Quicker returns for cattlemen and extra cash flow

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Rod

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I started out in the business three years ago with 42 head of mixed breeds with a registered angus bull. I put them on a farm that I had just bought at the foot of mt. nebo. I bought the cows on the assumption that I would be getting nearly all of my first investment back after selling the first batch of calves. I mean by all means thats how it all computed on paper. We'll here it is three years later and I'm not back to even yet. As a newbe I had no idea what was in store for me. When i first started out my father-in-law told me it was a good way to loose my a## and all fixtures ! ! (as he's been in the business his whole life) Was he ever right, I've pumped so much money into the operation, such as Equipment, fencing, feed, hay, Trucks, TIME, and etc. I learned as well that it's expensive to keep a cow alive in the first place. I'm a used truck dealer and real estate invester by day and I've many brainstorms on how to speed up the process of buying cows and having them in the free and clear in a much quicker time and also on many ways to have a steady cash flow for a farmer. So here are a few things that I did in the beginning of last year that got me the quicker returns that I was after.

1. Bought a group 1st calf heifer pairs , 60 in all. I paid 1200 a pair which comes to 72000. I rasied the calves to about 550lbs and sold them for 645 a head which comes to 38700. That put me at 33000 in the group of 60 that were at this time in about their 2nd stage. I then sold 40 of them heavy bred for 1150 a head which comes to 46000. Take the remaing balance of 33000 and subtract that from the sales of the 40 heavy bred and that left me with $13000 and 20 head free and clear. Normally it would of took me near 5 years to clear these cows by convintional means.

2. bought 60 250-330 weight calves. Brought them to the farm and got them lined out and eating right and put them out on grass. I kept them to 550lbs and then sold the whole group and was able to net about $125 a head, which comes to about $7500. What farm couldn't stand that little extra working capital.

3. Bought 4-5 bulls from sales barns around, (bulls that were spoke highly of by their owners) and put them in a small pasture out by the road with a bulls for sale sign out front. You wouldn't believe how many bulls we have sold, and there again is some usful cash flow.

4. Bought 7 bred cows for $900 a round in the spring and let them calve and re-breed in a few months and sell them all as three in ones. They averaged $1400 a round.

With just a few of these extra practices I was able to generate a consistant cach flow for my farm and speed up the process of getting my cow calf operation in the black much quicker.

This isn't for the light hearted, it adds alot of extra chores and can consume a lot of time at times but I do it mainly because I enjoy it and this year I've got to actually enjoy the money part of it to!
 
jeepers rod, now we know your secrets. In this game cash flow is the main problem i run into. I like your ideas for sure, glad you shared them.
 
Good work, Rod! I think this is one of the best posts we've had in a long time. Thanks for taking the time to share it with everyone.
 
Thanks, Rod. I'm not in a position to do what you have done, but I hope to be able to put your ideas to work for me soon.
 
Excellent post Rod. Especially for those who want to get into cattle and for those just starting out.
I would love to be able to implement the ideas and plans you have put to work in the last yyear, however, like msscamp, I'm in no position to do so. It's slow growing for me. Nice to see your plans and ideas worked, and especially nice to see someone else realize a NET gain on calves in the on hundred plus dollar range. How some forlks are clearing a net profit of three and four hundred is beyond me.
Keep up the good work.

Katherine
 
I know of four or five cattlemen in this area that have similar practices.. but I think you're not taking into consideration a couple of things when you do the "flip" thing.

One.. what happens when you get a bunch of crazy cows that are being sold because they can't be kept in? Now you'll have to add to your fences!

Two... what happens when you bring a cow in with a lovely disease or virus, that infects everything on your place? It's happened to a couple of cattlemen I know. Put them back a year or two.

If you have the facilities to keep everything quaranteened it might work, but you'd have to have a pretty elaborate operation for that.

The bulls you bought at the auction barn.. did you disclose where they came from to the buyers? What about BS exams?
 
I know of four or five cattlemen in this area that have similar practices.. but I think you're not taking into consideration a couple of things when you do the "flip" thing.

One.. what happens when you get a bunch of crazy cows that are being sold because they can't be kept in? Now you'll have to add to your fences!

Two... what happens when you bring a cow in with a lovely disease or virus, that infects everything on your place? It's happened to a couple of cattlemen I know. Put them back a year or two.

If you have the facilities to keep everything quaranteened it might work, but you'd have to have a pretty elaborate operation for that.

The bulls you bought at the auction barn.. did you disclose where they came from to the buyers? What about BS exams?

All valid points that must be taken into consideration. What i like about this is the idea that one isn't tied to the conventional way of doing. Rods methods might not work ideally for me but i have a different set of resources and i can use them to maximize my profits. The ways will be different but hopefully the results will be the same.
 
Rod

Great ideas! I use a similar approach with some other classes of cattle. What we are doing is adding value to these cattle and selling them to capture that value. Probably similar to what you do with used trucks & possibly real estate. Unfortunately, now you've let the cat out of the bag. ... LOL ......Bud Williams says businesses & cattlemen don't go broke due to a lack of profit, but a lack of cash. He says the two basic rules of business are to maintain cash flow & maintain inventory. Bud defines inventory for a rancher as cattle, grass & cash. He says never run out of grass or money. It is OK to be out of cattle, because if you have grass & money you can always buy cattle. Sounds like you are following these principles. As Allan Nation says, "If most of your neighbors think what you are doing is crazy, then you're probably on the right track." This is a prime example of thinking outside the box. Keep up the good work!

TheBullLady":mwz2lwqv said:
I know of four or five cattlemen in this area that have similar practices.. but I think you're not taking into consideration a couple of things when you do the "flip" thing.

One.. what happens when you get a bunch of crazy cows that are being sold because they can't be kept in? Now you'll have to add to your fences!

Two... what happens when you bring a cow in with a lovely disease or virus, that infects everything on your place? It's happened to a couple of cattlemen I know. Put them back a year or two.

If you have the facilities to keep everything quaranteened it might work, but you'd have to have a pretty elaborate operation for that.

The bulls you bought at the auction barn.. did you disclose where they came from to the buyers? What about BS exams?

Let me address these issues. All are valid points. As Rod mentioned, it is a lot of work.

1. Have bought many wild cows. The way I keep my fences in shape & cows at home is my perimeter fences are barbed wire with an offset hot wire. Cross fences are all 1 wire hot wire. New purchases are put in a small barbed wire trap with offset hot wire for Electric Fence 101 training. 24 hours usually gives them ample exposure to the devil that lives in that little wire. Have had only 1 cow that kept jumping into the neighbors pasture. Was probably my fault as she had just been separated from her small calf at the sale barn. Didn't keep her in the trap long enough. She went direct to the sale barn after her 2nd excursion.

2. This could be a serious problem for a herd of keeper cows. In my case, I do not have a resident cow herd. Nothing, except my lead steer, stays much over 6 months. If you have a herd of keeper cows, they would need to be kept separated from your "cash" cows. However that can be done very easily & cost effectively with electric fence. Would recommend always keeping an empty paddock between the 2 herds.

In my area, it seems there are many bull & cow buyers, mostly small operations who are only interested in the price, color, & general appearance of the cattle they buy. Rod is merely providing them another purchase option. Lots of cattle are sold by private treaty.

Just my 2 cents worth.

Good luck & best regards to all.

Brock
 
TheBullLady":tgpetcfv said:
I know of four or five cattlemen in this area that have similar practices.. but I think you're not taking into consideration a couple of things when you do the "flip" thing.

One.. what happens when you get a bunch of crazy cows that are being sold because they can't be kept in? Now you'll have to add to your fences!

Two... what happens when you bring a cow in with a lovely disease or virus, that infects everything on your place? It's happened to a couple of cattlemen I know. Put them back a year or two.

If you have the facilities to keep everything quaranteened it might work, but you'd have to have a pretty elaborate operation for that.

The bulls you bought at the auction barn.. did you disclose where they came from to the buyers? What about BS exams?

You bring up some good points and all were took into consideration proir to buying any flippers.

I dont really believe I get any crazy culls, granted when you buy a large group you do get some wild ones, I'm buying groups of dispersal heifers that have had their first calves.
Buy selling them as second calf heifers they are worth more than !st calf heifers, they're heavier and are seasoned mothers.

All new animals that are recieved are put in the lot and worked. We give each a shot of antibiotic under the skin as well as a precautionary measure. They stay on precondition feed for a week before being turned out. I do not intermingle this stock with my herd as they are all kept on another farm.

As for the bulls, I only buy the herd dispersal and production sale bulls and am able to visit with the farmer prior to the sale. They are tested before the sales as well. I bought 20 left over angus bulls the other day from a production sale. They didn't bring the low that the farm had left on them and i was able to make the farm a package deal. Most farmers in my area are after a 1000-1500 dollar bull and as long as I got some available they go away pretty quick.

There are definitely some added hardships with this approach as I mentioned in my post earlier but I've got more energized about the going to the farm than ever before.
 
Rod said:
......................

1. Bought a group 1st calf heifer pairs , 60 in all. I paid 1200 a pair which comes to 72000. I rasied the calves to about 550lbs and sold them for 645 a head which comes to 38700. That put me at 33000 in the group of 60 that were at this time in about their 2nd stage. I then sold 40 of them heavy bred for 1150 a head which comes to 46000. Take the remaing balance of 33000 and subtract that from the sales of the 40 heavy bred and that left me with $13000 and 20 head free and clear. Normally it would of took me near 5 years to clear these cows by convintional means.
==================
Rod,
A good concept....but,incomplete numbers;

Purchases $72,000.
Sales 38,700.
Less expenses;(annualized)
Prop.taxes, feed, seed,fuel,vet/medicine,Ins.labor,
dep. of fences,barns,equipment,moms(1/10th)etc,
=;$300.(est) per head sold x 60= - 18,000.

-----------
Gross profits 19,300.

Less provisions for I-Tax(20%)- 3,860.

Net income $15,440.

Do the same for the 2nd group you sold and
continue with the numbers.
(use -$300. cost per head).
(It is fair and reasonable to use $10.00
per labor hour to provide care)

Don't want to discourage you but one must be inclusive and realistic. :???:
(sorry...but posting will not let me keep the numbers in accounting columns)
 
Rod makes some very good points. I keep 150 permanent cows and buy 200-400 cows in the fall to improve and sell in the spring, depending on available grass. I dont have concerns about the wild cows for 2 reasons. I go through the cattle pens before each sale and am close to every cow I might bid on. This way, I eliminate almost every wild cow. If I buy a group that has a wild one in it, I will usually have them hold that one in the ring and resell her before she leaves the ring. When I get my cattle home, they spend at least 1 week in a pen getting grain every day to become accustomed to me, if there is a wild one, she is loaded up and taken back to the sale barn. I never turn a wild one out of the pen. A wild cow will never be worth the destruction and loss of time she causes.
 
preston39":2pu3mpi1 said:
Rod":2pu3mpi1 said:
......................

1. Bought a group 1st calf heifer pairs , 60 in all. I paid 1200 a pair which comes to 72000. I rasied the calves to about 550lbs and sold them for 645 a head which comes to 38700. That put me at 33000 in the group of 60 that were at this time in about their 2nd stage. I then sold 40 of them heavy bred for 1150 a head which comes to 46000. Take the remaing balance of 33000 and subtract that from the sales of the 40 heavy bred and that left me with $13000 and 20 head free and clear. Normally it would of took me near 5 years to clear these cows by convintional means.
==================
Rod,
A good concept....but,incomplete numbers;

Purchases $72,000.
Sales 38,700.
Less expenses;(annualized)
Prop.taxes, feed, seed,fuel,vet/medicine,Ins.labor,
dep. of fences,barns,equipment,moms(1/10th)etc,
=;$300.(est) per head sold x 60= - 18,000.

-----------
Gross profits 19,300.

Less provisions for I-Tax(20%)- 3,860.

Net income $15,440.

Do the same for the 2nd group you sold and
continue with the numbers.
(use -$300. cost per head).
(It is fair and reasonable to use $10.00
per labor hour to provide care)

Don't want to discourage you but one must be inclusive and realistic. :???:
(sorry...but posting will not let me keep the numbers in accounting colums)

Purchases $72,000.
Sales (60 calves ) $38,700.
(40 bred cows ) $46,000.

$84,700.
CLEARS 20 BRED COWS + $12,700.
Less Expenses
Property taxes, Ins., Fences,Depreciation,
Seed, ALL WERE PAID BY EXISTING
HERD. LABOR ALREADY AVAILABLE
DO TO EXISTING HERD.
Med,feed,etc. = $100 per hd @ 60 $6,000.

NET EXCLUDING I-TAXES $6,700.

This was done in a twelve month period, do the same math on the cow\calf operation and it will make you sad as to how long it will take a farmer to clear just 20 cows. As far as the calves go the $125 a head was net proifit. The bulls makes an exellent cash flow for the farm, a farmer can turn money on them in days time unlike that of raising a calf out to weight wether it be a born calf or a bought calf. The whole point of my post is there are ways for farmers to quicken their returns and increase cash flow.
 
................................. The whole point of my post is there are ways for farmers to quicken their returns and increase cash flow.[/quote]
===========
Rod,

As I said ..good concept.

I didn't want to see some newbies misunderstand with incomplete numbers.

Have done/do the same program with excellent returns. To be fair to your herd evaluation and decisions, each one sold must absorb their share of cost. If we have an animal for 2 months that animal must absorb 2/12ths of costs charge-back and purchase price to evaluate individual profit. Otherwise economics for culling purposes and operational evaluations become skewed and tough to get an accurate handle on.
 
I agree as well preston, the added animales should absorb some overhead as far as thinking goes. I just looked at all the extra pasture that was just sitting there anyway and put it to use. I feel that these methods were far quicker returns than the way that I orginally started it and thought it would be useful to have more of a steady cashflow. I dont know about the rest of you but it got old to me to have so much going out and so little comming in each year. Last year was so much easier for me.
 
Rod, flippers are good money. its all i have. i buy bredded cows then raise their calves to about 450-600lbs then sell everything. i even buy bottle calves to put on the cows after they calf. so i buy 10 brd cows, they calve then i put another on them then sell all 30 animals then buy again.i buy 10 - 50 animals a year and sell that all in same year. or at least close to it anyway. and i do pretty good and stay up with the trends.
 
Back to Prestons point. I also buy some calves to turnover. I have written a program that takes into account of the total number of days they have been on the farm and all expenses are charged accordingly. Even if I bring one home and carry it to another sale in the same week. It still gets charged for the actual cost for the percent of herd and timeframe it was on the place.
 
I agree, thats why I couldn't accept the $300 a head that preston had acessed to the flippers. He made a valid point on the figures but the sale of the 40 heavy bred that finally cleared the 20 head and put a little cash back in the farm account wasn't accounted for in that post.
 
Rod,
Didn't mean to mislead. The numbers..other than yours...were assumed...(notice.... est. in the post). ...to illustrate the point.

(ps...on the "pasture just laying around"...there is a cost when you go to replace.....re-seed...which must be charged somewhere!......it will become depleted.)
 

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