grassfarmer, you and I have had this conversation in the past but I think it bears repeating. Although margins are apparently quite high in the direct market, the problem that I see is that your overall gross dollars realized are not.
It's great to net out big bucks per animal or per pound by grassing your cattle, then selling privately, but it's your bottom line gross return that really matters. If you run 100 cattle and realize an annual net in your pocket of $400 per animal after all expenses--which I think is very high--you are going to have $40,000 at the end of the day. Well I sure don't know your circumstances and don't need to but I can tell you that $40,000 around here just won't cut it. Hell, I've got 5 kids and their hockey expenses are close to 10% of that. My land taxes eat up more than another 15% and that's just off the top of my head.
Now this year we lost a little on the grassers as I outlined earlier. But last year we made a lot, a whole lot more than $40,000 and that's just one aspect of the ranch. I think, with what we have invested in this operation, that we are entitled to a return that is comparable to other business ventures that we could put the equivalant amount of money into and that is, generally, what we strive to make.
I think you know a lot about direct marketing, based on your previous posts, and I know next to nothing about it. But when we have discussed this previously I believe you said that the number of animals you market this way are actually fairly small--maybe 25 or less??? To my way of thinking I cannot generate enough gross dollars from this to support my efforts. And I don't know how a person can grow this market to a size that would generate a liveable return. On the other hand I can hold grassers for four months and, on average, make $30,000 or so. And also have the upside potential of a big payoff one or two years in 10. And still have the basic herd and backgrounding ends. That's why, I guess, that a fast turnover, lower margin operation is what most big, successful cattlemen have.
kpb
It's great to net out big bucks per animal or per pound by grassing your cattle, then selling privately, but it's your bottom line gross return that really matters. If you run 100 cattle and realize an annual net in your pocket of $400 per animal after all expenses--which I think is very high--you are going to have $40,000 at the end of the day. Well I sure don't know your circumstances and don't need to but I can tell you that $40,000 around here just won't cut it. Hell, I've got 5 kids and their hockey expenses are close to 10% of that. My land taxes eat up more than another 15% and that's just off the top of my head.
Now this year we lost a little on the grassers as I outlined earlier. But last year we made a lot, a whole lot more than $40,000 and that's just one aspect of the ranch. I think, with what we have invested in this operation, that we are entitled to a return that is comparable to other business ventures that we could put the equivalant amount of money into and that is, generally, what we strive to make.
I think you know a lot about direct marketing, based on your previous posts, and I know next to nothing about it. But when we have discussed this previously I believe you said that the number of animals you market this way are actually fairly small--maybe 25 or less??? To my way of thinking I cannot generate enough gross dollars from this to support my efforts. And I don't know how a person can grow this market to a size that would generate a liveable return. On the other hand I can hold grassers for four months and, on average, make $30,000 or so. And also have the upside potential of a big payoff one or two years in 10. And still have the basic herd and backgrounding ends. That's why, I guess, that a fast turnover, lower margin operation is what most big, successful cattlemen have.
kpb
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