Cattlemen..."Serious" advice needed

[MTplainsman]

I could use your help and ideas. Any kind of help would be appreciated, but I need advice based on experience, not assumptions or guesses. Heres the deal...

I am facing the point of selling near half my herd by next spring, due to old age. I bought this half as "short termers" and got two good years out of them. They "must" sell before they go rough on me! Some are already showing thier age.

Now then, I have a smallish herd of 120 cows. I have to sell roughly half or more of this number. I figure when all is said and done, I will let go 65-70 head. I have only had cows now for two years, and of course they are a "l-o-n-g" ways from being payed off as well as turning much of a profit for me. So, here I am, facing to buy back expensive cows in the spring, in which will keep me in debt for so much longer.

I have been pushing around the idea of keeping just 30 pairs, enough for a herd bull, and just take on bout 90 or so lease cows. Is there any sand to such an idea? Is this a reasonable option for a profit these days? What are things I should concider going this route? How do you make leasing work? What's the "share" ratio. What must I supply? What must they supply? PLEASE! I need any words on this subject I can get. I thank you all for any help. Joel

[ksfarmer]

MTplainsman, I'm in somewhat the same situation. I sold off about half my cows last year due to drought. Pastures have recovered now, and assuming normal rain next spring, I need some more cows. Prices for good bred cows are scary right now. The ones I have are debt free, but the replacements wouldn't be. I'm retirement age so am wondering if I should sell the rest and rent the pastures out to someone else. I would also be interested, if someone posts here that has experience with a lease arrangement like you are considering. Maybe we will get some ideas.

[agmantoo]

This doesn't answer your question but there is an exception to how the income is handled when the animals are sold due to drought. The IRS will allow you to "hold" the income for up to 2 years and you can buy back stock in the second year and not have a gain/income from the initial sale.

[travlnusa]

How old are the cows you are looking to cull, and why are you culling them out of the herd? I know you said they are getting old, but are they still calving?

If you do sell them, group them in to matched lots. Buyers will pay a bit more for a full load of matched loads.

I would suggest you sell what you need to sell and then either, pay towards you loan note, or buy heifer calves.

Another point is if the cows you what to sell are bred, can you hold them long enough to calve and get rebred and then sell them as a thee-way (cow, calf, and embryo)? That will bring more money, but cost goes up keeping them.

Not knowing you personal math, I would cull what wont bred back, keep the rest. If you are selling to to lack of feed, cull your bigger cows that will use up more feed.

Just some ideas.

[Alice In TX/MO]

You've had them two years and they are old? What were they when you got them .... ten?

Without more info, there's not an answer.

Edited to add: go into debt to buy cattle? umm NO.

Ever heard that the way to make a small fortune in the cattle business is to start with a large one? It's true.

Edited *again* to add: If you aren't in the inner circle of the fancy breeder business already, it is VERY hard to break in. Don't waste your money on pedigreed cattle.

Rose, who has been there done that, etc.

[MTplainsman]

Yes I bought many of them at 10 yo with quarenteed calf at side. They were very nice, and a real deal. Now many of them are 12 and some 13! I got my use out of them, and several are not breeding back, keeping there weight, and too many are throwing smallish calves now... They have to GO!

P.S. I am strictly "commercial" No pedigreed stock running my place except for the bulls.

I'm listening to all of your points, thanks.

[travlnusa]

You mentioned that some are not breeding back, meaning that some are still breeding back. Those I would keep. A cow has one job and that is to drop a live calf each year. If they are doing that, keep them.

[elkhound]

there are many many things you can do.first off NO MORE DEBT....lol..sorry...

are the cows breed to calve at one time??? this way you can get a vet out on one or 2 days and give a pregnancy check and cull the open cows.open cows are dead weight.also as another management tool you can set a standard for your calves weining weights...if a cow does not wean out a calf that weighs xxx pounds then they are culled.but this could be much farhter down the road for you.when you set your standard stick with it.

the easiest way to replace cows is to keep you heifer calves and sell the cull cow.pick out the very best animals for replacements.you can shoot for them to calve at 18 months or so...but get them to calve at same time frame with the herd.

do you let the bull run with cows?? and breed back as soon as they come in heat ??if so this will really age a cow fast. do you do all spring time calveing?? or fall or what ever??different people have different market targets and should breed for that. if so this will really age a cow fast.

wished you was closer there are some nice cows and breed heifers ont he market thsi fall due to the no rian heree.lots of farmers selling off stock.

[Tana Mc]

I agree with one of the previous posters... Have you preg checked them?
I do it for my neighbor and as soon as I get thru these first few days of deer hunting season, he has about 70 waiting for me. That will cut your dead weight immediately and help with culling decisions. Give you a bit of cash flow, too.
I have other neighbors that lease out their cattle and a friend that brings in about 2500 leased cattle. She spends a good part of her life on horseback. Are you thinking cow/calf or some kind of a stocker arrangement for calves? I can't get right back to you ( deer season!!) but I'll chat with them about how their arrangement works or have them get I touch with you so I don't get the info botched up.

Tana Mc

[Ken Scharabok]

Suspect it would be worth your while to have them preg. checked. Anything not bred within four months of calving likely should go - regardless of age. Send them to market as an open cow with calf. Locally some will sell as a cow/calf pair and others will be separated, with the cow going to slaughter and the calf going to a feedlot.

Keep in mind though some vets aren't very good at detecting pregancies under three months.

Then use that money to buy back young cows bred to your calving philosophy. Likely they are selling cheaper now then in the spring when pastures start to turn green and you have to compete with everyone else stocking up again.

My oldest cow is 12-14 now. Still gives me a calf each year, but the quality of the calves is declining. Out of my first calf crop. All of the other heifer calves I kept out of it have fallen out of the program for one reason or another.

[Jena]

I will assume that you are following standard cow stuff like preg checks. I will also add that raising cattle in Montana is a lot different than raising cattle in Illinois and it is a lot different in many other places. Consider location when you consider advice.

Do what you have to do first. If the girls need to go...sell 'em.

Then start figuring your options.

Do the math. Do the math. Do the math.

It does not matter what worked for me or the guy down the road. You have your debt, your expenses, your whatevers that figure into your math. I can't tell you if something will turn a profit...do the math!

That said...what was your plan when you bought the short term cows? Short term cows should be part of a long term plan. Did you have one? What happened to it? If you didn't have one....well, you might want to figure how your chosen option for this year is going to affect your operation next year...and in five years, ten years, etc.

In another post, you talked about keeping heifers or selling them. 58 I believe. What happened to them? When can they be bred? I was thinking they were ready to be bred this year, but I might be wrong.

You say your cows are a long way from turning a profit. Why is that? I can understand them not being paid off, but if they aren't profitable...if you are losing money on them....well....maybe you ought to sell them all and refigure things. You can't stay in business if you can't make a profit...however small.

Jena

[ksfarmer]

Originally Posted by agmantoo

This doesn't answer your question but there is an exception to how the income is handled when the animals are sold due to drought. The IRS will allow you to "hold" the income for up to 2 years and you can buy back stock in the second year and not have a gain/income from the initial sale.

You are correct on deferring the income from sale of drought stress cattle, however, you must buy back to the same as you sold. If I go to a backgrounding operation instead of stock cows , then I owe the tax plus a penalty. All things considered, my tax man advised declaring the income and paying the tax. Situations might vary for others.

[MTplainsman]

Ok, I bought these "short termers" with the idea of getting two years tops, out of them. I was gonna turn around and sell after that point, and use the money to buy back fresher cows. Thing is, that cows of this age bring canner prices right now, and with all the expenses due to improvements and equipment for a begginer trying to build up, you do the "MATH"... Now then, I most certianly have to let a percentage go due to payments on land etc. I need to get rid ofthe older cows anyways, as I don't want to be stuck with so many going to heck on me. When the old cows are gone, I am then open to a fresh idea. Rather then coming up with the money to buy back younger replacements or raising expensive heifers, I really was thinking about leasing out a cow/calf herd to fill in the blank, without putting out so much money on cows of my own.

Yes I preg test, and I always know what I got. I breed for spring calving. I do have 58 heifers, and am able to now keep all but 30 of them, I was able to hold back my better ones!

Maybe it is wise to keep 60 pair of my own brand for tax reasons, and for a good base, but I still can't justify buying back what I need to replace all the old cows. If I keep 60 pair, I still have room for another 60 pair. I need to fill that balance out in some way in which I have less money to put out. I still think the lease idea could be the answer. It is hard to understand, not knowing what it costs me to get started and what my expenses are, and I will not go into details. I know I have a limited amount of money to invest in an alternative, as profits I do make have to go into the process of starting from nearly the ground up!

[MTplainsman]

Just wanted to add: These ST cows are range types, not the huge farm type cows many of you saw in my pics. These type of cattle burn out much quicker than the general farmer styles. 12 and 13 yo cows sound like they still got some year left in them, but you just can't expect such a thing from a "range" cow!

[Cheribelle]

Joel, did you expect these cows to bring better than canner prices when you started this plan? Just curious.

[shelljo]

My dad leases his ground to other ranchers with cattle. I think the steers he has on pasture right now, are contracted for either $15 a head, or $15 a lb. gain weight.

He told me, but I can't remember exactly. I know that sometimes he's taken a percentage of their gain, but now he says he likes just agreeing on a price per head, so I think he'll get $15 a head. I have no idea how long these cattle will be on his pature either. Maybe it's $15 a head per month? I can ask.

Gee, I felt more confident about an answer for you before I started typing it out!

[Marilyn]

Please don't borrow if at all possible.

[Rocky Fields]

Hey.

Generally, selling in October brings some of the best prices for beefers in WI.

RF

[Jim S.]

You might as well start on a retention and culling program. Keep the best, sell the rest. Get your herd in a rotation scheme where you have heifers coming up to replace older cows as they head to the sale barn. The harder you are on them as far as culling standards, the nicer your herd will look 3 years from now. So cutting 65 cows out can actually improve your herd down the road, provided you sit down and make up a list of reasons for culling and goals for your herd conformation. Stick to your list, and make them work to stay.

There are those who will insist that you cannot economically raise your own replacements. Ignore them. It can be done cheaper than buying, if you manage your costs. Grass in the pasture is free energy for growth.

I started out just the same way you did, with older cows. Retain your nicest heifers, sell your very oldest cows and all steers/bull calves, keep your youngest of the old cows for another calving season, then save their best heifers. Then you will have a stepped rotation started in your herd.

I don't know how many bulls you run, but if you want the benefits of purebred without the pricetag, get on what I call a "ladder breeding" program. The best of your F1 females go to a second bull for the F2 crop. The best F2 females go back to the same bull as the F1s had. And so on, back and forth. You are essentially line-breeding in the traits of the bulls used, so if you choose complimentary bulls it works well. This is a closed-herd system until you reach the limits of homozygosity, and then you can swap in new bulls to release all that pent-up potential again in heterosis.

Here's another possible management route. I set my herd up for fall calving (which might work good for you, since springs out your way can be brutal). Anyhow, by fall calving, I was able to get with another farmer and use his bulls. I would overwinter young bulls and feed them up. I would get the winter service, he would get the weight gain. He would then use those bulls on his spring-season cows, or sell them. It's a good trade. Plus, your fall-born calves will be ready in counter-cycle to the market, bringing you a seasonal premium in most years at the sale barn.

It is hard to work out of cattle debt, but try to do so as quickly as you can. The market is good now, but it is still a commodity cycle thing, no matter how confident folks are that we have escaped that basic cycle. They say that at every peak. But I have sold some nice calves before at 33 cents in a bottom, so I know for a fact what goes up will come down. You don't want to be carrying a big debt load when it does, and wind up upside down to cattle prices.

It is true about tax relief for drought, and I'd take advantage of it in every way you can. You can actually even pause in farming and carry over to a future better year. Get with your tax guy. If you don't have a tax guy, get one who is intimately familiar with farm and ranch tax law. Best money you'll ever spend, trust me. I consider mine almost a business partner.

[Wilbur]

I don't own any cattle and never have (yet being the hopeful word there ) so this may be a foolish idea but can you keep some of your herd with the program you have and then lease some of the land as well? What I am implying/asking is if your whole herd is set up for fall or spring calving are you putting all your eggs in that one basket by hoping conditions work out AND the market is primed for the exact time you have calves/cows for market? It might be a way of diversifying your risk so that you don't find yourself in a spot where all your money will come from calves for sale when prices are down or having to re-stock when all the prices are high? Is there some other way to spread your risk around- while it won't be as profitable as hitting that perfect time when prices are high AND you have calves/cattle for sale, it limits your downside risk of being upside down in that scenario also. And with debt service to cover, having a less volatile stream of income may be more important than hoping you hit the cycle just perfectly.

If this is not suitable or the cash flows won't work sorry- just something I was thinking of as I read the responses. Good luck.