Profit

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The most important thing to remember in your budgeting:

Just because the market is good now doesn't mean it will stay that way. It never has. The only question is how long it will take to bottom out. I'd caution against using current prices for long-range planning---or even three-year planning. Don't build your business model around $600 calves or $1.10 feeders.
 
Here is my answer to profit in cows and farming.

To start with how big are u going to buy in? Are u gonig with 10 or a 1000 head? Are U going to buy land or lease? Buy equipment or have done custom? The problem with ag is there are so many variables. If u buy now and the market drops u lose, if it stays or comes up u win. We all have to deal with the weather and blah blah blah. That is why u will hardly ever get a straight answer.

I started when I turned 19 with a good banker. My family had sold out several years earlier and called me an idiot. When I presented my plan to the bank I had thought out almost everything. I did not have a side job to go with it and if the farm needed money I went without. There have been years when I made piles of money and years I have broke even. I try not to pile all my eggs in one basket and it has paid off.

Now to the hobby farmer. I have nothing at all against them b/c they are doing something they enjoy. The way I think they hurt the market is by not a: succesfully negotiate contracts and just taking what the sale barn, coop, or anybody else gives b: paying way to much for supplies and operating material. The ag market is one of the only markets that the seller has hardly any say in what his price will be. Now more power to the niche market farmers b/c they are finding what somebody is willing to pay extra for and fulfilling thier needs. My def. of a hobby farmer is somebody who does not make their main livelyhood off the farm. If u are a lawyer with 1000 head and u never see them that is a hobby. If u are a niche farmer with 50 head and organic crops and that is how u make ur living u are not.

Expecting to consistently make a certain profit farming is like expecting to go to vegas and consistently win at craps or roulette. The bottom line is are u willing to take a chance to make it in farming or do u want to live in the suburbs staring into a glow over ur head instead of stars every night. If u are going into it expecting to make a profit treat it just like a company (plumbing, oil, carpenter, etc..) or do not expect it to make a profit.

Post ur business plan and I am sure we would all be more than welcome to give u tips and ideas on it and we might learn a few from u.

In finishing, I believe there is a great deal of money in ag u just have to want it and work for it. I hope that is a straight enough answer to ur question about profit. :D
 
C & C Land & Catt":20b07vf1 said:
If u are a niche farmer with 50 head and organic crops and that is how u make ur living u are not.

You reckon they can raise a family on 50 head.
 
Texan":3gh15y8j said:
The most important thing to remember in your budgeting:

Just because the market is good now doesn't mean it will stay that way. It never has. The only question is how long it will take to bottom out. I'd caution against using current prices for long-range planning---or even three-year planning. Don't build your business model around $600 calves or $1.10 feeders.

I am scared that maybe the 600.00 calves might stay but if not already soon a 600.00 calf might seem like a $400.00 calf because of the fast rising cost of living. I can not even believe how much building fence has went up in just the 5 years since we moved to the farm, or the cost of gas, it has almost doubled.

Might be one of the biggest times a cattleman should be watching the books as much or more than the Prices at the stockyards.
 
C & C Land & Catt":3g9hh5xt said:
My def. of a hobby farmer is somebody who does not make their main livelyhood off the farm.

I know you qualified it as your definition, but I would dissagree.

My definition of a hobby farmer is someone who doesnt run the farm as a business. A hobby is done for the love of doing it. A business' intent is to make money. Therefore, if your intent is to make a profit, you are not a hobbyist regardless of if you actually make the profit or not, or enjoy dong it.

If you dont make a profit, there might be something to be said as to your business sense as a cattleman, but anybody who called you a hobbyist would be missguided and not utilizing the word correctly.


If u are a lawyer with 1000 head and u never see them that is a hobby.

This still would not be correctly definted as a hobby, but is in fact a business. If he never sees them, he couldnt get any enjoyment from them, but is probably invloved with a profit in mind.

For the most part I agree with your post, but would exchange part-timer for your definiton of Hobby farmer.

Wewild":3g9hh5xt said:
C & C Land & Catt":3g9hh5xt said:
If u are a niche farmer with 50 head and organic crops and that is how u make ur living u are not.

You reckon they can raise a family on 50 head.

Do you reckon you can raise a family on minimum wage? What does that have to do with what he said? Since when did how much money somebody actually made play into the definition of a hobby, part-timer, etc?

If that were the case, then there's going to be a lot of hobby farmers this year.

Or maybe I missunderstood what you where tryign to say. If that is the case I appologize.
 
Been following this post with interest. One point that has been missed is an increase of net worth. One more skill we need to hone, Land manager. Take care of your land and it will take care of you. I'll make more on the increased value of my land. than I ever made in Ag. Though that does not help with monthly expenses. Long term, it does make a difference. Another point that has been made, find a niche market. I remember as a kid going to the coffee shop hearing all the other farmers complaining about going broke. And I thought "there all doing the same thing, crops, animals ect." I decided then I would not do the same thing. Its not easy. You will get little outside help. You my be considered a freak of nature or odd ball. Hang in there, keep plugging away in your niche market. You control the quality of the product and more importantly the Market Price. In the end your still here and they work in town. Only said half of what I wanted to say But you get the point.
 
Land does not always increase in value, you younger people didn't see the colapse of the S&L's in the 1970's and land was selling my area for 2500 dollars an acre after the colapse 700 an acre.
It has taken 30 years to get back to the price of the 70's.
Just let another good recession hit with 16% intrest rates or a depression and see what happens.
This country is on the verge of a major recession right now.
The difference in a recession and a depression are if your neighbor is out of work its a recession if you are it's a depression.
 
I do remember. Some of my best deals were in that time period. But you are right, short term land prices do not always go up. And we may be entering a time period for a price correction. Look at land prices in the 1919 time period, look three years later. Alot of folks lost here shirt. For me long term land has been good.
 
Bluestem":i4gxg21o said:
Been following this post with interest. One point that has been missed is an increase of net worth. One more skill we need to hone, Land manager. Take care of your land and it will take care of you. I'll make more on the increased value of my land. than I ever made in Ag. Though that does not help with monthly expenses. Long term, it does make a difference. Another point that has been made, find a niche market. I remember as a kid going to the coffee shop hearing all the other farmers complaining about going broke. And I thought "there all doing the same thing, crops, animals ect." I decided then I would not do the same thing. Its not easy. You will get little outside help. You my be considered a freak of nature or odd ball. Hang in there, keep plugging away in your niche market. You control the quality of the product and more importantly the Market Price. In the end your still here and they work in town. Only said half of what I wanted to say But you get the point.

I think it would be nice if you wrote the other half of what you wanted to say. Your ideas are very valuable, and even more valuable when they are complete.
 
3MR":33mvnxxn said:
Wewild":33mvnxxn said:
C & C Land & Catt":33mvnxxn said:
If u are a niche farmer with 50 head and organic crops and that is how u make ur living u are not.

You reckon they can raise a family on 50 head.

Do you reckon you can raise a family on minimum wage? What does that have to do with what he said? Since when did how much money somebody actually made play into the definition of a hobby, part-timer, etc?


No.

Means it's a second income and not the primary one.

You tell me? They mean the same thing to me.
 
3MR":2nsd1eq7 said:
Since when did how much money somebody actually made play into the definition of a hobby, part-timer, etc?

The Governement does.

The number of hobby farms continues to grow. The most recent Ag Census shows that hobby farms comprise 59.3% of total farms in the U.S. By their definition, a hobby farm is a farm that makes under $10,000 per year.

http://www.agnr.umd.edu/AGNRNews/Articl ... 4531&NL=61
 
aplusmnt":2oayl6v9 said:
3MR":2oayl6v9 said:
Since when did how much money somebody actually made play into the definition of a hobby, part-timer, etc?

The Governement does.

The number of hobby farms continues to grow. The most recent Ag Census shows that hobby farms comprise 59.3% of total farms in the U.S. By their definition, a hobby farm is a farm that makes under $10,000 per year.

http://www.agnr.umd.edu/AGNRNews/Articl ... 4531&NL=61

I stand corrected. Right or wrong, they do use $10,000 as a cutoff.
 
aplusmnt":f590qgan said:
The Governement does.

The number of hobby farms continues to grow. The most recent Ag Census shows that hobby farms comprise 59.3% of total farms in the U.S. By their definition, a hobby farm is a farm that makes under $10,000 per year.

Dang. Now I am a hobby farmer by yet another definition. The truth still doesn't hurt tho.

But what if one year I went over 10K? Does that make me a has been but now hobby again farmer?
 
backhoeboogie":bt6d9zd4 said:
aplusmnt":bt6d9zd4 said:
The Governement does.

The number of hobby farms continues to grow. The most recent Ag Census shows that hobby farms comprise 59.3% of total farms in the U.S. By their definition, a hobby farm is a farm that makes under $10,000 per year.

Dang. Now I am a hobby farmer by yet another definition. The truth still doesn't hurt tho.

But what if one year I went over 10K? Does that make me a has been but now hobby again farmer?

Important thing is we are the Majority at 59.3% we could rule the world if we pulled together :lol:
 
Herefordcross":3v1tlqc6 said:
Caustic,

You should be a college professor or at minimun an ag teacher somewhere.

No I am not qualified to walk the same ground as a teacher.
Teachers are the most important profession in our society as they shape the minds of our children and grandchildren.

I am just a hard headed old man that has made a lot of mistakes.
 
aplusmnt":1e2j4kl5 said:
backhoeboogie":1e2j4kl5 said:
aplusmnt":1e2j4kl5 said:
The Governement does.

The number of hobby farms continues to grow. The most recent Ag Census shows that hobby farms comprise 59.3% of total farms in the U.S. By their definition, a hobby farm is a farm that makes under $10,000 per year.

Dang. Now I am a hobby farmer by yet another definition. The truth still doesn't hurt tho.

But what if one year I went over 10K? Does that make me a has been but now hobby again farmer?

Important thing is we are the Majority at 59.3% we could rule the world if we pulled together :lol:

I do not even own any cattle yet, but I would say offhand that if 59.3% of the producers any industry had lilttle or no vested interest in producing a quality product or earning a profit that it could not help but drive the value of the industry down to some extent. I'm not saying that it is wrong by any means, or that you shouldn't do whatever you want to, but hopefully everybody understands the goals of the industry and buys in to some simple standards.
Another interesting and genuine statistic is that 8% of the cattle priducers in this country produce 50% of the beef.
 
Rogerwilco":2ej6y1r0 said:
aplusmnt":2ej6y1r0 said:
backhoeboogie":2ej6y1r0 said:
aplusmnt":2ej6y1r0 said:
The Governement does.

The number of hobby farms continues to grow. The most recent Ag Census shows that hobby farms comprise 59.3% of total farms in the U.S. By their definition, a hobby farm is a farm that makes under $10,000 per year.

Dang. Now I am a hobby farmer by yet another definition. The truth still doesn't hurt tho.

But what if one year I went over 10K? Does that make me a has been but now hobby again farmer?

Important thing is we are the Majority at 59.3% we could rule the world if we pulled together :lol:

I do not even own any cattle yet, but I would say offhand that if 59.3% of the producers any industry had lilttle or no vested interest in producing a quality product or earning a profit that it could not help but drive the value of the industry down to some extent. I'm not saying that it is wrong by any means, or that you shouldn't do whatever you want to, but hopefully everybody understands the goals of the industry and buys in to some simple standards.
Another interesting and genuine statistic is that 8% of the cattle priducers in this country produce 50% of the beef.

Just joking about ruling the world! As far as beef goes probably the Gov will rule it, much like everything else. ;-)
 
Rogerwilco":1cbq2fzg said:
aplusmnt":1cbq2fzg said:
backhoeboogie":1cbq2fzg said:
aplusmnt":1cbq2fzg said:
The Governement does.

The number of hobby farms continues to grow. The most recent Ag Census shows that hobby farms comprise 59.3% of total farms in the U.S. By their definition, a hobby farm is a farm that makes under $10,000 per year.

Dang. Now I am a hobby farmer by yet another definition. The truth still doesn't hurt tho.

But what if one year I went over 10K? Does that make me a has been but now hobby again farmer?

Important thing is we are the Majority at 59.3% we could rule the world if we pulled together :lol:

I do not even own any cattle yet, but I would say offhand that if 59.3% of the producers any industry had lilttle or no vested interest in producing a quality product or earning a profit that it could not help but drive the value of the industry down to some extent. I'm not saying that it is wrong by any means, or that you shouldn't do whatever you want to, but hopefully everybody understands the goals of the industry and buys in to some simple standards.
Another interesting and genuine statistic is that 8% of the cattle priducers in this country produce 50% of the beef.

You are so right that is my point on the pet owners versus hobby farmers versus the part timer. Part timers are entering this as a business.
 

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