Getting Started in the Cattle Business

[HDRider]

I know we have some real cattle success stories out there. Would someone just start a lesson plan or a road map to getting started in the cattle business?

Could someone share their mistakes and what they learned along the bumpy road?

I am not looking for a college book. I want to hear from folks that learned the hard way, and took many years to learn the hard lessons. Share life's lessons, the joy and the sorrows.

Agman and others have done so much to help us learn about grazing. Could someone back up and start from the beginning? Talk about the wealth of info you have to share with us newbies. Take me as an example; I was born and raised on a row crop farm. My Father quit farming when I was 14, but I continued to work for other farmers until I went off to college. I am now 52 years old, and plan to get back on the land in about 3 years. It is in the blood...and after over 30 years in the corporate world. AND then think about those young folks just starting out and how they can build on your good works and learn from your mistakes. Talking about your mistakes helps us all so much...

I am reading everything I can. Greg Judy, Laurence Lassater, Allan Nation, Heather Thomas, Jim Gerrish, Sir Albert Howard, Andre Voisin.

I am visiting farms, mostly those doing intensive rotational grazing and those that have cattle from Kit Pharo.

Put yourself in my place. What do I do first? Second and so on until the infrastructure is in place, and then talk about the day-to-day. Calving, fall or spring, and why. Sick cows, vinegar in the water to fight parasites, anything and everything you do every day to keep a healthy, productive herd. Just write what you know. Keep each lesson short and tightly focused on one subject until you move to another subject. Easy Peasy, right?

I know I am asking a lot, but it is purely your call. Thanks so much for considering it.

You will be surprised how some folks add valuable little nuggets and tidbits to contribute to the richness of the discussion. There will be those few smart alecs that have to be cynical or know-it-alls. Just ignore them, they are only having fun when you reply directly to them.

There are those that just have a difference of opinion, and that is fine. You know better than most, there are multiple ways to skin that cat..

You have done something you enjoy, and you made a good living doing it. That is the basis for real satisfaction.

If you decide to do it - take your time and go at your own pace - No one is pushing you to do the next chapter. Questions will come up and they too help strengthen your efforts.

[nosqrls]

First You have to figure why you want to do it.(profit or something you want to do.)
then decide if grain finish or grass or organic. Then pick a breed that will do that in your area. If just starting out pick a small number of a easy to manage breed to do what you want.

[PaulNKS]

Based on the OP's request via PM as well as a couple others, I'll start a thread based on MY experiences only and what has worked for us.

[HDRider]

Originally Posted by PaulNKS

Based on the OP's request via PM as well as a couple others, I'll start a thread based on MY experiences only and what has worked for us.

Fantastic - I can't wait to read them. Thanks

[PaulNKS]

Originally Posted by HDRider

Fantastic - I can't wait to read them. Thanks

You got me into this, you better help. lol

[HDRider]

Originally Posted by PaulNKS

You got me into this, you better help. lol

We all will.

Does anyone have other authors to suggest? Obviously Joel Salatin should be on that list. He is a one-man homesteading machine, and way beyond, benefiting from family generations before himself.
Joel Salatin - Wikipedia, the free encyclopedia

[oregon woodsmok]

Cattle prices run in a cycle. Right now they are high, so it is not the best time to buy in.

[HDRider]

Originally Posted by oregon woodsmok

Cattle prices run in a cycle. Right now they are high, so it is not the best time to buy in.

Right,, I feel for those that don't have a choice - Buying (high price) or selling (drought)

[ErinP]

Personally, what we did was work on a bunch of different ranches in several states for about 10 years. Didn't really set out with the intention of being background for our own operation, but that's what happened.


Experience is really the best teacher...

[PaulNKS]

Originally Posted by oregon woodsmok

Cattle prices run in a cycle. Right now they are high, so it is not the best time to buy in.

But... they have been consistenly high over the last 10 to 12 years, high enough to profit. The key is that you can't owe money on the land and the cattle and expect a profit. You have to own at least one or the other.

[SCRancher]

I have been thinking on this a lot as I consider purchasing more land to have more cattle with the plan on one day retiring and living off my cattle income.

These are the numbers that are running through my head as I consider each piece of land in my area that is for sale.

Please if you find problems or have other thoughts on these numbers reply - please note these are round numbers because I don't really think your going to get really accurate with all the variables.

For Cow/Calf Operation - 400-450 pound calves in my area are selling between 1.50 to 1.60 per pound. So your talking a number between 600 and 700 dollars per calf gross. Which I'm thinking with a MIG system of grazing and focusing on profitability you may net around $500 per calf after care and potential supplemental feeding of cow and calf.

So starting with my $500 figure per calf and backing into the debt level that this $500 supports.
$10,000 X 5% interest = $500.
So for each calf raised you can have a maximum of $10k in debt to come close to BREAK EVEN if you don't include any of your labor.
For now breaking even or coming close to breaking even is all I need because I have off-farm income to support myself.

So how does this 10k in debt translate? Well if you take out 1k for the cow purchase you now have 9k left for land and this is where huge number of variables come into play to determine if the land your considering will pay for itself.

Agmantoo is in my geographic area and is running around 1.7 acres per cow but he has been doing this for a while, has what appears great fertility, and he has LOTS of experience. I would say for me and a safety margin I would need 3 acres per cow. So 9k divided by 3 = maximum of 3k per acre of pasture.

If your buying a piece of land that is 80% pasture and 20% woods you would need more than 3 acres per cow because part of your land is not going to support the animal.

So when I'm looking for land I need to hit 3k per acre to break even in my area.

This figure does not take into consideration equipment and improvements necessary to handle and care for cattle - for me that will be made up from my off-farm job.

Please note - if your area calves are selling for around the same but land is higher or lower it will change your land purchase price.

If you have equity in the property or say it's paid off then you can determine your rough income from the above as well.

Again I'll use my area - if I own out right a piece of property + cost of the cows that cost $250,000 and I want to earn 5% return on my investment then my return should be $12,500 which is 25 brood cows. 25 cows X 3 acres per cow means I would need 75 acres of pasture.

Now what about appreciation of land? Well that would enhance your profit when you get ready to sell but does not come into play on a yearly basis. Historically rural farm land nationally has appreciated 3-5% per year but regionally there can be a HUGE difference. In Ohio farm land has jumped 10-16% per year in the last few of years while at the same time in my area land has had no appreciation to slight deprecation.

A bit rambling I know but I have so many thoughts on this and there are so many factors to consider that just getting this much out of my head was a task.

[PaulNKS]

It's nice to see you working through the numbers. I will make a couple comments... just my opinion....

Originally Posted by SCRancher

For Cow/Calf Operation - 400-450 pound calves in my area are selling between 1.50 to 1.60 per pound. So your talking a number between 600 and 700 dollars per calf gross. Which I'm thinking with a MIG system of grazing and focusing on profitability you may net around $500 per calf after care and potential supplemental feeding of cow and calf.

For those types of prices, you will have to be raising a heavy beef breed such as Hereford, Angus, Limousine, etc. With each breed, you run into specifics as to how long before they will reach a weight to sell. BUT.... 400-450 pounds per calf is WAY too young and too small to sell. If you have good cows, with good milk, the calves should weigh a minimum of 600 pounds weaned.

So starting with my $500 figure per calf and backing into the debt level that this $500 supports.
$10,000 X 5% interest = $500.
So for each calf raised you can have a maximum of $10k in debt to come close to BREAK EVEN if you don't include any of your labor.
For now breaking even or coming close to breaking even is all I need because I have off-farm income to support myself.

You'll have losses most years. It may be one calf, or one cow, but count on losses. It may be mortality or it may be from a cow not conceiving.

So how does this 10k in debt translate? Well if you take out 1k for the cow purchase you now have 9k left for land and this is where huge number of variables come into play to determine if the land your considering will pay for itself.

Agmantoo is in my geographic area and is running around 1.7 acres per cow but he has been doing this for a while, has what appears great fertility, and he has LOTS of experience. I would say for me and a safety margin I would need 3 acres per cow. So 9k divided by 3 = maximum of 3k per acre of pasture.

A cow/calf operation will not break even at those prices if you have debt on both. If you borrow to buy the land and borrow to buy the cattle, you will not break even.

If your buying a piece of land that is 80% pasture and 20% woods you would need more than 3 acres per cow because part of your land is not going to support the animal.

So when I'm looking for land I need to hit 3k per acre to break even in my area.

I never get that deep into it. When we get ready to buy land, we buy based on how much cash we have to spend. lol We also know what our stocking rate is. When referring to stocking rates, you usually don't factor in timbered areas at all. Stocking rates refer to grass pastures. We never plan on stocking at the full rate.

This figure does not take into consideration equipment and improvements necessary to handle and care for cattle - for me that will be made up from my off-farm job.

Doesn't have to be a lot. There are many things you can do as you add equipment, to make do temporarily. Eventually, you will need a working chute, and headgate. Other than that, the only thing you will need is a way to handle large bales of hay, either tractor or a skid steer. If you plan to produce your own hay, then you will need equipment for that. Otherwise, it doesn't really take much equipment.

You referred to supplemental feeding of calf and cow. The only supplemental feeding you would need is just a handful per head to get them accustomed to coming into a work or sorting area when called. Also, a free choice mineral and a salt block. As far as grain, don't spend all your profit on grain. If a cow can't keep here weight on with just grass/hay, then she's not really paying her way.

Good to see someone thinking it through so thoroughly.

I will also say that on a farm, when you get an unexpected expense, it isn't a little one, they are usually costly. You also didn't figure any vet expenses into your plan. Unless you know how to do your own vet work, you will have a lot of vet expenses, especially in the beginning.

[SCRancher]

First let me thank you for reading what I read and putting so much time and effort into a great response!

Originally Posted by PaulNKS

For those types of prices, you will have to be raising a heavy beef breed such as Hereford, Angus, Limousine, etc. With each breed, you run into specifics as to how long before they will reach a weight to sell. BUT.... 400-450 pounds per calf is WAY too young and too small to sell. If you have good cows, with good milk, the calves should weigh a minimum of 600 pounds weaned.

I'm still new at this - I do have Angus cattle now - I was basing 400-450 pounds on what the market report in our area was showing as the best price/weight to bring in the $$. I know my current calf crop was still nursing at 10 months old - I finally separated them from their mamma's. I put the 400-450 weight range because I was figuring pulling them from their mamma's @ 4-5 months old - I guess they would not be weaned but as I think you said in your thread they would be "green" but the auctions around me don't separate cattle by green vs weaned - they only separate by weight.

A scale is on my hit list of equipment to buy but right now I have other priorities for the $$. I have only sold 1 batch of calves at the auction - my current batch I'm going to try to sell as beef to friends and friends of friends - we'll see. I only have a few cows and only 6 steers so perhaps I can find enough buyers for them as beef, if not then I'll take them to the auction.

Generally with beef breeds how old are they when they reach the weaning age/weight you mentioned?

Anyway the information in your statement above is great and thanks for it!

Originally Posted by PaulNKS

You'll have losses most years. It may be one calf, or one cow, but count on losses. It may be mortality or it may be from a cow not conceiving.

Yup for sure I have experienced this as well and your right it does take away from the numbers causing a short fall in what I wrote.

Originally Posted by PaulNKS

A cow/calf operation will not break even at those prices if you have debt on both. If you borrow to buy the land and borrow to buy the cattle, you will not break even.

Here I will disagree because it does not matter so much on what you own but upon the amount of debt. I say this because in an area about an hour away from me I have seen good pasture land go for $1500 per acre and near to me I have seen land go for 8-12k per acre. It does not matter 1 lick if you own the cow if your land is costing you 12k per acre you will never even come close to breaking even.

Where in my scenario I can borrow for both the cow and land if the land is $1,500 per acre, the stocking rate is 3 acres per cow, and still make a profit.

So that is the reason I disagree with your statement.

Originally Posted by PaulNKS

I never get that deep into it. When we get ready to buy land, we buy based on how much cash we have to spend. lol We also know what our stocking rate is. When referring to stocking rates, you usually don't factor in timbered areas at all. Stocking rates refer to grass pastures. We never plan on stocking at the full rate.

Yup 3 acres per cow in my area SHOULD most years with good management allow year around grazing - like I said Agmantoo is less than 80 miles from me and his stocking rate with year round grazing is 1.7 acres per AU

Originally Posted by PaulNKS

Doesn't have to be a lot. There are many things you can do as you add equipment, to make do temporarily. Eventually, you will need a working chute, and headgate. Other than that, the only thing you will need is a way to handle large bales of hay, either tractor or a skid steer. If you plan to produce your own hay, then you will need equipment for that. Otherwise, it doesn't really take much equipment.

Agreed!

Originally Posted by PaulNKS

You referred to supplemental feeding of calf and cow. The only supplemental feeding you would need is just a handful per head to get them accustomed to coming into a work or sorting area when called. Also, a free choice mineral and a salt block. As far as grain, don't spend all your profit on grain. If a cow can't keep here weight on with just grass/hay, then she's not really paying her way.

Supplemental feeding to me is not grain - I agree 100% with you on feeding grain - supplemental feeding for me is purchased hay - it's not much for me - last year is was between 30 and 40 days of haying them - I possibly could have gone 1/2 that amount of time to no hay at all but I'm too new and already had the hay so figured I may as well feed it. My hay is stored out side on the ground so it won't keep long.

Originally Posted by PaulNKS

I will also say that on a farm, when you get an unexpected expense, it isn't a little one, they are usually costly. You also didn't figure any vet expenses into your plan. Unless you know how to do your own vet work, you will have a lot of vet expenses, especially in the beginning.

The vet bills were included in the care of the animals - I was figuring at current prices of 600-700 per calf and only netting 500 after care for me included the vet bills. My vet is super easy on the prices, lives 1/2 a mile from my place, and is more than happy to educate me. I will use him less and less but will always use him when I'm unsure or feel my skills are not up to par to get the job done.

[ramiller5675]

It's always seemed to me that the buying and owning of land should be separated from the profits from the cattle.

When figuring out how much it costs to produce a calf, you should factor what it would cost to rent the pasture regardless of whether you own the land outright, rent it from someone else, or have a loan on the land.

In other words, if I get 25 calves off of a pasture that would cost me $2500/year to rent, it cost me $100 in pasture rent to produce that calf. The price paid for the land is irrelevant if I could rent something similar for that amount (i.e. it doesn't matter if the land cost $12,000/acre or $1200/acre or was inherited, it still cost $100/calf in pasture rent since that is theoretically the going rate to rent pasture).

The money you make (the profit) from the cattle is what you use to either pay for the land or put in the bank. The land it is an asset that I am buying and isn't an expense that the cattle operation has to pay for. Even if all the profits from the cattle go to paying off the land loan, you are still "making money" because you will eventually own the land.

It might not make complete sense, but that's the best I can explain it.

[SCRancher]

ramiller - true however if your buying the land with the expectation that the money from the calf crop is to pay for the land then it makes all the difference in the world.

If buying the land and wanting the cattle to pay for the land then the numbers have to line up to at least close to the break even point otherwise your going to have to make up the difference from your off-farm job.

Thus 12k per acre land you can not "pay for the land" using cattle alone which is my goal.

Like any investment or business there is danger - in cattle a few are: bad crop (weather, infertility, etc), loss of seed stock (age, eating the wrong plants etc...), or change in market conditions - calves suddenly drop down to 50 cents per pound from almost 1.50 per pound now. These dangers could lead to a complete loss of your investment ++

To me owning land is not separate from the profits of the cattle - to me profits from the cattle are directly going into purchasing the land - if the cattle can not make the payments on the land then I need to rethink my decision about purchasing that piece of land.

When you don't 100% own the land it is not yet an asset put a potential asset that can still be taken away from you due to foreclosure.

[ramiller5675]

Aren't you approaching the problem from the wrong direction?

First, you have to figure out how much profit you will make from the cattle and then figure out how much you can afford to pay for the land.

I don't think my previous comment was entirely clear, if I was buying a piece of property I would figure out how many calves I could produce on that piece of land and figure up how much it cost to produce a calf without including the pasture rent (bull cost, feed, cow cost, death loss, etc.).

Then, I would take the payment amount for the land and subtract the going pasture rent amount to find out if I had enough cash flow from the cattle to make the land payment.

I don't think there is any way you could massage the numbers to make 8K-12K an acre land an option.

[SCRancher]

Originally Posted by ramiller5675

First, you have to figure out how much profit you will make from the cattle and then figure out how much you can afford to pay for the land.

That's what I said LOL ....

My figure for profit from the calf crop was $500 per calf - from that I backed into what I could afford to pay for the land but you have to consider carrying capacity - the numbers you can afford to pay for the land on a per acre basis change depending upon carrying capacity. In my examples 3 acres per cow is the carrying capacity. 500 profit means that @ 5% interest rate I could borrow up to 10k to purchase the 3 acres + the cow and break even.

Now that I have 10k and knowing I need 3 acres and knowing a mamma cow will cost me roughly 1k that leaves 9k for the land 9k divided by 3 = 3k per acre so to make it work the land has to be <= 3k.

[PaulNKS]

Cattle will not pay for 8K per acre land.

In a profitable cattle operation, you always figure your profits from the calves as to whether there is enough left to pay for the land, no matter how you go about it.

If you pay 1500 per acre, it isn't that the land has to produce $1500 per year or per acre.

If you're payment is $7000 per year, then you have to have a calf crop that will net enough to pay that $7000 per year. That is as simple as it gets and the easiest way to calculate it. All the other about what land rent should be bringing has absolutely no bearing on it, in my humble opinion. Don't try to over-think it. Keep it simple.

However, if you are renting the land, then that's different. In most of the midwest, for cattle, it is priced by the head/per day, or head/per pair/per day. For example, 50 cents per head per day as long as your cattle are on it. Or a certain amount per head (or per pair) total for the season. Say, $100 per pair for the grazing season. (dollar amount, just an example, not the going rates, as they vary)

[rancher1913]

the best way to get started from scratch is to buddy up with a rancher IN your area and help them and learn from them. you can read all the books in the world but they will not always apply to your area. I like what joel salitin is doing in virginia but there is no possible way that would work where I'm at. agman's operation is great but it won't work here either. I have to have around 20 acre's per cow and haul water all summer so MIG is to labor intensive. I bought 5 calf's and bottle fed them to get my first cows, piggy backed off my uncles heard--took care of his and mine in exchange for running them with his. slowly bought needed equipment and after about 10 years bought my uncle out. still help every rancher in the area as needed and they help me too.

[oregon woodsmok]

$500 profit from each calf........ bwahahahaha.