Questions

[Anonymous]

Hi. I am trying to decide whether or not to buy a farm. It is set up for feeding out cattle and that's what I would do with it.

My husband has farmed all his life and has about 70 head of cows. His management is....um...less than efficient. He has some very good bulls and good producing cows, but not much in records, management, etc.

If I buy this farm, it will have to pay for itself. I know better than to think I will make any money! To breakeven, I know I need to run a very tight operation.

I am not experienced in cattle, but with his help (and equipment) I should be able to pull this off...I think.

I've read so many numbers I can't keep them straight anymore! There is so much information out there and it's hard to sort through what is really something to be concerned about and what is not. I plan to feed 100 or so calves. Some I will have to buy, some will come from his cows (or mine as I get them).

Is the grid pricing and value-based marketing stuff for real? I do understand that I need to raise quality beef, not just a bunch of cows, but do the price systems really make that much of a difference?

My husband just hauls his stuff to the local sale barn. I think that if I raise good lots of cattle, I can get better prices either by selling them directly to the packer (though I may not have enough) or something.

Also, they have a tag program in this state that certifies your cattle are healthy. I understand that could be important if I were selling feeder calves, but since I will be doing the feeding. Is it still important?

Am I totally misguided to think that having calves all year long...just whenever...and then hauling them off to the sale barn...a few at a time...is not making the most of our resources?

I have a zillion other questions, but it's near the end of my night shift at work and I'm brain dead. Any help would be appreciated.



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[Anonymous]

I don't usually try to discourage someone from pursuing a dream, but it sounds like you are too inexperienced to run a feedlot type operation.

Competition is fierce in the industry and margins are small. You saying the place has to pay for itself makes me worry. If you could buy the place outright, you could survive your learning phase. With mortgage payments, you could be broke in the first year.

I think you could learn a lot if you were to increase management with your husbands herd. If you could get the calving season tightened up and a more uniform set of calves to sell, or feed, the money would be there to expand sooner.

Most don't like the idea of buying higher priced buls with good epds and carcass data, but the investment will pay if you sell to feedlots that know the value of those genetics.

Grids are a reality and genetics must be matched to feed, environment and the grid. Just picking up a few calves here and there won't pay.

Feed is another issue, what will you feed? Where will you get it? If it is home grown you still have to value it as to what you could sell it for. It isn't free.

There are a zillion other concerns, but I think you get the idea. Don't risk what you can't afford to lose. If you can finance the place without making any money, they go ahead and learn, but be prepared.

Jason Trowbridge Southern Angus Farms Alberta Canada

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[Anonymous]

There are a couple of good articles in the archives of CattleToday.com. Part 1 is in the August 2001 archive and Part 2 is in the September 2001 archive. The author of these articles agrees that the feedlot business is one of the harder places to get started. It is a competitive sector of the cattle business. A recent article in the Livestock Journal stated that most feedlots are running on a profit margin of $10 to $15 per animal.

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[Anonymous]

I read the articles you mentioned.

I have figured out the capital costs. Much of what I would need is already there. There are some repairs needed, and a few equipment pieces I would need. This place has enough storage, water, feeding systems, pens.

I would be able to use some of my husband's Simmental cows, but would buy about half of my own. The cows are purebred and would try to buy the purebred also, but am considering herefords instead of Simis.

I have checked into enviromental stuff. There's not a ton, since I would only have 100-200 cows/calves, and they would not all be on this place. I think I would pretend I was bigger and have a waste plan in place anyways, just for good management and practice.

My feed would be homegrown, and yes there are costs. The costs are lower than the "lost income" from not selling the grain, but I used the "lost income to figure with. He already farms many acres, so adding mine wouldn't be a big deal. When I rotate my crops, we will trade, so the fields stay in good shape, but I still get what I need for the cows (corn, silage, hay)

My husband has two angus bulls with very good stats. He has two others, but I would not want to use them. They have no records and even if they look good on the outside, it's what's inside that counts.

I've considered vet costs, including vaccinations, implants, etc. I've considered supplements. I've considered what would happen if the crops fail or pasture gets eaten by pests (that happened last year).

I don't have experience, but I do have some brains and I think it could work. My biggest lack of information is in marketing them, but I even calculated my figures using sale barn live cattle prices, in case I can't figure out any other way to selling them. I am going to talk him into tracking a sample of the calves he has now. My state beef association will do that for pretty cheap and it's worth it to know where we stand. I think (probably everyone does!) that his calves will test out pretty well. I think mine will be better, especially if I have the data to work with.

I can do this full-time. I would not have to work this job, with the 12 hour night shifts! I don't mind walking in that special cow pen mud, placing my arm where the sun don't shine to see just where that calf is at, though I do get a little nervous standing down a bull without something (a 2X4 will do) in my hands.

My husband and I had a talk tonight and I showed him some articles on price grids. He is not stupid, just got lazy in his old age I guess. He is familiar with selling hogs on a similar basis. He sort of does things the way he always has and doesn't worry about making money or making payments. He always manages. I, on the other hand, have to figure it all up and at least know if I have a chance of making it before I jump in!

I appreciate the advice on going broke in the learning curve! It could very well turn out that way. I hope not, but I think there are enough resources to give it a try. I can always sell out and pay off the bank for the remainder of my life! If it works as planned, then I will make no money, but in 20 years the place will be paid for and my kids can enjoy it!

Is there anything I forgot? Probably something major....got taxes, insurance, repairs, fuel, utilities, water....and a good working vocabulary of those special words for when things just don't go as planned.

Any comments are appreciated! Thanks

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[Anonymous]

You are a brave woman, Jena. But how will you market these fed cattle? Is there a packing plant in your area? Will they take a few head at a time? Any "proposed" environmental rules in the works in your area? In my state, established chicken operations are really going to be hurt if some new proposed state regulations are put in place. Yes, grid marketing is here to stay. Some packers in the Texas panhandle only buy on a grid basis now. If he's raising good cattle, most years a producer will make more money off his cattle the longer he owns them. But prices have been good the last few years at sale barns, too, without retaining ownership through the feedlot. It's a good ideal to retain ownership in a few of yours and see how they feed and grade. We did that a few years ago and learned a lot about feedlots, average daily gain, herd health, and packing plants. Herd health is very important in the feedlot. That's why these sales of calves with a documented health history are becoming more popular. Studies show that an animal that gets sick twice in the feedlot is just not going to hang a quality carcass. We also know if a calf doesn't get enough quality colostrom at birth, he's more likely to get sick in the feedlot. Calves that haven't been weaned 45 days before they go into the feedlot are more likely to get sick. And the ability to gain efficiently (ADG) is probably the most important quality in feeder animals. Good luck...

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[Anonymous]

> I read the articles you mentioned.

> I have figured out the capital
> costs. Much of what I would need
> is already there. There are some
> repairs needed, and a few
> equipment pieces I would need.
> This place has enough storage,
> water, feeding systems, pens.

> I would be able to use some of my
> husband's Simmental cows, but
> would buy about half of my own.
> The cows are purebred and would
> try to buy the purebred also, but
> am considering herefords instead
> of Simis.

> I have checked into enviromental
> stuff. There's not a ton, since I
> would only have 100-200
> cows/calves, and they would not
> all be on this place. I think I
> would pretend I was bigger and
> have a waste plan in place
> anyways, just for good management
> and practice.

> My feed would be homegrown, and
> yes there are costs. The costs are
> lower than the "lost
> income" from not selling the
> grain, but I used the "lost
> income to figure with. He already
> farms many acres, so adding mine
> wouldn't be a big deal. When I
> rotate my crops, we will trade, so
> the fields stay in good shape, but
> I still get what I need for the
> cows (corn, silage, hay)

> My husband has two angus bulls
> with very good stats. He has two
> others, but I would not want to
> use them. They have no records and
> even if they look good on the
> outside, it's what's inside that
> counts.

> I've considered vet costs,
> including vaccinations, implants,
> etc. I've considered supplements.
> I've considered what would happen
> if the crops fail or pasture gets
> eaten by pests (that happened last
> year).

> I don't have experience, but I do
> have some brains and I think it
> could work. My biggest lack of
> information is in marketing them,
> but I even calculated my figures
> using sale barn live cattle
> prices, in case I can't figure out
> any other way to selling them. I
> am going to talk him into tracking
> a sample of the calves he has now.
> My state beef association will do
> that for pretty cheap and it's
> worth it to know where we stand. I
> think (probably everyone does!)
> that his calves will test out
> pretty well. I think mine will be
> better, especially if I have the
> data to work with.

> I can do this full-time. I would
> not have to work this job, with
> the 12 hour night shifts! I don't
> mind walking in that special cow
> pen mud, placing my arm where the
> sun don't shine to see just where
> that calf is at, though I do get a
> little nervous standing down a
> bull without something (a 2X4 will
> do) in my hands.

> My husband and I had a talk
> tonight and I showed him some
> articles on price grids. He is not
> stupid, just got lazy in his old
> age I guess. He is familiar with
> selling hogs on a similar basis.
> He sort of does things the way he
> always has and doesn't worry about
> making money or making payments.
> He always manages. I, on the other
> hand, have to figure it all up and
> at least know if I have a chance
> of making it before I jump in!

> I appreciate the advice on going
> broke in the learning curve! It
> could very well turn out that way.
> I hope not, but I think there are
> enough resources to give it a try.
> I can always sell out and pay off
> the bank for the remainder of my
> life! If it works as planned, then
> I will make no money, but in 20
> years the place will be paid for
> and my kids can enjoy it!

> Is there anything I forgot?
> Probably something major....got
> taxes, insurance, repairs, fuel,
> utilities, water....and a good
> working vocabulary of those
> special words for when things just
> don't go as planned.

> Any comments are appreciated!
> Thanks

you sound like a better cattleman(woman) than most..you certainly seem to have researched it thoroughly.. and it sounds like you have made up your mind.. i dont know many men who care to palpate their own cows, much less many women.. or many women who will take a 2x4 to their bulls.. LOL i am on a much smaller scale than what you are describing (i run cow/calf operation, moving into the registered stock) and i am still trying to figure out how to make them pay their way.. LOL hope you have good luck.. gene

 

[Anonymous]

As far as marketing them. We market smaller groups (10-20) through our local NFO. I'm not exactly how they do it, but we give them a weeks notice, and they put together loads. We have done this both grade and yield, and on a grid. We usually come out a bit better than the sale barn on the top 80% or so. But the last ones to finish out don't seem to grade as well, and we do better at the sale barn. You don't have to be a member of NFO, but they encourage you to join. One other thing is that I don't have to pay yardage and commission when I go through NFO, and can pay the added trucking costs of going to the bigger packers. Hope this helps a little in your decision.

 

[Anonymous]

Just reading old msgs and need to know, what does NFO stand for?

> As far as marketing them. We
> market smaller groups (10-20)
> through our local NFO. I'm not
> exactly how they do it, but we
> give them a weeks notice, and they
> put together loads. We have done
> this both grade and yield, and on
> a grid. We usually come out a bit
> better than the sale barn on the
> top 80% or so. But the last ones
> to finish out don't seem to grade
> as well, and we do better at the
> sale barn. You don't have to be a
> member of NFO, but they encourage
> you to join. One other thing is
> that I don't have to pay yardage
> and commission when I go through
> NFO, and can pay the added
> trucking costs of going to the
> bigger packers. Hope this helps a
> little in your decision.



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[Anonymous]

> Just reading old msgs and need to
> know, what does NFO stand for?

National Farmers Organization