Herd Size

[grassfarmer]

That's what I don't understand about you f_s. You say "Cargill and Tyson pay me for live cattle based on the U.S. price minus a basis; not based on what they sell the beef for." yet you support ABP whose policy regarding the packers has always been one of appeasement. Again this year I understand two resolutions were defeated at the AGM that sought to limit packer ownership of fed cattle - why? Why will ABP not try to fight the packer control issue that is keeping our beef returns low? At the same time ABP continues to fight the idea that BSE testing for marketing purposes should be allowed. Personally I don't know if there is a market for BSE tested beef, or if there is a live test that will work on BSE opr even if that is relevant - but I would support all of these proposals if they had any chance of removing the power from the hands of the corporations who control us and giving it back to producers. I see no justifiable reason why ABP will not support these aims either.

[rkaiser]

Your post tells me that you did not have the time to read the proposal that the five industry groups are working on in a series of meetings farmers_son.

In fact ABP is there farmers_son.

Are you simply ignoring that part of the big picture of trying once again to make this BSE testing issue as small as you possibly can?

[PureCountry]

Grassfarmer's last post said it best. How can anyone argue with it?

As for your numbers f_s, I blasted away at you because they are numbers for one situation, and that always scares me because no 2 operations are the same. No one can really take your numbers and put them to use for themselves. They need to figure it out on their own.

And I disagree that your easiest method of adding value is to increase cow numbers. Would you agree that it could be easier to change herd bulls or calving dates to fit a particular value-added program already in business? All it takes is a look outside the box, and there are several groups in Alberta marketing a niche beef product. Switching a little of this or that would be much simpler than buying more cows, when you stated you already have debt. The hardest step would be swallowing your pride and accepting change. That was the hardest one for me.

Just trying to be helpful here...this time.

[smcgrath76]

Just a couple of further questions...
What happens if land is all leased (maybe own a home quarter). Most young guys I know are taking this approach. Still a cash flow concern, but a relatively low debt load requirement?
I think in the current paradigm (commodity, sell via auction market or to Cargill/Tyson), your number is actually low for the prototypical operation.
The next question is as it relates to folks who work off farm. Is it better to have more small outfits with off farm income, fewer large outfits that are employed full time on farm, or ultimately is there another way?
I do agree with the ability to increase production off the same land base, and to greatly increase forage production through some relatively simple management strategies such as MIG.

[pandiana]

I am curious, fs, how you derived the $20 for Bulls?

[ProFarmer]

Unless you have 100 cows and a good off farm job there is no way you can make it the beef business. 100 or less cows is just a hobby farm now a days. Just do the math.......

[per]

That is true in the conventional cow business. Maybe think farther outside the box or maybe in the box. How many boxes of beef can you get out of a beeve? There are opportunities out there to value add. There are cultures that eat things we might not. What about the hide and no implant markets. Small niche cottage outfits can be highly profitable. There is a grassfinshed market out there for those that are into Omega 3s etc. It doesn't have to be a hobbie even if you are small.

[Bez]

Tend to agree with ProFarmer despite the fact we are somewhat smaller - and managed to actually make money on that portion of our business.

As for needing 400 more or less - I suppose that makes a great number of folks either idiots or dreamers.

Then again we have ignored advice from the cattle orgs, their representatives and their status quo thought processes - and created our own opportunities - which have paid off handsomely.

Bez

[farmers_son]

How I got $20 cost per bull? I assumed buying a bull for $3000, using him for 4 years and then selling for $600. That worked out to be $600 cost per year and the bull would breed 30 cows. Some will buy more expensive bulls, some bulls are more affordable, some last longer and people will breed more cows and so on. The operation was providing all the feed for the bull. I guess if there was bull death loss that number would be included in the inefficiency line item. The numbers were intended to general and just indications of what needed to be considered.

Certainly if the land was leased it would reduce debt but the lease payments have to be included as an expense. Re the number being low…I what is important is knowing what the number is for you. I recently read a piece about Harlan Hughes being at a large meeting of cattle producers. Harlan posed the question who in the crowd knew their break even herd size and only one producer put up his hand out of a group of 450.

Certainly there are opportunities to value add. But you still need to know your break even although it should take fewer cows to make a go of it if you truly are value adding and not just doing more work for no pay.

Without question the break even herd size will vary by producer. But we need to have that kind of information and although the numbers will vary from farm to farm the concept is exactly the same for everyone. Per head revenues minus variable costs equals contribution per animal. Fixed expenses (with surface lease revenue some farms actually have fixed revenues that could be subtracted from the fixed expenses) divided by contribution per animal equals the size of operation you need to break even. It works for everyone, feedlots as well as cow calf operations. Only the feedlot guys tend to know that kind of thing already but the cow calf guys need to know it too.

No one can operate long term if they are not cash flowing their operation. It is critical you know your breakeven cash flows. And if the numbers come out such that you need to do something it is far better for you to find that out and be doing something about it than have the banker tell you.

[jensend]

don't your bulls eat sometime during the year or do you have free feed?