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Need advice on Culling older cattle - what to look for
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<blockquote data-quote="HerefordSire" data-source="post: 690031" data-attributes="member: 4437"><p><em>First of all, my meaning of proftitable and cost basis are probably not the same as what an accountant would use. An accountant may combine the herd (through numeric summing) thereby hiding the profitable cows, if there are any. This is the way I choose to show profitable cows, which may or may not be correct according to standard accounting procedures.</em></p><p><em></em></p><p><em>Let's say you are considering culling profitable ole Bessie. For whatever reason she has to leave the premises. The reason could be not enough hay because of a drought, not enough grazing acres, your other cows produced replacements you believe are superior, etc. <strong>For math simplicity</strong>, she has returned her overhead and her orginal cost, and she is still alive and expected to produce at least one more average calf just like she has all the other previous years. Her cost basis is zero. She is free and clear.</em></p><p><em></em></p><p><em>Since I know she has produced calves covering her overhead, we could say in a similar environment geographically, she would be expected to cover her overhead there also. For example, a farmer down the road may have room, a similar pasture and water, etc., and would likely be willing to take her in if you agree to pay the farmer a fair price which may be more or less than her current overhead is.</em></p><p><em></em></p><p><em>In this example, let's say her overhead is $20 per month plus the cost of the money. It takes her another 12 months to raise the calf. So you borrow the $240 and finance it for 12 months @ 8% APR. The cost of the money cost you $19.20 and the total overhead now becomes $260 rounded. We could say, the <strong>basic </strong>difference in her staying on my property and down the road at the farmer's property is the cost of the money which happens to be at historic lows even though I am figuring eight points.</em></p><p><em></em></p><p><em>Therefore, as long as Bessie brings me a calf worth more than $260 she puts money into my pocket. In the past sum of years, she may have always raised a calf that brought more than $260.</em></p></blockquote><p></p>
[QUOTE="HerefordSire, post: 690031, member: 4437"] [i]First of all, my meaning of proftitable and cost basis are probably not the same as what an accountant would use. An accountant may combine the herd (through numeric summing) thereby hiding the profitable cows, if there are any. This is the way I choose to show profitable cows, which may or may not be correct according to standard accounting procedures. Let's say you are considering culling profitable ole Bessie. For whatever reason she has to leave the premises. The reason could be not enough hay because of a drought, not enough grazing acres, your other cows produced replacements you believe are superior, etc. [b]For math simplicity[/b], she has returned her overhead and her orginal cost, and she is still alive and expected to produce at least one more average calf just like she has all the other previous years. Her cost basis is zero. She is free and clear. Since I know she has produced calves covering her overhead, we could say in a similar environment geographically, she would be expected to cover her overhead there also. For example, a farmer down the road may have room, a similar pasture and water, etc., and would likely be willing to take her in if you agree to pay the farmer a fair price which may be more or less than her current overhead is. In this example, let's say her overhead is $20 per month plus the cost of the money. It takes her another 12 months to raise the calf. So you borrow the $240 and finance it for 12 months @ 8% APR. The cost of the money cost you $19.20 and the total overhead now becomes $260 rounded. We could say, the [b]basic [/b]difference in her staying on my property and down the road at the farmer's property is the cost of the money which happens to be at historic lows even though I am figuring eight points. Therefore, as long as Bessie brings me a calf worth more than $260 she puts money into my pocket. In the past sum of years, she may have always raised a calf that brought more than $260.[/i] [/QUOTE]
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