Profit from cattle?? Where is it?

[OhioRiver]

hence the word little or marginal in determining better than a good commercial cow. i get it I think. i hope so anyway. I just want my kids to like cows too some day.

There are no tiers in registries- the bottom just disappears(quit registering) as the top gets better.

the cream(with lots of money and salesmanship behind them) will always demand a higher to extreme value -- that won't change.

as the market saturates the good Reg cows/bulls will be worth a little more than a good commercial cow/bull.

As the market is saturated the ok- level becomes the commercial cow. with a commercial cow value.
The "papers" have little/no value- on an ok cow(bull) when the market is saturated.


When the market saturates Papers are not worth anything-- its the animal/performance/marketing that will determine the value- the papers just back that up.

 

[OhioRiver]

I do believe you trust me.....I am just not sure how to do that other than years down the road a piece. It is like saying I have a 10,000.00 valued bull but no one buys his semen and I only get to send him to slaughter.......where is my $10k bull?

thank the lord....I could not afford to take that large of a pay cut for sure. no nobility in poverty.

BTW I believe you about the no credibility in the game thing.



BTW most people would never even consider hiring you as a hired hand so no need to worry about quitting your job to do that :lol: :lol: :lol: .

The credibility statement was nothing to do with you as an individual .It is just that you are going to have a heck of a time convincing a veteran producer to spend any money on your (a newcomer with no cattle or breed knowledge) livestock,no matter how impressive they may be .The reason that people do make money in this business has a lot to do with integrity and reputation;and it takes years to develop that.[/quote]

 

[Hippie Rancher]

How does someone new win then or is it just hopeless.

The usual - with hard work, connections (building a network of good people that help each other - point being this is not a one way relationship) and a bit of luck.

 

[usernametaken]

How does someone new win then or is it just hopeless.

The usual - with hard work, connections (building a network of good people that help each other - point being this is not a one way relationship) and a bit of luck.

Hippie - thems some dirty words there - especially that hard work ! :lol: :lol:

 

[bgm]

Please don't tell me that you are jealous or anything. It sounds like you are. Don't think that because you don't want an MBA makes it okay for you to bash those that do. And DO NOT think that because you know about cattle that others cannot learn as much as you or MORE.

OR, with your vast business knowledge from having an MBA and not wanting to actually touch the filthy cows, why not play the options market?

The first step to learning is admitting you don't know. I haven't seen too many know it all's learn a single thing.

 

[usernametaken]

Please don't tell me that you are jealous or anything. It sounds like you are. Don't think that because you don't want an MBA makes it okay for you to bash those that do. And DO NOT think that because you know about cattle that others cannot learn as much as you or MORE.

OR, with your vast business knowledge from having an MBA and not wanting to actually touch the filthy cows, why not play the options market?

:roll: :shock: :lol: :lol:
Ohio River, not to upset you or anything, but I cannot read between the lines on anyone's posts that you have, as of yet, inspired a case of Jealousy. A lot of emotions maybe but I don't think jealousy fits any of them.

 

[Caustic Burno]

This has been one entertaing thread, all I see from the original poster is a formula for losing money. This guy is trying to jump in and play the big boys game from jump street. Your odds would be better on a Vegas crap table.

 

[Limomike]

Well said Caustic.

 

[MrBilly]

There are multiple opportunities to invest in the cattle industry without touching the filthy things. One is to buy into a percentage of a flush cow or a potential semen selling bull without possession.

This is an investment - risky investment. Some of our most expensive registered cows turned out to be duds, not because we didn't select correctly, but because when a cow/bull is young you are dealing strictly with numbers produced by the parents and their parents, etc - these don't always predict the future of the calf in question. That is the risk one needs to accept - just like buying a stock. A stock might be doing great the past several months, but then tanks right after you buy it ( I've done that ) - remember the fine print in the stock prospectus? Same with cattle - past performance does not predict future performance or returns. If I invest in a soap company, I do not consider myself a soapmaker, just a knowledgeable person about the soap industry. Being just an investor in cattle doesn' make you a cattleman either, just possibly a knowledgeable person about one aspect of the cattle business - a very small aspect.


You can work deals with top producers who do have credibility and the most important asset, the access to buyers through their own seed stock sales. Many would be more than happy to take your money, just like the stock market does. Of course you will be the money man, it takes money and it will take several years before your cow or bull has time to be noticed or not - if he/she is a dud, you loose. If it turns out well you can make some bucks. What are the statistics you will? Don't know.

As an example, we don't have the numbers fo registered Angus to have our own production sale, so we have a deal with the seed stock producer from whom we buy most of our bulls for our commercial herd. Once a purebred bull is weaned he goes to the seedstock guy, he raises him, puts him in his sale, and we split the sale price plus 5% sales commission that covers the brochure, the auctioneer, etc. This works for us, gets the critter off the land and out of our hair.

Billy

 

[OhioRiver]

MrBilly.......you may be right.....I asked my guys about your post and they seemed to concur. It may be best that I watch from the sidelines and slowly integrate myself as I go along and maybe a few years down the road I would have a true perspective of things.

There are multiple opportunities to invest in the cattle industry without touching the filthy things. One is to buy into a percentage of a flush cow or a potential semen selling bull without possession.

 

[OhioRiver]

absolutely.....i just excited about a new idea and ran with it putting together forecast models and such. It seems there are a great deal of intangibles that were not considered. I am seeing the picture a bit now I hope.

This is an investment - risky investment. Some of our most expensive registered cows turned out to be duds, not because we didn't select correctly, but because when a cow/bull is young you are dealing strictly with numbers produced by the parents and their parents, etc - these don't always predict the future of the calf in question. That is the risk one needs to accept - just like buying a stock.

 

[OhioRiver]

i believe that totally. registration money would be dumb for them to stop. I don't know if this is relevant, but my cousin used to deal in baseball cards a lot. They graded them as well per their condition like very good, excellent, near mint, and mint. then they added a mint plus. consumers were not satisfied until an industry leader decided to grade them for a fee personally. he charged a minimal charge to grade them but you got the grade you got. some people thought their cards were mint when they were not. they tried to sell them as mint and could get some people to buy into it. some did not and demanded only the best. too many arguments ensued and this new class by the new judge of the industry make them graded items and not just claims to be mint. if he made them mint they commanded a decent premium, if not you paid the fee and landed at whatever grade he placed for you. I see the registered version of angus headed for that down the road. they can charge more per those registration attempts and get a third party involved for a fee as well. hence, more revenue. just makes sense that some people with cattle that are at 50.00+ $B would want to differentiate themselves totally. I think that it will go that way someday since I was told that so many registrations continue to increase annually.



They are not going to rock the boat. The breed association makes it's money selling registrations. 350,000 X $9 (the price for 4-10 month old calves) is $3.15 million and half those calves were AI babies so 165,000 x $10 (what the assn charges for A.I. certificates) is $1.65 million. ET calves are another $10/hd. Transfering ownership is another $5/hd and record keeping on your registered cow is $3 per head per year and you will have to pay $30 a year to be a member of the Angus assn. It is up to the breeders to fight off mediocrity.[/quote]

 

[Brandonm2]

The market grades them. When there is great demand they bring great price. As supply increases price decreases. I was at an Angus sale just this weekend. This time it was the Alabama Angus Assn Fall Sale.

The top selling cow was a 5 year old New Design 1407 daughter out of a Precision 1680 cow with a bull calf. A good cow that was originally bought at Gardiner's. She brought $3900.

The #2 cow was a heavy bred 6 year old JLB Exacto 416 daughter out a Traveler cow. She brought $3600. Her February GAR Solution daughter brought $1900 for a combined lot price of $5500.

The top selling bull was an 18 month old GAR Retail Product sired bull, who had EXT and Precision 1680 on both the top and bottom of his pedigree. His $B was 53.6. He brought $2750.

The #3 cow was an Emblazon daughter out of an EXT cow with a Predestined calf. She brought $2600.

A similarly bred cow with a Sitz Alliance 6595 heifer calf brought $2500.

A BAR EXT Traveler 205 cow with a Mytty In Focus heifer also brought $2500.

An 878 grand daughter with an otherwise all Alabama pedigree and a GAR Solution heifer also brought $2500.

A SAF Strategy 9015 daughter with a Boyd New Day heifer also brought $2500.

A 4 year old Millcreek Diversity daughter out of a SAF 598 Bando 5175 cow with a GAR Retail Product bull calf brought $2500.

A 7 year old New Design 036 daughter with a heifer calf brought $2400.

Everything else brought less than $2000....all the way down to a 14 month old Boyd New Day 8005 bull (+37.96 $B) the stockyard bought for $800.

 

[HerefordSire]

How does someone new win then or is it just hopeless.



I am new.

There is no need is risking anything unless you are willing to risk everything.

Don't invest a dime until you see the light (profit potential).

How many acres do you have to work with?

How much cash do you have to work with?

It takes just as much paperwork and studying to make $100K as it does $100 on one trade. Is is the same principal, just more on the line. Why trade $2K cows when you can trade $20K cows? To learn @ first, but then increase trade size over time.

Newbies, you and I, need leverage to compensate for lack of experience. There are several areas to obtain leverage. Let's say you had $1M to invest in cattle. The first couple of years or so, the leverage is in the cash flow through tax deductions so you can hide other income. This increases assets. Certain assets increase in value and some decrease in value. If you only purchase assets that increase in value during your income hiding tricks, you can borrow more money. This creates leverage because the percentage of your initial net worth relative to your buying power is reduced.

 

[Arkieman]

The first couple of years or so, the leverage is in the cash flow through tax deductions so you can hide other income.

Translation - this means losses......

 

[HerefordSire]

The first couple of years or so, the leverage is in the cash flow through tax deductions so you can hide other income.

Translation - this means losses......

If my tax bracket is 37% there would be an advantage up to 37%. It is called a loss, but the cash flow and assets increase becasue I would normally pay my taxes to the government anyway and get no refund. It is real money, not virtual money.

 

[Brandonm2]

IF YOUR farm lost $50,000. Your real job paid $100,000, then added up you have a net taxable income of $50,000 so pay (Very roughly) $18,500 in taxes. Turn it around and that means you have $31,500 to live on. IF you had no farm and farm loss you would have paid DOUBLE the taxes; BUT you would have had $63,000 to spend (or invest). Now ideally you would make $50,000 on your farm. You would pay an exorbitant $55,500 in taxes; BUT you would have $94,500 to spend. And yes I do know that moving between brackets can (and will) change these numbers somewhat.

 

[backhoeboogie]

IF YOUR farm lost $50,000. Your real job paid $100,000, then added up you have a net taxable income of $50,000 so pay (Very roughly) $18,500 in taxes. Turn it around and that means you have $31,500 to live on. IF you had no farm and farm loss you would have paid DOUBLE the taxes; BUT you would have had $63,000 to spend (or invest). Now ideally you would make $50,000 on your farm. You would pay an exorbitant $55,500 in taxes; BUT you would have $94,500 to spend. And yes I do know that moving between brackets can (and will) change these numbers somewhat.

You didn't include property tax and ag exemptions thereto. Make $5K profit and that's it. Uncle Same takes a cut of it. Is it worth the time and effort. Yes if you save significantly more than that in property taxes. There are lots of folks still in the cattle business just for ag-exemption. One other alternative is to lease your property for ag purposes.

 

[Arkieman]

The first couple of years or so, the leverage is in the cash flow through tax deductions so you can hide other income.

Translation - this means losses......

If my tax bracket is 37% there would be an advantage up to 37%. It is called a loss, but the cash flow and assets increase becasue I would normally pay my taxes to the government anyway and get no refund. It is real money, not virtual money.

In short, you can never lose your way to weath...

Edit: Unless you're Donald Trump via bankruptcy...

 

[HerefordSire]

In short, you can never lose your way to weath...

Edit: Unless you're Donald Trump via bankruptcy...



The entity hiding assets has to expand assets in the form of accumulation to continue the process of increasing assets. Renmember, the assets must also increase in value and be deductible for this to work. That is why companies buy companies then spin them off. Then the entity is in control when the money hits the bottom line.