Same topic (sorta) different day (farms)

Discussion in 'Cattle' started by JeffNY, Mar 4, 2005.

  1. JeffNY

    JeffNY Seeking Type

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    The last topic was asking "why do farms get so big" etc. Well after some answers etc, it seemed clear why. However recently we were looking for some more animals (once you go organic, you can only buy from organic farms, and the best genetics seem to be on traditional farms), inquired about Dutch Belted, and Brown Swiss. Will most likely go after a Brown Swiss. Well the two farmers my mother talked with, talked about farming etc. Well it was interesting to hear their take on things, and both had the same thinking.


    Now that thinking is similar to what mine is, and that is keeping your overhead low, you can make a profit and continue doing what your doing, and in this case, farming. The first farmer milks 60, has 100 total or so. He does it pretty much by himself, he is in his 60's I beleive or 70's. Well he makes a nice profit, and stays in buisness, why? Low overhead. The other farmer who has the brown swiss does it by himself, did have help however he left because he was going to sell but decided not to. Because he worked on his genetics, and has nothing else going on, he decided to continue. I guess he wanted to get away. Well he makes a profit, averages 13000+ lbs, and milks 70 or so.


    I guess they got talking about big farms, and why they get sooo big. Partly because of milk prices, and perhaps other reasons. Well he made a good point, and I guess this was discussed at some meeting he went to. What happens if the prices dipped to $11. The conclustion was, they could not stay afloat due to their overhead. Figure all the help, and machine expenses, GOOD LUCK! Now the smaller farms can stay afloat better, because they don't have all those expenses, and figure some do not need help, like the two I mentioned. So why are their expenses lower, and this I find interesting.


    Both do not grow corn, both put up grass silage, and baled hay (grain quantity fed is lower too). This is one reason why their expenses are lower. Remember, it isn't cheap to grow corn. You have the expense of seed, spray, fertilizer, tilling, etc. Now hay, your fertilizer is mostly manure (its what most farms do). The cost of alfalfa initially is offset by the amount of cuttings you get, and how many years you get. Corn is a one shot deal, and the risk of loosing corn is real. Now corn is cheap feed, you can get volume, but the nutrition in corn is poor. It has energy, and is a filler. However the real nutritents come from hay, and grain. However hay is the best feed, since that is what cows were meant to eat, sorry but before corn it was all grass.


    Now the same Brown Swiss farmer's friend was trying to figure why he does so well, why he makes a profit etc. Well I beleive he explained to him what he does. Well it dawned on his friend why, his overhead. His grain requirements are lower, because he doesn't want to max them out. Whats funny, the big high milk producing farms, pump the cows full of grain, and that costs money.


    See when I posted that first post, I think there was confusion why I myself can make a pofit, how I can do what I do. It is because I do not have the overhead most farms do. But that overhead, if high is likely due to poor management. Relying on someone to check everything, vs doing it yourself. What is the most interesting thing about this all is the fact there are farms that are doing really well, limiting their health problems. Then you have farms that are doing just the opposite, its very obvious it is management.


    So my own advice to anyone thinking about milking, keep your overhead low and you will succeed. Corn is a waste (silage), and no one will convince me otherwise. I really cant see why anyone can disagree with overhead costs limiting your profit.


    As a side note, I was reading in a nutrition book Hoards Dairymen sells. There was some stats, like how many farms use silos, trench's, bags etc. The stat I looked at closely was the farm numbers. Above 30, the declines were from 3-8% or so, from 1989 to 1999. However 20-29 cow dairys only declined .2% between 1989 and 1999. Under 19 the decline was a couple percent. So, obviously those small dairys are doing well. I realise they do not make up a huge percent of the total percentage (only 6%), but nevertheless they seem to be doing well. Also, the majority of farms in the US are under 50 cows. The big farms stand out, because its either due to problems being noticed more, or its like a big name, it travels. So why do farms get big? To make more, however the reason why people work is to make money, is it not? Same can be achieved by a small dairy, if you play your cards right, a.k.a watch that overhead.


    Jeff
     
  2. Haggis

    Haggis MacCurmudgeon

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    The only feed we can grow around here is hay, and sometimes not even that will be successful. Last year folk around here got a single cutting of hay due to the cool summer.

    It is very likely that I will always have to buy the bulk of our cattle feed. Certainly grain is out of the question, and cutting hay is sometimes affair.

    My milk costs work out like this:
    My current round hay bales cost $28 and I unroll them and feed our of a manger so the cows eat everything.

    Lucy the Jersey is poducing 5 1/2 to 6 gallons of milk a day; about 50 pounds.
    She eats about $1 worth of bought and delivered hay per day, as well as a $1.38 worth of 18% dairy feed.

    If my math is correct it currently costs me $2.76 to produce a 100 pounds or 11.6 gallons of milk from this cow, which I in turn can sell, if I choose, for $29. She will produce less later in her lactation but by then she will have free graze on my pastures and cost less to keep.

    So pretty much for every day she gives milk she buys 5 days worth of feed for herself and/or other members of my little herd.

    We do not keep animals for cash profit, but I can see that it wouldn't be too hard to make a living at this if one wanted to pursue it.

    I know that a lot of folk will say "But what about your initial investments: barn, land, cost of cattle, etcetera etcetera yadda yadda et al" but I still have my investment capital tied up in the afore mentioned and increasing in value while coughing up plenty of daily interest by way of family food and marketable produce. Should I choose to sell my herd and my land I will get my money back and with yet more interest.
     

  3. milkstoolcowboy

    milkstoolcowboy Farmer

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    Jeff, To date, you haven't started selling any milk, correct? I think there is a pretty big difference between profits in theory (I CAN make profits) and profits in practice ( I DID make profits). I'm not doubting that you can make profits, but in all fairness, you've incurred a lot of start-up expenses to date in preparing your milking facility, buying and feeding heifers, etc.

    Second, I don't think anyone is disputing that cows can milk on an all-forage diet, but corn is one of the best sources of energy. If you're feeding all forage ration, at least some of that forage has to be high quality (RFV > 185).

    Profits can be increased by lowering cost OR increasing revenues. Putting concentrate and high-moisture rolled shell corn in a ration adds to the cost, but it increases your profit by significantly increasing milk production, maintaining persistence of production and butterfat pct. I penciled out the costs of raising 6 tons/acre alfalfa vs. 200 bu./acre corn and the corn was about $17/acre more. Managing for high-yielding forage and taking off high-quality hay is not cheap either; you're operating costs go up when you try to get 5 cuttings of pre-bloom alfalfa. Think about your equipment costs for haying, either square bales or chopping haylage. Out here, we've had real good luck no-tilling corn, and at most we chisel plow, field cultivate and plant. We've had 200 bu+ corn at 15% moisture 5 of the last 6 years. You can't make blanket statement about costs of different crops without knowing the fertility of the soil and growing conditions in different parts of the country. With organic, you aren't going to get those yields and I don't know what your costs would be for buying corn and supplement.

    Haggis, I think your calculations are pretty far off. By your figures, your feed cost per 100 lbs. of milk is $4.76, not $2.76, and that ignores: (1) the feed costs during her dry period; and (2) the fact that her production will drop off later in lactation. Assuming a dry period of 60 days (with feed cost of $2/day), if she gives 10,000 lbs of milk for her lactation, your feed costs per lb. of milk are $0.157 and if she gives 15000 lbs. of milk your feed costs per lb. of milk are $.105. So, even factoring in reasonable estimates of "all-other" costs, I'm sure you are making a profit, but you can't ignore every cost other than feed.

    On average, medium-sized commercial dairies have feed costs that are slightly above 50 percent of total costs. For smaller operations, all other non-feed costs could easily be a larger proportion, because your milking set-up and other facilities aren't spread over as many cows.

    I did some figuring for my herd at current milk prices and feed costs and came up with a feed cost per pound of milk produced of $0.138 and a net revenue (profit) of $0.0376 per pound of milk produced. This figures in the costs of: raising alfalfa and alfalfa-grass mix hay, haylage and corn, oat straw for bedding; purchased concentrate, cottonseed, minerals and salt, suppplements,buffers; feed and facilities costs for raising replacement heifers; breeding costs (semen), veterinary expenses; costs of feed testing to balance ration; mating consultant fee; costs of registration; DHIA testing; milkroom supplies (soap, teat dips, strainer socks, inflations, dry cow treatment); milk hauling and marketing expenses; electricity costs; insurance costs and labor costs. I ignored the value of manure produced because I factored that in as a reduction in the cost of growing the feedstuffs. I excluded costs of flushing cows for ET program but also did not include revenues from sale of breeding stock to other breeders. I can't speak to the exact profitability of other dairy producers in my area, but I know of a couple dozen guys who are making money running 20-80 milking cows and all feeding corn and concentrate. We've had two new herds start up, one 30 cow herd and another guy who bought up a 300-cow parlor operation that had been sitting empty for about 14 months.
     
  4. Haggis

    Haggis MacCurmudgeon

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    You're right, it is $4.76 not $2.76.

    But even at that rate, 1 gallon of milk daily just about pays to keep her and another 4 gallons of milk keeps four other cows. Fifteen days of milk above her maintainence gallon will pay to keep her during her 60 day down period.

    I am no book keeper, so Herself takes care of that end, but when we sell any milk or eggs the money goes into a coffee can. When I buy anything, feed or otherwise for our critters it comes out of the coffee can. It has been many months since we have spent any of our "own" money, and the coffee can stays full.

    I could count the 8 mile trip to the feed store as an expense, but as it is the only time I ever leave our property it's more of a joy ride for me, and supposedly healthy for me to get out of the house; even if it is only for a hour a week.

    I can't really compare what I do with those folks who make their living from farming, but it does seem to me that if some old curmudgeon like myself can show even a little bit of profit while buying nearly 100% of my feed needs at retail prices, then someone who can raise their own feed at well under wholesale prices ought to be able to do a little better.
     
  5. milkstoolcowboy

    milkstoolcowboy Farmer

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    Haggis,
    I agree with you that you can show some profit with a small homesteader dairy. I bet a lot of folks would point out that they get more than $2.50/gallon for the raw milk they sell.

    It's not always true that it's cheaper to grow your own feed vs. buy. In my neck of the woods, there were some decent round bales (1st and 2nd cutting) for $40-45/ton and some real nice 2nd cutting small squares for $65/ton. Even putting together all second-hand equipment, you might not put up your own hay for that price. You don't have to buy seed, fertilize, buy tractor, mower-conditioner, tedder, rake, baler, wagons, conveyor, buy twine, fuel, and incur the labor cost.
     
  6. Haggis

    Haggis MacCurmudgeon

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    Again you're right on both points.

    I've been told by no few people to charge $5 or $6 a gallon for raw Jersey milk, but $2.50 is plenty.

    My brother once bankrupted himself farming as a sharecropper and buying better equipment. I took a contract one season to sharecrop and hired all of the equipment and paid cash for everything I needed. Later when I sold my crop I bought a small farm of my own.
     
  7. agmantoo

    agmantoo agmantoo Supporter

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    Much of my income comes from the farm and from the beef cattle I raise. I realize that I can do nothing to influence the price of beef at the market. However, I can control my input costs to a degree. Therefore, to assure that I remain competitive and maximize my income potential I control these costs. I find this is key to remaining in the business and to have a positive return on the venture. I do lots of things that are unorthdox but I do make money most of the time. To remain a viable producer in the competive meat industry these steps must be taken. For example, I have not fed the first bale of hay this winter, no grain is fed, worming meds are bought at discount off the net, I only buy minerals and salt, I have no outside labor costs, I do my own vet work, etc. My cattle are in good conditon and the last feeders I sold brought $1.29 on hoof through the local sales barn. I earmark 25% of the gross sales to put back into production. In good years the pastures get lots of fertilizer and lime. In lean years, we tighten the belt. Works for me!
     
  8. Jena

    Jena Well-Known Member

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    One major expense that I have not heard discussed is the cost of the land. For me, that is THE factor I always have to consider. If I can't make the mortgage payment, then the place will sink.

    I know lots of people who are running profitable farms, mostly because they inherited land that was paid for, or bought it at a discount from family. In my case, I have land that was bought a couple years ago and my husband has land that was bought 20 years ago and then free use of some family ground (to run cows, crops are shared).

    If I didn't have to pay the mortgage, I'd be sitting very pretty and making a fortune :)

    Jena
     
  9. milkstoolcowboy

    milkstoolcowboy Farmer

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    Jena,

    Whether you own the land free and clear, you have to include the cash equivalent rent when figuring your costs of feed raised on your own farm. I've owned all my land free and clear since 1994, but it's not free to use. I could rent the corn and bean ground for $150/acre cash rent and most all of the hay ground for $100/acre.

    I rent pasture ground for my cow-calf operation, and I pay $50/acre for this ground. I've rented this 80 acres since 1972.

    I know guys in the next county over who get $175/acre cash rent. They don't have any livestock so couldn't market the grain through livestock, and that's a nice income for minimal expenses and no risk.
     
  10. Jena

    Jena Well-Known Member

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    My mortgage is about double what I could get for this place in cash rent. We could get about $100/acre on crop ground and $35 for pasture. I maybe could do a bit better on pasture since cattle prices are good, but then other years, you couldn't rent it for free!

    Jena
     
  11. Haggis

    Haggis MacCurmudgeon

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    I guess we got lucky. We bought our 100 acres for $99 an acre, and paid cash of course, but now I'm told that any land around here will bring $1000 an acre and pasture land will bring $2000 an acre.

    All we pay is "homesteaded" land taxes.
     
  12. milkstoolcowboy

    milkstoolcowboy Farmer

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    Haggis,

    I figured out that in the last 45 years down here, land prices have gone up by 1500%, although they had a period from 1981-1987 when they dropped by 173%. Good farm land here is now over $3000/acre, and some guys have paid as much as $4000/acre for wooded hunting land. Sounds like you made a good investment.
     
  13. JeffNY

    JeffNY Seeking Type

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    Interesting with the rent, most land around here is rented either as a whole, or 20-30 bucks an acre. We used to rent to people for 500 a month, they paid the electricity. But it was a damn fair deal. See if you own your own land, own all of your equipment it helps. In my case, everything is paid for except the chopper, which was new last spring. The land is all paid for (235 acres, 100 tillable). In my situation, the only thing bought outside of the farm is grain, and not to be cocky, ive seen other peoples hay, and some id feed but a lot I wouldn't.

    I like to know what im feeding, and the majority of their diet is the grass silage and hay. Of course these are animals that aren't milking, however they are growing and growing well. Speedy (anyone who saw the site) was 735lbs in the pic, she is now 800lbs. I taped her Feb 5th or so, and again feb 26th. So that is about 2+lbs a day. Her diet is haylage/corn meal mixed in. The total corn meal+haylage in percentage. I would venture to say, it makes up 2% of the haylage, might be less. The amount is about 100lbs every 7 days, so its about 14lbs a day spread through it. The whole idea of it is to sweeten it up, and gives some energy. The other one I taped, (kahlua) has gained about 1.25lbs a day, I might be off with that, because I forget whether it was 835 or 865. If it was 835, she gained 60lbs in about 25 days. So its about 2.2lbs a day. I do think it was 835, because she is getting big (not fat, muscle). But the average cost for them for feed bought off the farm? It is $9.00 for 100lbs of corn meal, if they are getting 14lbs mixed in a day, that is about $1.28 a day and divided across 14, it is .09cents per animal for the corn meal. The haylage cost is a tricky one to figure, and it came down to 2.25 or so per ton. I figured in fuel costs, and I went high. Maybe im lacking something, but the only expense this past year was fuel. Of course if you calculate in the expense of the machine, but lets assume its owned. Now there is electricty for the unloader, however the difference with that thing running wasn't that much, only a few bucks higher than normal. The hay cost for those 14 if figured in, is only 2.00 to 2.50 a day. The two bales they get, they do not finish (haylage is why). So actually it is less, since they eat closer to 1.75 bales or less. You have to figure it costs 1.00 to 1.25 to make a bale. The twine, the diesel, and labor (to put it in the barn). There are other animals, (12 herefords), they get about 60-65lbs of forage a day, the other lot I didn't figure in at the time of this post.


    Lets figure grain costs. In my case, if im feeding 10lbs of grain a day, to 15 animals over 30 days. That is 4500lbs of grain per month. Now as far as cost? Organic grain is about $350.00 a ton, and comes to about $800 a month for grain. Average this across 15 animals, it comes down to $1.77 per cow for grain. There is forage costs, and if it was hay only (easiest for me to figure). Figure in 1.25 per bale to make. Lets say they are getting 50lbs a day (remember, this is a basic figure). If the bales are 50lbs, thats easy to figure, 1.25 per cow. This is about $3.02 per animal per day. Now there are other costs, such as electricity, etc etc etc. However im figureing feed costs. Now if I went out and bought hay, like I make, it would cost me 2.00-3.00 a bale, I doubt ill get bales with the density mine have, so I might have to buy more. So lets figure that in. It brings the total cost from 3.02 making my own hay, to $4.77 buying baled hay. So I actually would save money, feed alone making my own. Now this is with hay only, as figuring my haylage costs I tried to do, and its tricky considering the only cost was fuel, and I burn maybe 100gallons, if that (I do think it is far less) to put in haylage.(average across 3 tractors).

    But with the organic milk market the grain costs are offset by the prices. Figure $22.00 a hundred weight (not an assumption, and not wishing, it IS this through dairylea, and goes at or above $26.00 pending quality). Cut that in half, that is about $11.00 per animal, assuming the animal is giving 50lbs. (easy number to work with). Now to make what your making per cow, ill figure electrcity. With my operation, there will be NO milk line, there will be very little drain. The only drain, for the most part will be the bulk tank (portable milker burns as much as a hay elevator). My hot water heater will not be electric, they are not efficent. My fuel costs will be little, and averaged over 2 months (I doubt ill burn 300gallons in 1 month). So figure high, $400.00 for electricity (I figured in per motor, for the cooler, and it came to about $200.00). The motor on the barn cleaner, fans and in the silo do not drain that much, they aren't running that long. Besides a motor that runs well, will not pull as much power (im also using light bulbs that give more light, using less power). So lets add $800 to $400 + 250 + 560 (hay). This is $2010.00. Now divide that by 30, then by 15, and you get $4.46 per animal. That is still less than buying hay and grain as mentioned above. That $4.46 includes electrcity, fuel and hay costs (yes there are other costs, however this is the basic down the middle, per cow cost).


    See with my situation, the farms are my parents, well ours, but still. The machinery is all paid for, so no expenses there (well chopper, but thats being taken care of). Now yes, there are vet bills, there are other bills such as teat dip, inflations etc etc etc. However, with what i've added up. Take $11.00 subtract $4.46 from it and you get $6.54. Now take that, multiply that by 15, then by 30 then by 10 (10 months). This is a general average, yes the numbers will change, but this is all in general. You get about $30,000. So lets just throw something out there for kicks, lets say you had $15,000 in extra BS. You still are left with $15,000. What if it was 20? still have 10. See why I am going organic, and keeping it small? Perhaps these other guys not feeding that silage, and those guys doing most of their own work, and putting their own feed up keeps money in their wallet (mine too, since ill likely rent 40 extra acres for $500 a season, or unless she wants to do it with tax exemption). In my case, the only expenses is feed, power, fuel and any vet crap that comes up (remember, this is in the barn expenses, not field). But you know whats great? A vet willing to show us what to do, to keep our costs down, also its interesting to note. One farm where we bought some of the holsteins from, does not use a vet, they do it themselves. It can be done yourself, you have to be willing to listen and learn. Had to articulate a head off of two calves two years ago. After seeing him do the first, and realising its the same deal as a deer. I tackled the second one, and managed to get the calf out. A lot of things ive watched them do, we could have done, but we played it safe (wrapping a hoof, shots, etc). Possibly he is willing to show us stuff, because he sees we are capable, dunno but he is the best in this area.


    Jeff
     
  14. wr

    wr Moderator Staff Member Supporter

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    Jeff, I think some of your ideas are unrealistic. The big operations (dairy or beef) are feeding the population, small time operations like yours meet a niche market. You can't possibly believe that all the US needs is a few more mom and pop operations to keep the population fed. You seem to display some distain for anyone not 'doing it your way' and the fact is that anyone breaking even or turning a profit is doing it while watching the bottom line - none are sqaundering money and in the black or even crawling out from a mountain of debt. Another important factor that you aren't seeing is the feed factor is regional, someone in the south is not going to see the same feed use/consumption as someone in Montana. You haven't a clue what it takes to keep cattle alive at -40 for weeks. Fuel costs are rising and land values continue to rise equipment costs have gone up to the point where it's crazy and you can't get the big job done if you're trying to breath life into antiquated equipment. You were fortunate to have a trust fund to draw on but many others have to take out loans or work off farm to pay for additonal cattle. I'm in much the same position as you, I make extremely good money of my cattle because I meet a very specific need, we are raising longhorns to supply two specific markets - rodeo and a specialty meat market. Like yourself, I've looked at my neighbors and wondered what they were thinking and then I realized that agriculture is a calling not a job and those like Jena, Milkstool and others on here are the heart and soul of the country. They are the people that day to day, work their tails off to feed the country, not just a few descriminating customers, they feed the poor and wealthy alike.
     
  15. milkstoolcowboy

    milkstoolcowboy Farmer

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    Jeff,
    I don't get what you're motivation is when you post these messages as to the keys to running a profitable operation, when you haven't even got a milk check yet.

    From your figures, it seems that you have some real rough guesstimates and you are ignoring real expenses.

    The rent equivalent of the land, the depreciation of the machinery, maintenance, the value of your time (labor cost), interest or implied return on your initial capital investment, the costs of raising replacements, semen, breeding charges unless you do your own AI, bedding, milk hauling costs. You will also have certification and compliance costs for organic. You can pretend these aren't costs, but they are. I didn't just make that up about feed costs being only 50 percent of total costs on average. Go ask anyone, it can range from 40 to 60 percent based on your feeding program and facilities.

    You see, some of us actually had to buy farms at market value and go borrow money to buy land and build facilities. Try to sit down with a banker and dismiss land, labor and depreciation costs and see how that flies. These ag lending officers will sharpshoot you and they aren't dummies. If you don't have realistic cost estimates, they'll turn you down. Heck, sometimes they'll turn you down even if they agree with your numbers. They will ask you "raise vs buy" questions, inquire about flexibility on least-cost rations, quiz you about using futures contracts to lock in a target price, etc.

    Hay and hay silage with RFV below 120 is considered below average for dairy rations. Hay with 12% crude protein is not high-quality, and without some improvements in the quality of the haylage, you'll have to have protein supplement in that organic grain to get enough crude protein in that ration.

    If it costs you $1.25 a bale to make a 50 lb. bale of hay, that's $50/ton. So how is that your costs per ton of haylage are only $2.25? I'd say $36/ton would be a heckuva lot closer to a realistic estimate. Operating costs alone for a forage chopper are about $9.50/acre, and that's not taking into account your fixed costs (depreciation, insurance) for the chopper. Most custom operators charge by the tractor hour, but for this coming year they're quoting custom rates that figure out between $22-30/acre, depending on whether you supply the fuel, blower and boxes. When you are chopping vegetative/pre-bloom alfalfa, you aren't going to have the same yield per acre and you shorten the longevity of the stand.

    You've also got costs of establishing a stand of alfalfa. Around here, that's about $240 per acre, and then you've got annual costs of maintaining this stand, which are about $320/acre around here. Figuring a life of 3 years, you can spread that establishment cost over 3 years. I'm not sure about lime, but I believe if your hay is certified organic, you cannot apply P,K and boron. Your fertilizer costs are lower, but so are yields and recovery times between cuttings, even with manure. The other issue is weed control. Are you direct seeding alfalfa or using a cover crop? Are you using rye or another plowdown crop for fertility and weed control? Even your pasture ground is going to require maintenance costs (fencing, clipping weeds)

    I don't know what you mean by grain, but I hope it contains some soybeans or bean meal or comparable. If not, I'd be worried about a deficiency of "bypass" (undegraded input) protein in the ration.

    For a 1350 lb. cow producing 50-60 lbs./milk per day and consuming a ration that by your calcs is at least 83% forage, you're aren't going to get the DMI you site in your calculations (60 lbs. +) That much forage limits total DMI.

    I am not trying to put you down and I'm not trying to argue with you, I just see several things that don't jibe. Everybody's expenses are going to be different, but I've been doing this awhile and your way of calculating profits sure baffles the hell out of me, especially when you' don't even have bred heifers. The P/L from the first milk check is going to be determined by feed prices and milk prices for what, the middle of 2006?

    Here's some other food for thought. Some day in the not-so-distant future, these staggering profits you project might need to support not just you but a family and buy health insurance. In my younger days, I had to bring in enough to support my wife and 4 kids and a full-time hired man and pay all those bills as well.

    I'm don't want to keep going back-and-forth with you, and I really do hope you make a go of it. Anyone who works hard at dairying deserves to make a living.

    Edited to add: WR: I think most guys are always receptive to ways to increase their bottom line. My Dad sold some of his horses to polo players in the Great Depression, it got him through. I sell my fat cattle (beef) on contract based on carcass quality and yield, same with my butcher hogs. I have a couple guys who have standing orders to buy hay from me based on the forage analysis results. I can see the value of niche markets, but out here we have low population densities, pretty low household incomes (not many consumers who will pay the organic/quality premium) and my age limits my willingness to complete change my milk marketing. One of my brother-in-laws worked in a machine shop his whole life, and he told me that among the new hires, the guys who knew-it-all and always said "got it, everything's under control, I know what I'm doing" were usually the ones they had to watch the closest.
     
  16. wewild

    wewild Member

    Messages:
    7
    Joined:
    Feb 24, 2005
    milkstoolcowboy,

    I agree with you. I hope his rhetoric doesn't influence to many people.

    Been here a while. First post.
     
  17. Jena

    Jena Well-Known Member

    Messages:
    2,489
    Joined:
    Aug 13, 2003
    I have to agree with alot of what milkstool said. If you are trying to create a viable operation, you really need to figure out your numbers better and be realistic about them.

    Here is how I figure up the cost for my corn silage. The chopping and blowing is easy because I custom hire it. $6.50/ton and I think that's a bargain. I don't think I could do it for that much after I bought the chopper, the wagons, the box, the blower.

    I usually hire at least two tractor drivers at $10/hour so gotta figure that in.

    I pay all the fuel for all the equipment that the chopper guys use. They come with full tanks and leave with full tanks.

    Then, there's the cost of the corn. We did good this year and got about 20 tons/acre. That's 15 acres of corn in the silo. 15 acres that usually yield 140 bu, but this year they probably yielded 160 at least. Figure $2.50 for corn, though I sometimes just use the county price. That right there is $20/ton. How much would you be able to sell that hay for if it didn't go into haylage? That what's you got to figure.

    THEN, there's the cost of the silo. I didn't buy the thing, but I put a fair amount of money into it to get it running right. I also have maintainence/repairs every year on the silo or bunk. I divide out all those start up costs by how many years I think they are good for, divided by how many tons I think I'll use a year and get a figure for that. I use last years actual repair bills to estimate this years and figure that in.

    So it cost me better than $27/ton to get the silage in the silo and ready to feed. That's nice. Would hay be cheaper?

    I have to start over and figure the cost per ton of hay. Harder to do because we do it ourselves. It's easy to ignore the costs of using paid for machinery, but you will sink your boat eventually. If nothing else, use custom hire rates to figure, or just use what it would cost you to buy it.

    AND THEN....you have to compare the feed value of the hay vs the silage in order to make the right decision. I'm sure there's some tricky way to do that, but I just figure up what else I'd have to feed in the ration, the costs of that and determine which way is better. That's the bottom line, but then there are other things I consider as well.

    I raise beef cows and have crappy hay. Crappy hay works along with the silage to get them through winter without losing too much condition. When I run them on hay alone, or with lick tubs or something, they look a lot worse by this time of year. I'm sure there's a way to asign a number to that (probably easy with dairy because you have production to look at), but I don't know it, so I just think about how I want my cows to look in March and what it is worth to me. I do have a general idea of how poorer condition affects calf mortality/illness, time to breed back, etc. If I were better, I'd know exactly what crappy hay alone costs me, but I'm a slacker.

    Then I have to figure in labor somehow. I don't pay myself by the hour, but I do look at how my time is spent. Is it more profitable to spend all summer putting up hay, or am I better off raising chickens? Until I can clone myself, I have to consider the use of my time as it is probably the most limited resource on the farm.

    All this figuring is no fun. It is often depressing and then it's tempting to fudge the numbers to make it look better. Gee, instead of using the county price for corn, I'll just figure my inputs instead. Sounds encouraging, but life doesn't work that way. Better yet, I could ignore it all and just figure out the most obvious costs so I can tell myself how profitable I am. It will bite you in the A## eventually. The best method is to forget about that boring, frustrating math and just go pet your cows.

    How long will your parents ground carry you? How long will their machinery carry you? It sounds like you are in a really good starting place, based on their hard work. Don't blow it all. Don't worry, they will be long passed away before you lose it all, but you will lose it if you don't start out right and maintain the habit of being meticulous about figures. I bet they can even show you how.

    Take the time to do the numbers. Trust me on this. Do the numbers before you ever start up, then do them again, then show them to a banker and let them do them again. Then place your hand on the bible, swear to total honesty and run them yet again. It is sooo easy to lie to yourself, but those numbers simply will not lie to you, as long as you put the correct numbers in.

    As far as vet work...anyone who has anything but pet cattle ought to know how to do most things themselves. It's not that hard. I never pay a vet to give a shot. I never pay a vet to pull a calf without giving it a very good try myself first, including trying to rearrange the calf by taking "the dive". When I can't get them unstuck, the vet usually has a trick that works. If I ever get a calf stuck in the same way, you can be sure I'll try the trick I learned last time before I resort to calling the vet. I never pay a vet to come out for a downed animal as that is just a waste of money. Bullets are cheaper and it always comes down to that anyways. If I am stumped on something, I call the vet. She will gladly tell me what she thinks and what to do by phone. She doesn't want to come out here anymore than I want to pay her.

    I know nothing about dairies and the costs of running them, but based on your methods of figuring feed costs, you probably need to really do some serious work on that.

    Jena
     
  18. wr

    wr Moderator Staff Member Supporter

    Messages:
    16,474
    Joined:
    Aug 10, 2003
    Location:
    Alberta, Canada
    Milkstool, I'm a huge fan of diversity and I think that anyone that's been in business for a couple decades have done things that get us through and cover costs. We have a consulting firm that gives us a pretty good living but if the cattle & horses can't pay their own way, they wouldn't be here. It does take some innovative thinking once in a while but that's what keeps any of us in business. Jena is a classic example of someone that thinks outside the box.
     
  19. Haggis

    Haggis MacCurmudgeon

    Messages:
    2,246
    Joined:
    Mar 11, 2004
    Location:
    Northeastern Minnesota
    The guy who sold me my 3 Jerseys makes his living hand milking 12 Jerseys. Of course he sells some calves and old cows, but the 12 Jerseys are his livlihood.

    On reading what you goodfolk who keep cattle for a living have to say I've come to the conclusion that what I'm doing here with a half dozen head is not the same thing at all. There are similiarities but it's apples and oranges most of the time.

    For instance:
    We bought own land just for the privacy and freedom a larger piece of land affords.
    I built my barn to house my extensive collection of wood workng tools and my Harley; the cattle came later as an after thought.
    Fencing just increases the value of our formerly unfenced land.
    Living on our own place and in my own house means we don't have to pay rent elsewhere.
    The cattle grazing my land helps clear bush, keeps the pastures lookng trim, and increases the aesthetic value of the land.
    And, we're not trying to make a living here, we're just trying to make the critters pay their own way while skimming any cream that might happen to float to the top.
     
  20. JeffNY

    JeffNY Seeking Type

    Messages:
    2,102
    Joined:
    Dec 13, 2004
    Location:
    New York
    "I don't get what you're motivation is when you post these messages as to the keys to running a profitable operation, when you haven't even got a milk check yet."

    Very very simple, you talk to people, and listen. You also calculate, and everything I calculate before I do. I see if it is worth while, and if not I do not tackle it. Seeing a milk check? Never compare traditional to organic, it is a totally different market, it is NOT as inconsistent as the regular market. The 22.00 is not a pipe dream, call up dairylea and ASK THEM the prices, for that matter, call organic valley. Theirs starts at 21.75, but they charge shipping, dairylea doesn't. How do I know this? I talked with someone at dairylea. The reason organic valley is lower, is because they charge.


    "The rent equivalent of the land, the depreciation of the machinery, maintenance, the value of your time (labor cost), interest or implied return on your initial capital investment, the costs of raising replacements, semen, breeding charges unless you do your own AI, bedding, milk hauling costs. You will also have certification and compliance costs for organic."

    I do not value my time, my time is priceless. You can calculate your time, but my time I do not calculate, never will. You might not like that, but I do not do this to worry what my time is, if I did I would not enjoy it if I worried what my labor is. Organic costs for certification aren't that high. It is based on what your making, currently we pay with the hay about 500.00 and get 70% of that back, for the milk its about $1500 or so, it is based on what you make, it is the cost. A.I. will be done by someone, I will learn how to do that someday, however their cost isn't all that bad, had a Jersey bred, wasn't bad. The higher priced bulls ill be using for many of them, however the others will be bred by the hereford bull we have. If it takes this to get things going, then it will be done.


    "You've also got costs of establishing a stand of alfalfa. Around here, that's about $240 per acre, and then you've got annual costs of maintaining this stand, which are about $320/acre around here. Figuring a life of 3 years, you can spread that establishment cost over 3 years. I'm not sure about lime, but I believe if your hay is certified organic, you cannot apply P,K and boron. Your fertilizer costs are lower, but so are yields and recovery times between cuttings, even with manure. The other issue is weed control. Are you direct seeding alfalfa or using a cover crop? Are you using rye or another plowdown crop for fertility and weed control? Even your pasture ground is going to require maintenance costs (fencing, clipping weeds)"

    Alfalfa per 50lb bag is about $180.00 a bag, or there abouts. I like to plant 60/40 to 70/30%. This is alfalfa and timothy mixed. I forget how many lbs per acre we have it planted, but it comes in thick. Weeds? in a new field, that fall I cut the weeds off, before they mature. It kills them, following year, foxtail is gone and any other weed is minimal. Most people in this area do the same thing. Plant, and do not treat the land. Funny, lady at NOFA said they stopped spraying their corn for bugs, year or so later, no bugs because it encouraged bugs that eat the pests. I've seen corn sprayed for weeds, and entertaining to see the field with weeds regardless. The land here is extremely fertile. You can plow up alfalfa, and replant with alfalfa and it grows beautifully. But this area is very fertile. As far as that manure? Ive seen what it does on fields, and ive seen fertilizer. That manure made the hay grow thicker than the fertilizer. I could compost it, but we'll see.

    "Here's some other food for thought. Some day in the not-so-distant future, these staggering profits you project might need to support not just you but a family and buy health insurance. In my younger days, I had to bring in enough to support my wife and 4 kids and a full-time hired man and pay all those bills as well."

    I like kids, but I do not want any of my own. Never had the urge for kids, I rather raise animals.. Married? We'll see, knew a couple who stayed together for about 20 years, finally got married because of some deed thing. But either way, naa no kids for me.


    Jena,


    "I usually hire at least two tractor drivers at $10/hour so gotta figure that in."

    Yeah, that can add up, I cut, chop, haul and blow it in. My mother helps me level it in the silo, and set on the blower in case it plugs (to shut it down). My costs last year with the forage itself was the fuel. We use 500 gallons or so a season, about 700 bucks or so.


    "How long will your parents ground carry you? How long will their machinery carry you? It sounds like you are in a really good starting place, based on their hard work. Don't blow it all. Don't worry, they will be long passed away before you lose it all, but you will lose it if you don't start out right and maintain the habit of being meticulous about figures. I bet they can even show you how"

    I'd like to move to the other farm some day, however being an only child and with me doing my part (tax expemption, keeping the farm running) im paying my way. Even though my father complains about what he pays to the government, etc. He is getting a nice break with what im doing. Besides, I wouldn't be caught dead doing anything else, working with people can be a pain in the grits, not come on you can't disagree with that! Animals, dunno been around birds, cows, chickens, etc all my life and heck animals are easier to deal with, regardless of them getting out. Its the people driving on the road that are the jerks, no the cows dont get out much, but when they do people like to dial 911, for one animal... AHHHHH Gotta love NY! :p

    "AND THEN....you have to compare the feed value of the hay vs the silage in order to make the right decision. I'm sure there's some tricky way to do that, but I just figure up what else I'd have to feed in the ration, the costs of that and determine which way is better. That's the bottom line, but then there are other things I consider as well."

    Yeah we do this, feeding 65lbs a day to the herefords, not all of them are eating that. But that is what is available to them. Its about 600lbs of haylage, and 200lbs of hay. So 800 divided by 12. What is funny, fed them hay last year (this is the first year feeding haylage). Well the hay fed was 45lbs per animal or so a day, and they maintained their weight the same. They seem to eat more haylage, amazing what dry matter does over wet feed, but what a difference haylage makes! One of the herefords is about as big as the bull, taped her @ 1500lbs, big girl.

    But the whole calving thing can be tricky. The two we had problems with was a common occurance in the area that spring. The COLD winter did something, because other people had to do the same thing we did (articulate the head). The one that calved recently (nice little bull calf) lost her first one. The calf was dead, one leg out, one leg back, head out. Only way to get it back in was to remove the head. It sucked, because you do feel bad for the cow, but she wasn't all into it (motherly) at the time. But with her new calf, 2 years after that issue, she takes care of him. We are glad too, its a pain in the grits to tie up a cow, and feed the calf. We have done this with a couple of them, and its a pain in the butt. Some things I couldn't do, such as fixing a twisted stomach, or cleaning the animal if she doesn't clean (haven't had that in a few years), prob just jinxed it :p. But from what I find, once beyond the first calf, they do well. But one down, 11 more to go! :).




    Jeff


    BTW: Was reading about RFV's. A study was done, and alfalfa with a RFV of 200 wasn't as good as haylage with a RFV of 130. The haylage made more milk, than the alfalfa. I can see why, haylage is decent feed.