Neighbor's cattle profits

[herofan]

I was recently having a casual conversation with a friend about cattle prices and making a profit. He doesn't do it for a living, but has an established 20 cow/calf operation in beef cattle. He cuts and rolls his own hay, but doesn't raise crops or anything else on the farm. He said he recently sold 19 calves, which i assumed were around 500lbs and a mix of steer and heifer, for over $14,000. He said the money was great. He said he had around $500 in hay and around $1000 in all other expenses for the year. So, it appears to me he made $12,500.

We were just talking casually, so I wasn't looking at his books and I wasn't going to drill him for more personal information, but that was what he said. In my mind, I thought even if that was doubled and he had $3000 expenses, he still made $11,000. I can't speak for my own situation because I have heifers and haven't sold any yet. But aside from the cost of buying the heifers and fencing expenses for getting things back in shape, other costs don't seem to amount to much. I've often thought, if i had been going a few years and had the cost of fencing and the heifers out of the way and had about 16 to sell, I'd be sitting pretty.

I know there is always talk about not making much, and I realize there can be unexpected tragedies, but overall, is my neighbor or I missing something? That seems like good profit to me.

 

[TennesseeTuxedo]

Shhhhhhh...Herofan, don't let anybody find out about your neighbor or before you know it everybody with a few unused acres will be sticking cesspool bred Angus cows on it and doing the same.

 

[herofan]

Shhhhhhh...Herofan, don't let anybody find out about your neighbor or before you know it everybody with a few unused acres will be sticking cesspool bred Angus cows on it and doing the same.

Hmmm. From what information i have provided, I assume you feel he is doing something wrong?

 

[TennesseeTuxedo]

Not at all. He's doing just fine.

Now technically he should take his property taxes and other expenses into account but on the surface his math makes sense.

 

[ALACOWMAN]

thats just talk.... it aint cut and dry... be a few years at these prices, before we can really say were making money.....................

 

[J&D Cattle]

What's the old saying, asset rich and cash poor?

 

[shaz]

You really have to go by tax records. That's the only fair comparison. Otherwise is just accounting and he's probably not mentioning infrastructure type stuff. That's where a noticeable amount of my money goes.

How bout Self-Employment tax?

 

[Anonymous]

You really have to go by tax records. That's the only fair comparison. Otherwise is just accounting and he's probably not mentioning infrastructure type stuff. That's where a noticeable amount of my money goes.

How bout Self-Employment tax?

Been paying that se tax for 20 years. Don't even get me started

 

[shaz]

You really have to go by tax records. That's the only fair comparison. Otherwise is just accounting and he's probably not mentioning infrastructure type stuff. That's where a noticeable amount of my money goes.

How bout Self-Employment tax?

Been paying that se tax for 20 years. Don't even get me started

I think se tax is :bs:
I'm paying it and I'm not self employed.
wtf?

 

[Anonymous]

If you don't get w4 from an employer and claim income then that income not from the w4 is self employment income. Taxed at a higher rate of course.

 

[salebarn junkie]

He forgot the cost of the tractor,hay equip, bull cost just to name couple of things.

 

[herofan]

He forgot the cost of the tractor,hay equip, bull cost just to name couple of things.

His equipment has all been paid off for several years, so their was no actual money out of pocket recently.

 

[Caustic Burno]

He forgot the cost of the tractor,hay equip, bull cost just to name couple of things.

His equipment has all been paid off for several years, so their was no actual money out of pocket recently.

There is taxes, fuel, fertilizer, repair's, vet supplies insurance and so on.
I can barely fill a tractor for a 100 dollar bill much less cut rake and bale hay.
Everytime he cranks a vehicle of any kind for the operation it has a cost.
This sounds like another classic case of the guy not knowing his input cost.

 

[djinwa]

This reminds me of people who go to the nearby casino and brag about all their winnings. The other day it took a few minutes of questioning to get a guy to admit the times he lost money.

I always ask them if everyone is winning so much, how can they afford to build the casino and pay the workers, etc.

Likewise, if cows were such easy money, why isn't everyone doing it?

 

[Anonymous]

How hard can it be to let them eat grass all day? :roll:

 

[1982vett]

How hard can it be to let them eat grass all day? :roll:

Pretty hard when it won't rain....

 

[herofan]

He forgot the cost of the tractor,hay equip, bull cost just to name couple of things.

His equipment has all been paid off for several years, so their was no actual money out of pocket recently.

There is taxes, fuel, fertilizer, repair's, vet supplies insurance and so on.
I can barely fill a tractor for a 100 dollar bill much less cut rake and bale hay.
Everytime he cranks a vehicle of any kind for the operation it has a cost.
This sounds like another classic case of the guy not knowing his input cost.

He was including his fuel cost in the hay prices. He didn't fertilize this year, and I assume his vet bills, if he had any, were included in his other $1000. I agree with keeping up with expenses. Some people spend on the farm all year and then get a lump sum when they sell something and act like they're rich. On the other hand, it appears that cattle could be like the movie industry. I've read that the production companies often claim that a movie technically didn't make any money even if it's a blockbuster.

Like I said, i haven't sold any yet, but aside from the cost of buying the heifers and fencing, there hasn't been any major expenses. We have a tractor and a few pieces of essential equipment that has been paid off for years. It doesn't look like a farm machinery show when you pull up to my farm and I'm not driving a new pick-up truck. I did have a flat tire on the tractor, but that didn't set me back too much. If it's costing more than i realize, it's not coming out of my bank account, so maybe someone else is paying it for me.

Like my brother says, mine is just a bare bones operation; maybe that is what makes the difference. I have a neighbor, for example, who planted around 20 acres of corn recently, and the equipment he had was huge. It looked like it had been beamed in from Star Trek. I can't imagine what it cost. If it had been me, I would have been satisfied with dusting the cobwebs off my grandfather's old two-row planter. It might not have been pretty, but my bank account would have appreciated it more.

As for my other neighbor, just for the sake of argument, if his expense amount was quadrupled, he still made $8000. I have trouble believing he overlooked $4500 in expenses, but even if he did, $8000 is still a nice hunk of "extra" money for a hobby operation of 20 cows.

 

[salebarn junkie]

He forgot the cost of the tractor,hay equip, bull cost just to name couple of things.

His equipment has all been paid off for several years, so their was no actual money out of pocket recently.

There is taxes, fuel, fertilizer, repair's, vet supplies insurance and so on.
I can barely fill a tractor for a 100 dollar bill much less cut rake and bale hay.
Everytime he cranks a vehicle of any kind for the operation it has a cost.
This sounds like another classic case of the guy not knowing his input cost.

Did he pay for all the equipment with profit from cattle?

 

[mwj]

Figure in the land cost to run them and we will talk about the profit :cowboy: Run out and buy or lease a couple of sections and buy you some of them ''dirt cheap'' pairs and you can get rich along with your neighbor.

 

[Bigfoot]

When I am selling calves I think to myself "I couldn't make it with out em". When. I am buying supplies I think "wow I would have some money in the bank if I didn't have these cattle". Trust me he is not netting that much.