Bookkeeping

[Junebug]

The farmer that said he can feed for nothing because he grows his own feed is also the one who will continue to feed the world at his cost. We have been calculating the cost of keeping a cow for a year for some time now and most resently came up with a figure of $744.00 per year.(This is for west Central Alberta) Went to a BSE inform meeting and the cattle ag specialist speaker there said, a four member panel calculated the cost of keeping a cow which was $765.00 per year. So we feel we have done our homework fairly well.
You must take into account everything that is related to having that cow on the place. (If you lived in town you wouldn't have the related cow expences)

[Junebug]

Beware of those who say it doesn't cost anything to feed. Do they strictly graze their animals summer and winter ?If you have to start a tractor or truck to feed your animals, then it costs you something. It also cost you something to get the bales into bales to feed. Was any fertizer used on the hay ? Alot of farmers think because they grow their own feed and do their own work it costs them next to nothing. I totally disagree.

[pandiana]

To recap what I think I hear from this thread:

For projections of profitability and goal setting you need to know the cost of feeding a cow based on fair market value.

However, in the real world, whether you are profitable at any moment in time depends on cash flow, i.e. money to pay the bills with some left for pop.
Does cash flow in this context refer only to income generated from production?

[pandiana]

junebug
I was very interested in your figure above. Does it include bedding, pasture, yardage, overhead? Is it based on actual cost or fair market value?

My main interest in this is in comparing the 'efficiency' of raising cow in different environment. I have some cows in SE Alberta. The environment is totally different than here. We have been feeding for 7 months or more these past few years. In some parts of AB they made feed 3 mo. Although our stocking rates are higher, in some cases approaching 1:1 were these are often 50:1, how does the cost of land factor into this. The cost to feed a cow for one year in each environment would enable a direct comparison of efficiency if all measures were relatively uniform.

[rsomer]

pandiana: your project sounds like it will be very interesting for you. Good luck with it. Alta. Ag. sells "Cowprofits" which may offer you some assistance in working with the numbers. I beta tested Cowprofits a few years back and have worked with it since. If you want to do enterprise analysis of a cow-calf operation it is about the best product available.

[rsomer]

junebug: Now that you know that it costs $744 a year to keep a cow what decision do you make?

Our farm has been doing enterprise analysis for some time too, over 40 years. If you want to benchmark your farm’s costs and profits to Alta. Ag.s numbers you have to use similar profit centers or enterprises that they used. Sounds like that is what you did. After some time I have come to the opinion that the average farm with total revenues of say $300,000 annually doesn’t really need to break down their operation into five or more profit centers. Its like zooming in with a microscope, if you look too closely what you see may loose its meaning. I now view our entire cattle operation, hay, pasture, winter feed, cow-calf, backgrounding as one profit center. On our farm we produce all our feed requirements except salt and minerals and some supplements. Believe it or not, when you grow your own feed and view your entire cattle operation as one enterprise your enterprise analysis really does not show any cost for feed, except the salt and mineral. As a result the cost per cow for my cow enterprise is closer to $350 per cow even though the overall profitability of my farm might well be similar to yours. I as decision maker may be motivated to make different decisions than you based on the different way we are looking at the information before us.

As I write this it is really hailing outside. The ground is white, the potatoes in the garden are flat and from the window the crop looks really beat up. I think it is gone. It won’t take long to analyze the profitability of our grain enterprise in 2003. We were hoping for rain. We got it and more.

[cakadu]

Sorry to hear about the hail - we have had thunderstorms going overhead all night, but no real rain, or anything else to speak of. It "looks" like it could rain all night, but so far just the sound of the thunder. What rain we got didn't even register in the rain gauge yet.

Surprisingly though, I haven't heard them out seeding the clouds.

[ALICIA]

pandiana- cash flow is refering to the sale of calfs and culls in the fall.
I use to get real upset when I would loose a calf but now when I loose a calf I just say oh well. I keep the cow for 9 months and the calf for 6 months.
sale of calf 6 months-$600.00 gross
2 weeks work-$1000.00 gross
But its in the blood and until I can't do it any more they will keep getting beef for next to nothing. I just can't seem to let go. But times are changing and there will be a end. The average age of farmers is 47 yrs.

[Junebug]

Pandiana, We take into consideration nearly everything related to having that cow. Costs include vet costs,death loss (for cow or calf),cow replacement allowance, salt /mineral,bedding, pasture, bulls, fuel, machinery costs, labour, ferltilizer, fencing, rent, extra power for waterers, interest on operating loan,and some opporunity costs. All these costs are related to having that cow, if you lived in town or acreage you would not have these cow related costs. Most of these costs are based on actual costs with some costs varying depending on the year. A person can lower their costs by: not having to use an operating loan, not using fertilizer, not having a herd health program (that is if you have A1 healthy cattle that never need any treatment of any kind). I'm sorry but there is no way that anyone can convince me they can feed their cow for nothing. I'm interested in seeing what the Ag specialists used in their formula.

[carebear300]

Junebug will try and relate my little experience with agricultural economists, in Sask. though, might be different. When I started farming in 1972 I was going to do everything the modern and correct way not the way my dad operated all his life and consulted the agriculture economics department at the university and long story short by the time I included all the costs that they recommended that I include I would be far better off to sit in the pub all day and drink beer. And maybe in the end they were right but still have managed to survive all these years by keeping my cash out of pocket expenses as low as possible. Don't know if I helped this discussion at all, sorry couldn't keep still any longer.

[cowman]

We can twist these things around however we like but the reality is there is no money in cow/calf right now and hasn't been for at least two years (and I doubt there will be any for quite awhile!).
I'd say that $765/cow is pretty close to reasonable if you don't pay yourself anything. And what about a return to your major asset...land? Land worth $2000/acre should return you $100 at 5%. Are you pasturing cows on that kind of land?
The fact is just about all agriculture enterprizes are a joke when you consider investment versus returns. I was talking to a fairly large farmer this winter. I asked him how he'd made out with the drought. His reply pretty well sums it up! "Well not too bad. Got a crop at least and I'm not starving, but you don't have to be too bright to net $50,000 on a $12 million dollar investment!!! I only had to pay about $600,000 to work last year!"
And there it is...reality!
Now having said all that, here I am still raising cows!! So I've got to count myself in with all the other idiots!

[pandiana]

I totally agree, cowman, but my accountant says there are farmers out there that make good money. I need to know how.