Rough idea – average annual profit per beef cow over cattle cycle

[Iowa guy1]

I’ve been looking at a lot of cow calf budgets online but would like input from the pros on this forum. 

I’m in my early 50s and have been away from the farm for 30 years.    My folks sold out in the 90s and I didn’t jump on it because we had a pretty good deal going in a small city about 4 hours away.   Not big money but secure and like the coworkers and people in the neighborhood.   Over the past few years I have milked in a double 4 parlor on the weekends for a great guy with a 50-60 cow dairy.

Anyway, I want to “retire” at 60 or so and then keep working to bring in $10 to 15K income at something I enjoy until I can’t do it anymore.  There is a guy at my job still going at 86 and he’s an inspiration to me.  I don’t do leisure real well and just want to make a little money but do something different.

Thinking, though, I may want that small income to come from running 100 or 120 beef cows in southern iowa.  Do you think it’d be realistic to net $15K (taking into account pasture rent or ownership cost – maybe I’ll buy but want to pay myself market rent or a decent ROI)?    I’m looking at a goal of $15k but that’s an average goal and will expect good and bad years.

I won’t clutter up the board w thank you’s but know I’m really grateful for replies.

[cowfarmer]

I can't tell you much about how much you can make, but I can tell you that cows are like the army. For the most part you will get out of it what you put into it. You also need to take a look at how you are gonna get your feed, and what you are gonna do for machines.  Just looking at the info you gave I think getting a big profit to start out will be hard. You are gonna need to get cows paid for before you start to see a big return. Cow Calf is a great way to make money and look good on a balance sheet but it takes time. You will also need to take into account, facilities for calving, facilities to house bulls and other things. Maybe a good way to start would be buy 50 cows and a couple bulls. I would buy an older bull and another two or three year old bull to keep the old guy working the first year. I would tell you that buying 120from the start would be a big risk. 50 will be a lot of work when they start droppin babies. If you have anymore questions, post and I will try to help, I've been doing this cow thing a long time all I can do is tell you what has worked for me, it might not be perfect, but the mortgage always got paid. LOL

[Iowa guy1]

Thanks ! 

I'll be bringing some equity to the picture.   What if I had cows paid for and also 2 acres per cow paid for (I won’t get there but will be a good guideline)?   Would a good goal after 5 years of working out the kinks and growing the herd maybe be $200-$250 a head (average with bad feeder prices and good feeder prices; dry years, holding back heifers, etc.)?   So give me 5 years of mistakes and if I end up with 120 paid for cows on 240 acres of paid for pasture, would $25K be a good goal?   This is above the $15K I said earlier but I need more since I own the cows and the land outright now.

What would you put cash toward first  -  cows or pasture?  This may depend on what land prices do over the next 10 years.

If I can’t get 2 acres of pasture per pair, what would you look to do first – rent additional grass or use an ethanol byproduct?  

I really appreciate it.

[Nebrfarmr]

Over here, we pay about $300 per cow/calf pair for summer pasture rent.   Some pay $350, but graze 6 months instead of 5.

If you have cornstalks, and they don't get buried in the snow too early, you have gone a long way into cheapening up your winter feed bill.  The cows grazing cornstalks alone, may net you as much as $100 more per calf, in winter feed you wouldn't have to buy.

My round rule of thumb numbers for myself in NE, is $300 summer pasture, then stalk grazing as much as possible (I have my own stalks, so I don't really figure much cost, except to fence them out and provide water), then 1.25 to 1.5 tons of hay to get through calving, and to pasture.   Add a little more, if you calve early, when the weather is still cold, or there may be snow on the ground.  You will have to plug in your local hay price, to get that.   Now, add $50 per head per year, misc. expenses, and you have your breakeven.   If you have to build fences/pens from scratch, add a bit more.

[itsmetoo92774]

With current land and bred cow prices I would guess you would have in the ballpark of $1 million tied up in 240 acres and 120 cows depending on age of cows and how good of a farm you buy.  $25K would be 2.5% ROA before you even figure prop. taxes, insurance, feed, fertilizer, machinery, labor, death lose, ect.  Why would you be willing to invest that much money and expect such a small return?  I know CD rates are very low, but by the time you figure in all other costs you would have as much ROA sitting on the couch while interest adds up then investing that much in land and cattle to only make $25K.  Personally if I had that much capital and labor tied up, I would expect a much hire profit then $25K.

I not trying to be mean or pop your balloon, but the timing is all wrong.  If you would have done this 10-15 years ago when young cows were $800 or less and southern Iowa pasture was $300-500 you would be in the cat bird seat.  I would love to expand my cows numbers as well, but with current feed, land, and cattle prices, I feel your just locking in a lose on any added numbers.  I'm glad I have the cows I currently have, but I would have a hard time hauling home as many dollars in a 24ft gooseneck that would fill a pot not that many years ago.

Good luck.

[Iowa guy1]

Great input and very appreciated.

That is a great point about the million dollar investment.   I wish I'd had some spare cash 15 or so years ago.   I guess I'm going to watch what land does over the next decade and see if it makes sense.   Maybe I'll hit a decent buying opportunity.   2.5% is not an attractive return for the risk involved but I'll see what the land price is and maybe I can also expect 2 or 3% land appreciation on top of the 2.5% (wouldn't count on that if entering now).

I wonder if in years 2020 - 2025, you might see some land price easing due to baby boomer age then.  Lots of farmers in that age group as well as hunting ground buyers that have been in the market the past few years.

What about distirllers grains for pushing cow numbers on limited grass?  What about running 120 cows on 120 acres and using distillers for feed?   Can you still net out a marginal profit on those extra cows (extra defined as those numbers over half your acreage number)?

THNAK YOU !

[Iowa guy1]

Nebr,

I think i'd take that breakeven and compare to the feeder price times 550 or 600 lbs times 90% (keeping back 20% of heifersand selling all the steers).

Are you feeding heifers in the breakeven figure?

Thanks.

[Nebrfarmr]

I very much oversimplified the numbers, I was assuming you'd sell an old bred cow for about $800, and the heifer you didn't sell would be worth a similar amount, and I factored a little extra in the feed costs, to feed a cow that didn't get bred.

You can use distillers or whatever, to push cow numbers on grass, but what tends to happen, is that you bring your expenses up a bit, as grass is the cheapest gain on a cow.   Now, if you want to have 100 head, at $70 profit, each, instead of 50 head at $100 profit (figuring very round numbers) and are willing to take on the extra work necessary to accomplish that, is a decision you have to make on your own.  
Also, check around, on your acres per cow.   Around here, it takes 5 acres per cow, in the sand it takes 10 acres per cow, and the guys with shallow subsoil moisture still figure 3 acres per cow, but this is also Nebraska dirt.

[buckfarmer]

It is harder and harder to recover from kicks, stomps, butts at my age. Twenty years from now if my kids don't want to take care of cows I won't have any around. It's just to much work. Starting out at your age I think it will be tough. I am glad to hear you don't have the average cattleman's philosophy of getting started with a few cows(6 or 8). Then they all have the same story "I've got six cows if I had a better job I'd have seven". Realistic numbers are nice to hear. Screw the ROI if it's what you want to do and you can get some help go for it.

[cowfarmer]

Cows are expensive compared to what they have been in the past, but the herd numbers are so down in this counrty because guys can take crop insurance on ground that would hardly grow grass here is western Iowa.LOL So my point is I don't see a huge downturn coming real soon. Also I think you could find some cornstalks to graze at a reasonable price. But it's just a different world you could buy good bred momma cows for 700 dollars no problem 10 years ago, not the case now.