Cow Business Number Crunching Doesn't Look Good

This example is for 10 hectares with planned rotational grazing.

Don't know where else to post these notes, so I'll just throw them up on here. What did I do wrong? I couldn't even cover the interest on a loan with these kinds of numbers. Is there an economy of scale? I'm guessing there is. I only projected double the amount of calves (the numbers in parentheses), but when you factor in the re-purchase of calves in the future, and all the overhead, it still doesn't seem to make sense even at double scale. How does anyone ever make money from raising steers to slaughter?  

It seems like the only way it might work here would be to have a mixed herd of females and males and to not castrate so they can produce their own offspring and thus not have to incur the expense of the re-purchase of calves every time.

Anyone have some other ideas how to make a living from cows? Thought about milking, but that's a huge learning curve for someone with no previous experience. Are there any good business models where they crunch the numbers like I did with my beef cow example? Milk business here has the advantage that there isn't much in the way of sanitary regulations to overburden the smallscale producer. Still, with a solid rotational grazing operation and improved pasture with salt mineral blocks, one could potentially run up to 20 dairy cows on our size piece of land. That would be waay too much work to deal with for just one or two people. Moving fences, water, minerals, weedwacking fencelines, setting up a tarp to milk a cow, fetching stubborn cows, milking in the pasture in the rain, transporting the milk to the other end of the property and travelling to town to sell.



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Steer Fattening operation over the course of 16 months

Buy 40, 8-month old bull calves at 8 soles/kilo at 150kg = 48,000soles (96,000)

eat 1 at two months = 0 soles gained

sell 25 over the course of the 16 months between months 8-24 (3 animals sold per month)
(avg. weight of 300kg each) equals 7,500kg of sold animal @ 8 soles/kilo = 60,000 (120,000)

at 24 months sell the remaining  14 steers (450kg each) @ 8 soles/kilo = 50,400 (100,800)

*Minus ongoing costs of transportation, fencing, weedwack, minerals, seaweed, dewormer/fly ointment
*Also startup costs of electric fencing, 20 plant protectors, 2 water troughs, and solar water pump with hose.

Estimated gross income = 110,400 (220,800)

110,400-48,000 = 62,400
220,800-96,000 = 124,800

Minus startup costs = 10,000?
Ongoing costs = 7,000?
Buying calves = 48,000

1st Year (16-month period) Net income = 45,400
Subsequent 16-month periods' net income = 55,400

===Calculations based on an Animal Unit (AU) equalling 450kg live weight
with 8-month old calves equalling 0.5AU and Full-grown steers equalling 1.5AU===

Tenzin, if I understand, you are in the South Americas.

But it seems you have the same problems of cattle producers here: where in the chain do I get maximum value for the time/effort/feed invested?

There is no simple answer. Your regional markets are likely as volatile as those in my area. It's a moving target.

From what I've observed, the one constant factor is that farmers are eternal optimists, no matter how bad things are this year. They adapt, and ultimately succeed, because they are just too stubborn to quit.

Luck to you!

Farming is a true enigma no matter where you are trying to farm:

Costs to farm are paid at retail prices, and the end product is sold at wholesale prices.

Most CEO's would scratch their heads at that business model.

Dairy farming is even worse. Here in the United States anyway, the government tells you SIX MONTHS in advance what the price of milk will be, but once it is made, a truck comes and hauls the milk away, takes it to a creamery, breaks it up into various products, sells it, consumers drink it, and then two weeks later the farmer is given a check for what the creamery thinks it was worth based on prices derived 6 months before. Don't agree? Try repossessing milk that has been consumed by consumers.

I'm not in the cattle business, so can only approach this from a permaculture perspective.
Here's just a few ideas:

Obtain a yield - 40 cows doesn't sound very many, and I'm thinking that without economies of scale you need to get better value out of the animals. Would you consider processing and selling the beef yourself? That is fairly common in the UK for small farmers, and for more effort /facilities you get a higher revenue - retail v. wholesale prices can be a factor of ten different. If you have 'happy cows' (which I hope you are aiming for) then this is something that people value. You also get the potential of hide and bones for craft or material sales.

Produce no waste - What other products do the cattle provide - can you (for example) harvest the manure for biogas production or garden fertiliser?

integrate rather than segregate - I think this means having the mothers as well as the calves, you have to feed the mums (and possibly pay for the use of a bull) but don't have to buy the calves. Also Is raising calfs to 8 months a better prospect?

use and vaiue diversity - I gather sheep can be grazed on the same pasture as cattle, since they eat short grass and cows like long grass, so you could have them together or graze subsequently.

The other principles 'Observe and interact', 'Catch and store energy' etc. I'm struggling more with, but some of those will be even more site specific of course.

In my area selling calves is the most profitable if you have a hay field to cut and bail. And honestly most of the “profit” is from taking a loss on taxes and an ag exemption for property taxes.

40 cows on 25 acres is really stretching it. That also means you have nowhere to cut hay so keeping mama cows over the winter is expensive. And 40cows really probably needs 2bulls. They eat about what 3 cows do.

From what I’ve seen the only real way to make money on cows is to have inherited everything or have purchased long time ago when prices were reasonable. Land prices are so ridiculous now you can’t even pay for that much less the feed and equipment needed.

Greg Judy FTW

So, my extended family owns a small cattle ranch. I don't know all of the details of the business, but I know that we have a herd of about 160 cows and that is considered pretty small. My thoughts are:

1) Buying calves sounds expensive. You definitely want to grow your herd yourself instead of having that cost every year. That is most of the purpose of having your own herd. Again, I don't know the specific details, but I know that my family keeps one or two bull calves every year without castrating them, and also keeps most of the cows for breeding purposes. The money comes from selling the remaining steers. Every once and awhile if an old cow is unable to produce, that is the one that will get butchered and be for the family to eat, since we don't mind if it's a bit tough

2) Like some people have said before, you get more of the profit if you package and sell it yourself. That is a good way to go for a smaller operation. My family actually isn't doing this, and I'm going to be trying to help them transition.

3) Growing some of your own feed is probably a good idea. You could try cutting down the size of your herd and using some of the land to grow a bit of feed to see if that helps bring down your costs.

All of that depends on your specific situation of course! I don't know anything about the market or practices where you're based.

If the numbers do not work with beef, you could try switching it up to working with sheep. They actually have more weight per the acre, and might tip the balance with not only lamb sales at higher prices than beef, but you might also be able to make money on wool, or maybe sheep milk. Don't laugh at the latter, unlike cow's milk, sheep's milk can be frozen without a loss of quality for over a year, making it easier to work with. That too has a higher price than cow's milk. They are also smaller in size, and thus less intimidating to work with.

I grew up on a dairy farm and had sheep too, so I like both. It's just sheep MIGHT pencil out better for you. (As well as other homesteaders on here).

Nancy Reading wrote:I'm not in the cattle business, so can only approach this from a permaculture perspective.
Here's just a few ideas:

Obtain a yield - 40 cows doesn't sound very many, and I'm thinking that without economies of scale you need to get better value out of the animals. Would you consider processing and selling the beef yourself? That is fairly common in the UK for small farmers, and for more effort /facilities you get a higher revenue - retail v. wholesale prices can be a factor of ten different. If you have 'happy cows' (which I hope you are aiming for) then this is something that people value. You also get the potential of hide and bones for craft or material sales.

Produce no waste - What other products do the cattle provide - can you (for example) harvest the manure for biogas production or garden fertiliser?

integrate rather than segregate - I think this means having the mothers as well as the calves, you have to feed the mums (and possibly pay for the use of a bull) but don't have to buy the calves. Also Is raising calfs to 8 months a better prospect?

use and vaiue diversity - I gather sheep can be grazed on the same pasture as cattle, since they eat short grass and cows like long grass, so you could have them together or graze subsequently.


The other principles 'Observe and interact', 'Catch and store energy' etc. I'm struggling more with, but some of those will be even more site specific of course.

I like your post. Basically, I had resigned myself that any operation would have to avoid purchasing new cows and be able to produce its own cows.

Sheep could be ok with just a couple for personal consumption, but there is no market for them.

Really leaning towards running 10-12 mature Girolando (that's the best breed of dairy cow available here that is well-adapted for our tropical conditions). Milked twice a day, ten could produce around 30,000 liters in a 250 day period. I figured just selling pure milk after transport costs I could get around 60,000 soles in that timeframe. Obviously would have to subtract more for the electric fencing materials, weedwacker maintenance, minerals, veterinary care, etc. Also, don't think I honestly want to do all that work, so I'd be looking to hire perhaps a local mom or two from the village to work part time split shift doing the milking. That would probably subtract another 10,000 soles. But all considered I think those numbers are actually looking nicer than the beef cattle numbers.

I also think if we rented a neighbor's criollo bull we could get these dairy cows pregnant again, and the non-pure calf could be sold off later at regular prices, but they would sell quicker just because they have a bit of improved genetics from the mother's side. The people around here can't really afford the improved breeds, but if it was half improved/half criollo at a regular criollo price, people would love to buy.

Joe Hallmark wrote: And honestly most of the “profit” is from taking a loss on taxes and an ag exemption for property taxes.

LOL.

The 40 cows number is actually 40 six-month old calves. The idea was after the second month to sell off 3 every month until you have 14 or so full-sized beef cows left and then sell all of them. The idea just sounds too complicated and a hassle without much (if any) reward.

What do you think of the Salatin book, Salad Bar Beef?
I think he wrote it in the late 90s, so how much would you say is valid for today? I consider a lot of those gurus to be riding in the clouds, so it's good to hear from more regular people like yourself.

Joe Salatin actually runs chickens with his cattle, they clean up ant worms the cattle may have and di eliminate the need for drenching and he had chickens to sell.
Why do you need a weed wacker?

With a permanent electric fence, weeds, tall grass, and tree shoots will grow up and short it out. Cattle will not eat some of those. Hence the potential need for a weed whacker. Intensive grazers use a movable fence to protect from overgrazing, so the problem sort of solves itself.

Actually those aren't the only two options with cows. The third option, which probably makes more sense than just a beef finish or dairy operation would be raising the regular criollo cows and perhaps renting a bull from time to time, or just raising a bull permanently. The cows produce their own offspring, and you can sell live animals every once-in-a-while. The cows are milked by the calves.

This resolves the disadvantage of a dairy operation: lots of work
And also resolves the disadvantage of the original beef idea: The cows produce their own replacements. No need to keep buying and transporting.

Not sure how profitable it would be though.

E Haroldsen wrote:So, my extended family owns a small cattle ranch. I don't know all of the details of the business, but I know that we have a herd of about 160 cows and that is considered pretty small. My thoughts are:

1) Buying calves sounds expensive. You definitely want to grow your herd yourself instead of having that cost every year. That is most of the purpose of having your own herd. Again, I don't know the specific details, but I know that my family keeps one or two bull calves every year without castrating them, and also keeps most of the cows for breeding purposes. The money comes from selling the remaining steers. Every once and awhile if an old cow is unable to produce, that is the one that will get butchered and be for the family to eat, since we don't mind if it's a bit tough

2) Like some people have said before, you get more of the profit if you package and sell it yourself. That is a good way to go for a smaller operation. My family actually isn't doing this, and I'm going to be trying to help them transition.

3) Growing some of your own feed is probably a good idea. You could try cutting down the size of your herd and using some of the land to grow a bit of feed to see if that helps bring down your costs.

All of that depends on your specific situation of course! I don't know anything about the market or practices where you're based.

Yes, #1 sounds good to me.

Did your family ever consider running a small dairy operation?