Questions for kpb

[kpb]

yes, in fact studies have consistently shown that the lowest cost per pound of gain is made when the steer is gaining at the highest rate possible. So, in fact, the most profitable operations are likely those that are able to buy in the fall big, growthy, steers and finish them in the spring. Then buy grassers, say in late March, early April, and feed them for only a short period of time before they go on grass.

Otherwise you run into the scenario that grassfarmer describes of feeding a long time over the winter for a short summer pasture season. Feeding to finish in the spring has worked sometimes but will be tough this year because of grain prices.

Of course the other course might be to forget the winter feeding altogether and just buy in March, feed a little and then grass.

kpb

[cowman]

Well I agree that the lowest cost per pound of gain is probably achieved by pushing big crossbreds hard, I think we need to look at the idea of cattle prices, too? Usually the grasser price, come April, is higher than calf prices during the fall run? Not always...but usually?
And I will admit I don't cost out everything like I should by feeding calves over...which if I did...I probably wouldn't do it!
I don't sell heifer calves, and I don't sell heifer grassers. I get tired of getting the shaft of 15 cents/lb. in the fall or spring! By August of their yearling year it is amazing how much that of 15 cents difference has dissappeared? Now I realize a steer gains a lot better(and cheaper) on barley than a heifer, but when you are basically just trying to maintain them until they go on grass...I think you can actually feed a heifer just as cheap? We're talking hay and straw here...no grain/pellets etc.?
As I said I don't price out things like machinery, facilities, labor for calves. Seems like if you have the tractor out feeding cows and you use facilities you need anyway...what does it really cost you? As far as labor goes...I don't know...you're out there anyway, how much is another half hour of work?
You should definitely be figuring in an interest cost whether borrowed money or your own? However quite often there are some tax advantages too? In fact I would suggest taxes might be one of the driving forces in cattle feeding....like a really big one!
Like I said I know that isn't really how you should look at it.

[cowman]

Just thinking a bit more about this and I guess it is all in how you do it? We never wean calves until after the new year now, other than the heifers we might keep for replacements.
The calves we keep get a bout 10 lbs of hay (probably about 12 by spring) This year they were out by the middle of April on banked grass. Pulled starting in mid August to Sept. and sold at Innisfail.
Now I don't know what they weighed at weaning, I would suspect around 600 avg., I guess they probably averaged around 880(hfrs) in Aug-Sept. The steers were heavier.
Now if I priced my out of pocket money at about 11 lbs hay at 2.7 cents/lb.(some good/some not so good) about 30 cents a day for 105 days...about $32? Straw...bale my own so will say about 1 cent lb. X 10 lb. day or around $11? So feed was $43?
I guess I would need about $20/month for grass so Apr.15 to Aug 15 $80? So total feed was about $123?
A 550 lb hfr calf in October 2005 was $1.23 according to the Alberta Ag site! I don't think I ever saw many sell that high..but whatever! Or $676.50?
Aug 2006 880 hfrs X $1.09 =$959.20
Or a gross profit of$282.70 minus $123 feed = $159.70?
Of course I don't have interest, labor etc. but I suspect $160 might pay for that plus give me a wee profit?

[cswilson]

were going to leave the calves on a bit longer this year-just started feeding on 11/15. We'll bale graze them along with the cows and see how that goes. The cows and calves are looking pretty slick after grazing second growth Canola for a month.We might just let the cows wean them off and go straight to the lot with them in the spring or else out to grass.

[kpb]

cowman, I recognize that you have an off-farm job so you do not have to make a living from the cows. Everyone's situation is unique--but someone who is making a living from the cows with no outside income has to take every expense into account because the money to pay them has to come from the farm. And even the part-timers should do all the numbers--not just gross numbers--so they realize that their labour really is a labour of love.

To your numbers--Innisfail, I assume, didn't sell your calves for free. So you have to take, say $17.50 off for selling commission, then $1 off for brand inspection, $3 to ABP, $1.50 for insurance. I mean these are real dollars you do not get from the gross selling price of your calves.

Then you have to get the calves there and, maybe to summer pasture. I truck my calves to pasture 5.5 hours each way and I can tell you that trucking costs have gone up a lot. But lets say you are smarter than me and have cheap pasture close by and an auction mart next door. I still say your trucking costs will be $20 per head--if you have your own trailer and depreciate the cost down it will be more like $40 or $45 a head but lets say you do it the cheap way and hire it done so we'll say $20 per head for transportation to pasture and to sell. That is very cheap.

The feedlots that I know generally work on $15 a head in drug and vet costs so we should use that. Maybe you never use drugs or the vet but, then, some year you might have a wreck and decide that some prevention is worth it. And how about deads. Well, if you don't run any numbers you might not have any deads but, in order to make any decent gross revenues you have to run decent numbers and then you will have a few deads so I usually figure on $7 per head on death loss.

As for your interest costs--whether you borrow to buy the calves or forego dollars you could have had in October because you didn't sell, there is an interest cost in holding calves for 10 months. I'll say 7% which is likely somewhere between what you would pay to borrow and what you could earn. So 10 months at 7% on $676.50 or $39.46 per head.

Taxes on your grazing land are $5 per head I figure and, although you say you are already feeding cows so what the heck for your time, you have to figure at least $20 per head for fuel and oil on your truck for checking on these guys for 10 months. What about mineral mix--do you feed any? If you do, you can count on $5 a head and that's understated. Repairs on your truck and baler, etc. How about $10 per head per year?

Add 'em up and there's $139.46 in expenses here. And most of these expense are really understated. Your gross after feed was $159.70 which gives you a net of $20.24 per head. So, if you were feeding 100 calves you made just over $2,000. for 10 months. And, if you had 1,000 calves you made $20,000 but then, of course, you might want to hire some help so there's another cost there.

These are all real expenses--maybe you disagree with some of them? But these are real costs that the full timers face every year. And I've left a few out (like operating charges from the feeder associations--mine was almost $2,000 this year).

I'm not whining or crying here--I've done this for a long time and I'm going to keep doing it. But let's face facts here and not throw numbers out that are not grounded in reality.

kpb

[coppertop]

kpb, excellent information, the only thing I would add is mineral/salt costs as well as repairs to fences, corrals etc. which also reduces the bottom line.

Interest can certainly reduce the bottom line or put an operation into the red even at today's rates....and the average operator isn't fortunate enough to be interest free....particularly the younger farmers that are just getting started.

[cowman]

kpb: No of course you are right...I wasn't arguing that at all. I just wish more people would use your numbers...instead of telling me I am a cry baby for saying...there just isn't one hell of a lot of money in this...no matter where you are on the beef chain! The fact is no one is making a pile of money on food!
The fact is food has not kept up with inflation? I've used the analogy of the pickup in 1992 versus today, with the price of calves today compared to the 2006 pickup? I wonder how that works with the price of food? If that darned steak is worth twice as much then that darned calf should be worth twice as much? And that just isn't the case! Tell me, if you were getting $2.54/lb.($1.27lb X2) for a 7 weight calf wouldn't you be satisfied?

[cowman]

It might also interest you kpb that I "try" to keep my farming business seperate from my other business(please note...I don't have any outside job...I work for ME) which by the way is extremely hard to keep seperate...hey you use machinery, labor etc. and it all comes out of my pocket...one way or the other!
Now I don't ever claim I expect the farm to pay for any land I buy...I expect rising land values to pay for that...but I do expect the going rate of rental income?
Maybe I am the ultimate diversifier? One year one thing pays, the next year something else pays...although I will tell you I sometimes consider agriculture as a NO SHOW!
Now I shouldn't imply it is a complete dog. If I do the books "right" it pays, but the fact is I have a lot of bucks tied up in something that really doesn't pay like the other business! So how dumb am I? I guess that question will be answered someday when I'm dead? Hopefully it will be a good bottom line for my kids!

[kpb]

cowman, you and I are generally on the same wavelength regarding this business and we've both been told we're whiners so there you go, lol. I gotta tell you that it irks me a little when guys tell me I'm whining when I show them real numbers. Stupid, sure, misguided, ok, I mean I just keep coming back for more. But I don't think facing reality is whining.

Also, I know you work for yourself, just forgot, and I can definitely see some tax benefits from running some cattle on that basis.

coppertop, thanks for your kind comments. I agree with you regarding pen repairs, etc. Also, interest payments for young farmers. Frankly I don't know any young farmers--I'm just not too sure that there are that many, at least in Alberta. And who can blame people for doing something else. I've got 5 kids and none of them want to take over this operation--not because they don't love the ranch, they do, but they've got better opportunites or strengths elsewhere.

kpb

[grassfarmer]

One thing you didn't add in on the income side if the residual value of manure contributed by the animals assuming they are on your own land. It's generally accepted that a cow produces $70-$80 a year of N,P K not including the value of organic matter. A yearling will obviously produce less and if it is in a corral there are mechanical costs to spread the manure. There is still a positive value there and if you are in the business of counting all your costs I think this should also be factored in.