IluvABbeef":3ue1w23e said:
Can anyone help me find some resources to this question (for a beef cattle term paper I've been working on over the semester):
What would be the optimum herd size for a single operator in order to attain a net profit of approximately $20 000, $40 000 or $60 000 annually?
Thanks in advance
I wish I could give you a decent link; but put it together kind of like this...
each cow needs ~2 rolls of hay a year (in Alabama that might be ~$30 a roll), figure 250 lbs of grain supplement (~$140 a ton here or ~$18), You probably are going to need more hay and feed in Canada, fertilizer cost at ~$32 a head (that could be a $120 too low), ear tag for calf at ~$2, vaccinations at ~$7 (jeffers Supply will have vaccination costs), fencing at ~$24 a head, marketing at ~$8, property taxes at ~$6, fuel costs at ~$18, preg check at ~$4, and miscellaneous costs at ~$4. You end up with something like $183 a cow in direct cash costs. Then there is machinery costs (both depreciation AND actual costs like oil, repairs, etc).
If you figure that the only machinery you NEED is a tractor (~$40,000), a bushog($10,000), corralls($6000), a chute($4000), livestock trailer ($7000) and 3/4 ton pickup ($30,000) or $97000. For tax purposes (IN THE U.S.) all that is 5 year property so tax depreciation would be $19,400. You will go broke if you can only get 5 years of life out of all that stuff. Figure REAL depreciation at 16 years or $6062.5. Used stuff won't cost nearly as much as new stuff; but it might not last as long either thus the real machinery costs CAN actually be as high. Figure cost of tires, repairs, oil, grease, etc at ~$2000 per year so your total machinery costs whether you are running ten cows or 5000 is ~$8062.5. It costs so much to have a vet come out too consult no matter how big the herd is figure $1100??? I got $9162.5 in total fixed costs. You probably need to add some barns to this scenario too.
Figure 88% of your cows have a calf every year and your calves bring $1 a pound and weigh 550 when you sell them so your cows gross ~$484 a head per cow. After direct per cow costs they only bring in $301. Figure that salvage value on culled cows bring enough to keep replacement heifers
$20,000 profit plus $9162.5 in fixed costs divided by $301 is 97 cows
$40,000 profit plus $9162.5 in fixed costs divided by $301 is 163 cows
$60,000 profit plus $9162.5 in fixed costs divided by $301 is 230 cows
AND all of that is assuming no land costs other than fuel, fertilizer, and property taxes. IF you are servicing a $2 million mortgage, I am not sure you CAN make money. Change those numbers to whatever you pay/get in Canada and run both high dollar market numbers versus low dollar market numbers. For what feeders are bringing here right now you might need a thousand head to clear $60,000 even if your land is paid for.