Numbers for the cowman

[rkaiser]

I see cowman has been trying to scare off any new comers with his numbers lately. Haven't had a bunch of time for the old computer these days. Half done calving as of today - first due date was April 1. Things are going great.

Dropped in to see cowmans numbers and thought I would share some myself.

I guarantee that I will make some money in this business this year cowman, and likely most on this board will. If you don't like the conventional route, you do have choices. Confidence like Mr. Wilson has in his stock will fetch him and extra buck or two on the grid, and vertical integration with secondary marketing groups will fetch even more with a bit more risk....

So here's my numbers cowman. Told you before that I paid $1.50 per day to have em custom fed. --- Well now I am buying the (silage - barley - mineral mix,) driving down the road a mile with my $2000.00 feed wagon and paying the guy 70 cents a day. I am addding a bit less than 30 cents worth of hay which I paid a heap for --- but it has had no fetilizer or chemical contamination.

Therefore - the $1.50 was pretty close if you say that he was charging me 50 cents for yardage. I don't know for sure, but I think he was making a few bucks, and is still making a few selling me the mixed ration. Probably would have run me down the road if he were'nt.

So let's say that $1.50 is high for the winter,and makes the feeder some dough. Then let's say one dollar a day for pasture (165 days).Looks to me like $465.00. Granted my cows are small and carry some extra value in their calves, but let's not scare everyone off with these dismal numbers of yours cowman. The numbers I have presented are custom rates. Guys like Mr. Wilson and Purecountry can easily do it for a lot less.

Gol darn it I love those rose colored glasses on a sunny April day.

Catch you all on the flip side.

[PureCountry]

Those aren't rose colored glasses old boy...you're sight is just really foggy from the stench of your BO after being in cowcamp for this long without a shower! By the time calving is over the Mrs. is gonna tell ya to stay in that little RV!lol

By the way, thanks for injecting a little optimism into this thread.

[cswilson]

Heck I'd just bought shares in a company that makes hanging ropes and three legged stools.

[cowman]

I think if you check my numbers I quoted $140 for pasture and $200 for winter feed for a total of $340 as compared to your quote of $465? So how am I posting dismal numbers?
I was pointing out that at 80 cent calves(which Sean, KPB were predicting) there is no way you can make money? Now you could take the farmers son approach and say I'm $250 to high on costs, but that isn't reality. Where was I wrong on any cost?

[whiteface]

I appreciate your numbers cowman. Especially that you factor a cost into the dirt the cows stand on which is a need for sure around here. I have some real nice people breathing real hard down my neck to sell my place to them and if I need to go and buy another one around here to replace it, I know I'll be digging deep and certainly not a price condusive to raising cattle. It's the "lifestyle...." that they want and will pay dearly for. Y'all run with that piece of dismal post, but have a good day!

[farmers_son]

Cowman: you asked where you were wrong on any cost.

Rather than point out where you were wrong I will put up my own numbers.

I grow my own grass and raise my own winter feed. So I will not include them as costs. Now some will criticize me for that but there are many different ways to approach costing and the whole farm enterprise approach is valid.

I calculated contribution two ways, one if selling weaned calves, the other retaining ownership until the calf is ready for slaughter. I calculated contribution per calf then inputted an assumed fixed overhead of $100,000 to arrive at the number of cows I would need to keep to break even. Enjoy…

Item………………….. Weaned Fat
Breeding…………….. 20.00 20.00
Custom Work……….. 13.33 23.00
Deductions………….. 4.00 4.00
Depreciation………… 66.65 95.00
Fence Repairs……… 46.67 46.67
Freight………………. 20.00 23.00
Fuel…………………. 53.33 64.00
Operating Interest….. 23.00 35.00
Rent-Equipment…….. 3.33 6.00
Repairs……………… 53.33 57.00
Small Tools…………. 13.33 13.33
Supplements………. 13.33 80.50
Twine……………….. 3.33 3.33
Vet Fees……………. 26.67 26.67
Total………………… 360.32 497.50

Expected Revenue…. 440.00 900
Contribution Per Cow 79.68 402.50

Total Fixed Costs….. 100,000 100,000

Breakeven # of Cows 1,254.97 248.45

[kpb]

farmers_son, whether you raise your own feed or not, you still have to include the cost of feeding your cow and your calf in your costs. How does your calf get to the fat stage without eating anything? And your cow--there are still feeding costs involved whether it comes from feed you grew or bought. Without feeding costs your numbers cannot make sense.


kpb

[farmers_son]

Actually for the purpose of these calculations I do not have to show feed as a cost if I am able to raise my own and do not have to purchase off farm.

As producers we have been trained to include feed costs by Alta. Ag. but it is not a requirement. I have shown a different way to think about raising cattle on your farm. I assure you it is correct. This is a whole farm enterprise calculation, not broken down to individual cash enterprises. It was done quickly so there may be some mistakes, but it is not necessary to include feed as a cost using whole farm enterprise costing unless you purchase feed off farm. The costs of growing the feed are included in the various line items as well as overhead.

What these numbers showed me is that even with 80 cent calves a very large farm may still be viable. But for most of us who are not that large there are opportunities to be viable by retaining ownership of our calves.

[cowman]

I know you explained how you see this once before farmers son...and after a lot of mulling it over it made sense...sort of? You definitely have a different way of looking at things and a different motivation than most people for being in agriculture! Which is okay...it takes all kinds to make the world go around!

[farmers_son]

I have included a link to an article by Dale Kaliel, who I believe has posted occasionally on these threads. I have referred back to this article many times and think it is very good. Check out:

http://www1.agric.gov.ab.ca/$department/newslett.nsf/all/agrp409

I like the whole farm enterprise approach best for viewing my own operation rather than the typical what I call “broken down” approach. I myself do not sell, sell or rent hay or pasture. I do the more common costing as well breaking down the whole farm to cash enterprises. That provides information but I am aware that it is information out of context and as such the numbers are considered in that light. If you buy in hay like Cswilson does then his cash costs are going to be very different i.e. less fuel and depreciation, no twine etc. as well as keep quite a few more cows on the available land base. Whole farm numbers are good to view your own operation, not so good for comparing your operation to others because each whole farm is different. Each method of costing has advantages.

Some comments about Cowman’s numbers. Cowman said “We won't go into labor as we all like to work for free and we won't count interest on our feed supply or the cost of a horse, quad or pickup truck to check the cows! Or the fuel to run them!”

Well didn’t Cowman charge out his cows at custom rates for pasture and at a wintering rate that already included the cost of the feed and tractor? Wouldn’t those costs Cowman did not go into have already been counted in those custom rates?

And even though Cowman did not count interest on his feed supply he implied he should have and that he was just being generous with the numbers. Well actually no, that was not being generous with the numbers just like Cowman was not being generous with the numbers which included $84 interest on the cow. For discussion interest could be defined as money paid to others such as a bank while interest paid to yourself is better thought of as return. If Cowman really does pay interest to the bank on the hay in the feed yard that could be considered a legitimate cash expense as operating interest. It is my impression however Cowman was penciling in a *return* for his investment in the cows and implying a *return* on his feed. The return should have been the net and not included as an expense.

[kpb]

farmers_son, I think I'm starting to understand your numbers and I could work this out myself but I'm going to ask you to do it. If you had a 90% weaning to cow exposed rate and culled 10% of your herd and used 10% of your heifers as replacements, what does this do to your projected breakeven herd size?

kpb

[farmers_son]

Kpb: I looked at the numbers I put up and I could quite easily say that those breakevens were for bred cows in the fall.

But you raise a good point. I did a spreadsheet a few years ago to calculate how much you could pay for a bred heifer in the fall. Some of the variables I included and the rates I used in that spreadsheet were:

Pregnancy Percentage 93%
Calving Percentage 92%
Percentage Live Calves to Weaning 97%
Cow Death Loss 2.00%
Cull Rate of Open Cows 100%
Cull Rate of Cows -Dead Calf at Birth 100%
Bull Replacement Rate 20%
Bull Death Loss 2.50%
Females Per Bull 27

Obviously these variables affect your operations profitability.

I did say those numbers I put up were rough numbers. I did not include any revenue from the sale of cull cows so the cost of replacements would be *roughly* a trade off. Depending upon just I how I read your assumptions you would need to turn the bulls out with between 111 to 123 females to wean 100 calves. 10% of your females exposed would be replacement heifers without a calf. I presume you meant a 90% exposed/weaned calf ratio on your cows only, not the entire herd.

You might be interested in the results of the spreadsheet for how much you can pay for a bred heifer. Buying replacement bred heifers, using full custom rates for pasture and winter feeding including yardage/custom calving and selling weaned calves in the fall would show a 3% ROI if the bred heifer was purchased for $850 however it would take a generation before you realized a positive NPV. Now many would say that can’t be true but we need to remember that is paying full custom rates. Most of us find a competitive advantage by supplying at least some of the cows inputs from our own resources.

[farmers_son]

Kpb: I know what you meant by keeping 10% of your heifers as replacements but just for fun I would point out that if you cull 10% of your herd you need to keep 20% of your heifer calves as replacements, not 10%, since half the calves are males.

[PureCountry]

The most interesting part of F_S's numbers to me, was the conclusion that it would take 5 times as many cows to break even with the old 'dump 'em at weaning' system VS. retained ownership.

I like it.

[kpb]

farmers_son, thanks very much for breaking down the numbers further. As usual, I find your research very interesting.

Like PureCountry I found the difference between selling calves and fats compelling. I noted that you have added $60 to the supplements section which I assume is bought barley.

The only other question I have relates to land ownership. Have you considered charging part of the land value back to the cows? Or do you consider this a cost of doing business? For example, if your pasture or hay quarter is worth $160,000, do you charge, say, 5% back to the cows as a reasonable return? Consider, if you had another business that owned real assets (say an apartment building) you would expect a rate of return. Or do you consider the overall profitability of the cows to be also the profitability of the land?

kpb