Horseless
Well-known member
To answer my own question; I kept about 10% but it needs to be higher just to maintain numbers and do a better job culling. So I'll be buying somemore 
Replacements, buy em or raise em???
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Caustic Burno
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1982vett":27i3ecke said:Got to call you out on this Caustic, or maybe keep things in perspectiveYou have effectively decreased taxable income :banana: by not selling a calfCaustic Burno":27i3ecke said:This is also all expenses than has effectively reduced taxable income. :clap: By now the sale of the animal is taxed as capital gains instead of ordinary income. You should also have an increase in "net asset value".caustic":27i3ecke said:Nothing to write off because it has already been expensed. Remember, you have had less income to be taxed in the previous year.caustic":27i3ecke said:I know both sides of these arguments pretty well. Both have their pluses and minuses. I have come to realize that no matter at what stage I buy them, I am still going to get some that need to be culled. After paying a lot of $$$ for a pair, that can be a hard thing to do after just one calf. You still run the same risk of needing to cull after that first calf even if you keep you own. :?caustic":27i3ecke said:
First off I am not in the business to reduce income by watching a cow produce nothing walking around the pasture and consume grass and add nothing to the bottom line and there is no way in He!! a half a dozen are going to be walking around sucking froghides out of my bill fold. To eat my grass or hay they are going to produce or leave on the next Hanover Gooseneck outta here.
Secondly I am not trying to reduce taxes I hope to pay more every year off more income not less income.
Third the cow you buy has depreciation value as well as upkeep the retained only has upkeep, if I am going to gamble on a heifer I am going with the one at least I can write off if she croaks.
I raise cattle to convert grass to cold hard train riding cash, the minute one isn't adding to the bottom line she is fired. I am not going to raise a heifer for a maybe you can buy replacement heavies that know how to work and start returning income on capital expense immediately.
In today's market with the input cost on a cow that doesn't produce to the bottom line is bad several a recipe to go broke.
Vett thats this is the reason I seldom post on heifers anymore some one can always come up with a reason to keep one but none of them make money. There is no good sound business reason for a commericial Cattleman to retain.
Brandonm22
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If you have quality cows that work in your environment and you have a fairly clean health status, I would much rather NOT bring in any more outside potential disease vectors than possible. We have got viral disease problem that we did NOT have 20 - 30 years ago and we are vaccinating for more stuff than ever before. Buying replacements is just adding another risk.
BeefmasterB
Well-known member
Interesting!!! I sold a lot of round bales to a operator last week who was taking the bales, dumping them into a tub grinder, adding chopped corn, protein and mollases and then feeding it to whatever yearlings he could buy at the auction barn. He had about 800 yearlings going (male and female). Go figure that one!
VanC":1ao8newo said:
That is my exact feeling. :clap: You will clearly see that in this post. Ignorance is bliss.
Man its never boring learn about cattle. I understood the points on both sides of this fence. However I think Caustic Burno made the best case. An animal eating this years feed and grass needs to add to this year's income. If your not raising cattle for your main source of income then you can count retaining as your gain.
In my case it doesnt matter. I did'nt sink money I did'nt have. Cattle is my habit so its money well spent. I had been think about this subject. I was wondering to do about my calves in relation to building a herd. I think I'll be going at it like Caustic Burno. Everthing sells and I buy replacement heavy bred. It just makes more sense to me. I have a holding pen that I put all the animals I buy for 3 days. Off the trailer I give them a penicillian shot and when I turn them lose in 3 days I hit 'em again.
In my case it doesnt matter. I did'nt sink money I did'nt have. Cattle is my habit so its money well spent. I had been think about this subject. I was wondering to do about my calves in relation to building a herd. I think I'll be going at it like Caustic Burno. Everthing sells and I buy replacement heavy bred. It just makes more sense to me. I have a holding pen that I put all the animals I buy for 3 days. Off the trailer I give them a penicillian shot and when I turn them lose in 3 days I hit 'em again.
kenny thomas
Well-known member
2007 kept about 10% of my heifers. Like them.
2008 sold heifer calves before the price went down. Averaged a little over $500. Bought bred 4-5 year old bred cows in November when things went bad for average $530. All of them have calved now so i think I am ahead this year.
2008 sold heifer calves before the price went down. Averaged a little over $500. Bought bred 4-5 year old bred cows in November when things went bad for average $530. All of them have calved now so i think I am ahead this year.
Caustic Burno
Well-known member
There is nothing wrong with retaining heifers, just realize they are no where close to being free.
They actually have a very high intial cost. Heifers also have a higher incidence of oh crap's.
It makes perfect sense to retain in a registered herd where you are retaining a genetic plus.
From a commericial terminal case it has loser wrote all over it.
We make money by putting pounds across the scale, a F-1 cross will weigh 10% more at weaning over a straight bred and a 3 way will weigh 18% MORE.
It is about putting the best terminal bull with low birth weights and calving ease numbers on crossbred cows to maximize hybred vigor.
You can't sell a dead calf you want them to get here the size of a housecat and grow like weeds.
As Forrest would say thats all I have to say about that.
They actually have a very high intial cost. Heifers also have a higher incidence of oh crap's.
It makes perfect sense to retain in a registered herd where you are retaining a genetic plus.
From a commericial terminal case it has loser wrote all over it.
We make money by putting pounds across the scale, a F-1 cross will weigh 10% more at weaning over a straight bred and a 3 way will weigh 18% MORE.
It is about putting the best terminal bull with low birth weights and calving ease numbers on crossbred cows to maximize hybred vigor.
You can't sell a dead calf you want them to get here the size of a housecat and grow like weeds.
As Forrest would say thats all I have to say about that.
SRBeef
Well-known member
This is an interesting and thought-provoking thread. Reading the posts above I realize that in my situation there are a couple of other ways of looking at things:
A retained heifer (and her dam) may not have brought in any hard cash this year but that heifer is still an asset - and a growing asset as she puts on pounds. Yes she does consume hay and grass which is an expense but if we can keep the average daily gain up and the hay/feed/grass costs down she is still producing a net profit on the balance sheet. Up until breeding at 15-16 months she can be valued as a beef animal. At 15 months if she weighs 1000 lb and could be sold for beef at 80 cents she has a value of $800 to use some round numbers.
15 months = about 450 days x $1.20 avg cost/day = about $540 of feed and upkeep so she has produced a net profit on the balance sheet of $800-540 = $260 even though she has not been sold. Obviously you can generate different numbers but the idea is she has made a balance sheet profit up to breeding even if she has not been sold. At breeding time her income switches over to the value of the calf she will produce or her value if sold as a bred heifer or pair if sold after calving.
Another factor for some of us that sell beef to consumers is that there is a value to many customers to being able to say that that animal was born here on my farm. I market my beef as "natural" beef (no hormones nor antibiotics) that I could not in good conscience claim if I bought calves. Some customers like the idea of knowing where their beef came from. If you sell commercially this is not a factor but there is some value to retaining heifers if you sell beef to a certain markets.
A retained heifer (and her dam) may not have brought in any hard cash this year but that heifer is still an asset - and a growing asset as she puts on pounds. Yes she does consume hay and grass which is an expense but if we can keep the average daily gain up and the hay/feed/grass costs down she is still producing a net profit on the balance sheet. Up until breeding at 15-16 months she can be valued as a beef animal. At 15 months if she weighs 1000 lb and could be sold for beef at 80 cents she has a value of $800 to use some round numbers.
15 months = about 450 days x $1.20 avg cost/day = about $540 of feed and upkeep so she has produced a net profit on the balance sheet of $800-540 = $260 even though she has not been sold. Obviously you can generate different numbers but the idea is she has made a balance sheet profit up to breeding even if she has not been sold. At breeding time her income switches over to the value of the calf she will produce or her value if sold as a bred heifer or pair if sold after calving.
Another factor for some of us that sell beef to consumers is that there is a value to many customers to being able to say that that animal was born here on my farm. I market my beef as "natural" beef (no hormones nor antibiotics) that I could not in good conscience claim if I bought calves. Some customers like the idea of knowing where their beef came from. If you sell commercially this is not a factor but there is some value to retaining heifers if you sell beef to a certain markets.
I believe this "formula" can be used to calculate roughly what heifers cost you to raise. Try it out, put in your numbers from your operation and see what you get.
1) Take an average of what you calves bring and multiple that by the # of calves you sell a year. That should be your gross earning for your operation.
Ex: 100-$600 calves means you gross $60K a year
2) Then take the number of replacements you keep and times that by the avg you earned off of each calf. That is what you "lost" by not selling them that year.
Ex: IF you keep 10% for replacements you keep 10 heifers which is $6,000.
3) Take your gross earning, subtract your expences, and divide that (profit) by the number of cattle you have. That says how much you make per calf, per year.
Ex: You gross $60K, spend $50K, profit $10K and divide that by 100 momma cows you make $100 per calf. It costs you $500 a year to raise a $600 calf.
Now you only calculate until the time that heifer is bred. Once she is bred she starts another calculation like all the other cows in the herd and will fall into Step 3. (You are only responsible to get her to breeding age, then she has to be calculated like all your other bred cattle as an expense)
Ex: If you wean at 8 mo old to sell for $600, and breed that heifer at 18mo, if it cost you $500 a year to raise an animal, that heifer cost you $1350 to raise one heifer, $13,500 to raise the ground to breeding age. ($600 + (1.5 x $500) = $1350)
Where the risk with heifers comes in is if you raised 10 heifers to breeding age and 8 out of 10 bred and were keepers, your cost of replacement heifers just grew. You have to take you total cost, add in what ever you get from the 2 at the auction, and divide that by the remaining keepers
Ex: At first you divided the total, $13,500, between 10 head. If only 8 pan out, you have to take $13,500, add in what ever two heifer bring at the ring (#800x.7)x2=$1120, and divide that between the remaining 8 heifers.
13,500 + $1120 = $14,620 / 8 = $1,827.5
Give it a try and see what yall get. It is then up to you to compare what it costs to raise them vs what you pay for heifers. Just about every number and time frame in this is a variable that depends on your area, operation but the way of calculating is the same and it should (maybe) take into account the different situations. (If you find some thing wrong with this please let me know because I use this ... :lol2: )
1) Take an average of what you calves bring and multiple that by the # of calves you sell a year. That should be your gross earning for your operation.
Ex: 100-$600 calves means you gross $60K a year
2) Then take the number of replacements you keep and times that by the avg you earned off of each calf. That is what you "lost" by not selling them that year.
Ex: IF you keep 10% for replacements you keep 10 heifers which is $6,000.
3) Take your gross earning, subtract your expences, and divide that (profit) by the number of cattle you have. That says how much you make per calf, per year.
Ex: You gross $60K, spend $50K, profit $10K and divide that by 100 momma cows you make $100 per calf. It costs you $500 a year to raise a $600 calf.
Now you only calculate until the time that heifer is bred. Once she is bred she starts another calculation like all the other cows in the herd and will fall into Step 3. (You are only responsible to get her to breeding age, then she has to be calculated like all your other bred cattle as an expense)
Ex: If you wean at 8 mo old to sell for $600, and breed that heifer at 18mo, if it cost you $500 a year to raise an animal, that heifer cost you $1350 to raise one heifer, $13,500 to raise the ground to breeding age. ($600 + (1.5 x $500) = $1350)
Where the risk with heifers comes in is if you raised 10 heifers to breeding age and 8 out of 10 bred and were keepers, your cost of replacement heifers just grew. You have to take you total cost, add in what ever you get from the 2 at the auction
, and divide that by the remaining keepers Ex: At first you divided the total, $13,500, between 10 head. If only 8 pan out, you have to take $13,500, add in what ever two heifer bring at the ring (#800x.7)x2=$1120, and divide that between the remaining 8 heifers.
13,500 + $1120 = $14,620 / 8 = $1,827.5
Give it a try and see what yall get. It is then up to you to compare what it costs to raise them vs what you pay for heifers. Just about every number and time frame in this is a variable that depends on your area, operation but the way of calculating is the same and it should (maybe
) take into account the different situations. (If you find some thing wrong with this please let me know because I use this ... :lol2: )novatech
Well-known member
I agree that it is not good economics to retain heifers for replacements in a commercial herd. One can usually buy better genetics for less money. You cannot raise anything better than you already have. This may not hold true for each and every individual and it does not account for those wishing to maintain a closed herd for health reasons. But as a general rule it will hold true for a skilled cattleman.
Having said this here is some food for thought, I do not see where anyone is accounting for the fact that these are replacements. This means there is a cow not eating grass or hay. Does the replacement heifer eat more grass or hay than the cow she is replaceing? There is also not value put on what the replaced cow brought at market. So basicly you are losing a years production from one animal. That fact alone will cause many to cull a cow but yet it is OK to retain and loose a year or more?
Having said this here is some food for thought, I do not see where anyone is accounting for the fact that these are replacements. This means there is a cow not eating grass or hay. Does the replacement heifer eat more grass or hay than the cow she is replaceing? There is also not value put on what the replaced cow brought at market. So basicly you are losing a years production from one animal. That fact alone will cause many to cull a cow but yet it is OK to retain and loose a year or more?
cypressfarms
Well-known member
I like Nova's point from this view: If the "replacement" heifer is replacing a culled cow, then the cost associated would not be as great as one might assume. Example: If I sold old belle, and kept one replacement heifer, the grass eaten - theoretically, will be the same. The variable costs will be the same, if not less (because of smaller size).
I belive that both sides have merit, though. Dun stated that he could get a few more productive years from his replacements as opposed to purchased: I think you'll need to in order to return that initial loss.
This past year, I actually did something that made my mentor (my dad) very proud. I sold most of my calves in August before the price tanked. In November I bought a group of heifers on the cheap (I believe that $450 was the most I paid for any of them, and they were all 450 to 600 pounds.) The market has come around and now those heifers are worth .80 to .90 per pound - when I bought them in the .60's. He actually said that for the first time in my adult life he saw me do something against reason (his ofcourse), and prove that it worked. There is always one more way to skin a cat. I'm glad to have my dad, now 68, still involved with me on an almost daily basis. Although I may be catching up to him, I still have a lot of cathing up to do!
At the time I sold my calves, the cost of keeping replacements was high in that calf prices were still high. The two replacements I kept would have easily brought $550 in August. In November the cost of buying was low, and was able to pick up some nice heifers for cheap. Sure I'll probably have to cull some, and I have no idea what their bags will be like (my personal pet peave - a bad bag), but at the time it made much more economical sense to buy. Now I have a group of heifers in my Angus plus bull getting bred which will give me more options. If I don't like them as they grow out, I could always sell them as bred heifers.
Thee are so many variables, that I find it easy to understand everyone's point of view.
One last word about genetics. I do try to improve my herd year after year. As I stated one of my pet peaves is a bad bag. With kept replacements I can be almost certain that I will not have bag problems - I only keep relacements from cows that have great bags. That cannot be said for purchased heifers.
I belive that both sides have merit, though. Dun stated that he could get a few more productive years from his replacements as opposed to purchased: I think you'll need to in order to return that initial loss.
This past year, I actually did something that made my mentor (my dad) very proud. I sold most of my calves in August before the price tanked. In November I bought a group of heifers on the cheap (I believe that $450 was the most I paid for any of them, and they were all 450 to 600 pounds.) The market has come around and now those heifers are worth .80 to .90 per pound - when I bought them in the .60's. He actually said that for the first time in my adult life he saw me do something against reason (his ofcourse), and prove that it worked. There is always one more way to skin a cat. I'm glad to have my dad, now 68, still involved with me on an almost daily basis. Although I may be catching up to him, I still have a lot of cathing up to do!
At the time I sold my calves, the cost of keeping replacements was high in that calf prices were still high. The two replacements I kept would have easily brought $550 in August. In November the cost of buying was low, and was able to pick up some nice heifers for cheap. Sure I'll probably have to cull some, and I have no idea what their bags will be like (my personal pet peave - a bad bag), but at the time it made much more economical sense to buy. Now I have a group of heifers in my Angus plus bull getting bred which will give me more options. If I don't like them as they grow out, I could always sell them as bred heifers.
Thee are so many variables, that I find it easy to understand everyone's point of view.
One last word about genetics. I do try to improve my herd year after year. As I stated one of my pet peaves is a bad bag. With kept replacements I can be almost certain that I will not have bag problems - I only keep relacements from cows that have great bags. That cannot be said for purchased heifers.
novatech":2ivs8qcv said:
When you keep replacements every year you do not lose any years. There is always a flow of cattle coming in, no down time like you are reffering to. IF you have multiple places and the cattle calve at different times you can literally have cattle every couple of months. ;-)
Horseless
Well-known member
For being so expensive to raise, there sure are a lot of them for sale. If it cost me that much to raise a heifer as stated above, then I shouldn't being raising cattle at all. If everybody that raises bred heifers lost money, I guess we would run out of cows. ;-) It must be why we are running out of ranchers ;-) Still be believe the ones I raise are usually better quality than what I can buy and will last longer in the herd, thats where money will be made. I still buy some, but to get the quality I have to pay a premium, from producers who didn't cut corners by not providing mineral and etc. As far as buying mid-aged cows, I ask why was someone selling them at such a young age. And if they can stay in my herd for 5 years, divide the cost by five, and hope they make it the five years.
Horseless
Well-known member
Cyrpressfarms My pet peeve is also bad bagged cows. But you mentioned some of those that you bought you will grow out and if "you don't like them" you will sell them as bred heifers. Well it looks to me like you might have some customers right here on this topic. I just don't want to be that person that buys those. But you did what you needed to do to make money.
Horseless":14sw2pog said:
Exactly, if you can buy better quality for cheaper than you can raise them, how is the person you bought from making money? :lol2:
There are some good points on both sides of this issue. For me though, I raise my own. For instance, I know I will be culling 3 or 4 cows every year as the herd ages. So,....I keep the 5 or 6 top heifers every year to raise, as I am also trying to build my numbers up. I try not to cull the older cows until the heifers are of breeding age. Always looking forward a couple years. Another issue that I haven't seen in this thread (unless I missed it), is the danger of buying heifers that have been bred to a non-calving ease bull. This happened to us years ago. 20 heifers that were supposedly bred to a calving ease bull. We had to pull every calf, and lost several calves and a couple heifers. Also, I personally don't like Father-daughter, brother-sister, grandfather-granddaughter breeding. Not sure what is "officially" called line breeding as opposed to inbreeding, but it is not for me. Lots of folks do it and it works for them, but those are heifers I don't want. We know the lineage of our herd for a couple or more generations. These are the reasons we prefer to raise our own replacements.
Caustic Burno
Well-known member
Horseless":30nsz1t7 said:
The majority are not making money off cattle they are proping them up with off the farm income.
Truth just isn't pretty, they can't admit ole Belle is not paying her way.
Less than 1% of the cattle ranchers today are under 50 years old according to an article in the Chicago Tribune a while back, the reason you can't pay to start a business that won't pay for itself.
That is like the deduction arguement on a tractor, its great if you need a new tractor but it is a loser buy anything to write off on taxes. You spend 30,000 on a new tractor depreciate it over 5 years so you write off 6,000 on farm income for total income for the year. If you are lucky you will get an additional 500 bucks back on the intial write off still 5500 dollars in the hole.
Today's Cattlemen pour a lot more into the operation than it takes to produce beef. Grass,water,hay and minerals thats it.
It took my hard head a while to figure out it is about being a grass farmer first, and open your eyes second.
Cows are employees those that produce stay those that don't go no second chances we are in a business that buy's retail and sells wholesale there is no room for any animal not to be adding to the bottom line in a commericial operation.
Thats what my little pea size brain has mulled, worried and penciled out in every direction in the last almost 40 years of messing with these hateful beast.
