don't hire any help to run our operation, are "retired" from the "business" lifestyle, and view our operation as both business and enjoyment of livestock. Our direct operating expenses and overhead expenses average out about 50/50. Our infrastructure is paid for and we are still realizing depreciation on our investment at tax time each year. All this aside, even if we have to sell a calf that didn't turn out to be breeding quality at a sale barn, we still make about $200 + on the calf. Considerably more if we sell a registered animal as breeding stock.

I would think that anyone that couldn't make more than $50 to $100 on an animal they sold (barring unforeseen exceptions that always happen) ... well, things could be a lot better in their operation....

 

[Ryder]

There are two "Laws" of Business:

* The Law of Diminishing Returns
* The Law of Economy of Scale

If these aren't in proper proportion, things can get pretty nasty.

....

Bill,
I am familiar with the laws of Incresing Returns, Decreasing Returns, and Diminishing Returns.
What is the Law of Economy of Scale?

 

[Running Arrow Bill]

There are two "Laws" of Business:

* The Law of Diminishing Returns
* The Law of Economy of Scale

If these aren't in proper proportion, things can get pretty nasty.

....

Bill,
I am familiar with the laws of Incresing Returns, Decreasing Returns, and Diminishing Returns.
What is the Law of Economy of Scale?

"Economy of Scale" is where one's business expands to the point that all resources (employees, facilities, equipment) are being used to the max in an efficient manner, thereby lowering the "unit of production" cost for each item being produced. Once the business expansion crosses that line of efficiency, then additional resources must be purchased or obtained in order to properly manage the additional units of production.

Then...the acquisition of those additional resources sharply cuts into the profit margin of the overall operation until the economy of scale level is again reached.

On a sidebar, there is the time-honored law for employees: The Peter Principle--"In an organization an individual rises to their level of incompetence" (a/k/a reaching a Plateau in their career where they can't advance any further in position or compensation).

 

[Ryder]

Thanks, a new term for me.
Peter principle is easy to see-it's all around!

 

[Medic24]

Somebody's been to business school?

I am going to try the advice of a speaker at our cattleman's assoc. meeting.......recommends to grow our herds, as much as our EXISTING facilities and infrascructure will allow, then add to the herd only as costs vs. income will allow, yet keeping the option for partial dispersal of the expanded herd open at all times, while maintaining the core herd..

He further went on to predict that with the exceptions of subtle 'market corrections' the cattle prices should remain nearly as high as they are currently for the foreseeable future. I don't know anything about that.

 

[Subsoil]

Here's my take on using the $100 profit (or the $75 for that matter). That meen that for every producers that's making $75 per head, there's another producer making $175 per head and another producers loosing $25 per head. Averages don't matter - you just have to find out where you can produce the most pounds of beef that your land will produce. Who knows, you might be better off selling your grass as hay rather than as beef.

A more tangible average would be the hourly pay rate on the time you spend caring for your herd. More than likely, most of us would be better off farther down the production chain if we wanted a good hourly wage in this business - somewhere in final distribution like flipping burgers or waiting tables.

 

[tapeworm]

A more tangible average would be the hourly pay rate on the time you spend caring for your herd. More than likely, most of us would be better off farther down the production chain if we wanted a good hourly wage in this business - somewhere in final distribution like flipping burgers or waiting tables.

You can say that again!!!! Ifwe were in it for money only be better off flipping burgers!!! More to life than money though right????