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Creating A Business Plan

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Halo Beef

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Hello All,

First off let me tell you I have enjoyed reading all your comments about ranching over the past few months and I value many of your opinions. It has been very educational. I have a few specific questions I was hoping many of you could answer as I am searching for a more defined direction.

#1 What is your ranching operation (how would you define it)?

#2 How much PROFIT do you make per animal unit? (cattle only please)

#3 What is your acerage (own/lease)?

#4 What is the most signaificat (and ethical) cost effective aspect of your operation? What enhances your profit margin most? Trick to your trade.

Thanks for your responses ahead of time!

Halo Beef
 

Jason

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Those questions are fairly specific, and I doubt on a public fourm many will want to answer them.

Some general answers though.

Land is the biggest capital expenditure any operation will face.

Feed is the single biggest cost in raising cattle.

The type of operation makes a huge difference. Are the cows intensively raised on small acreage and fed all winter, or are they open range cattle that have acres to find their own feed?

Before any answers will actually help you, you need to decide where and what type of operation you will embark on.

Most start where they own land and adapt to that area.
 

Halo Beef

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Thanks Jason.

Although they are specific questions I am only looking for rough estimates.

My wife and I have 100k to invest in land and we want to make 20k to 30k annually (once our business plan matures).

One of the key elements to research (at least in my mind) is finding out what profit people are getting per head (per operaiton).

I have read a bazillion ideas (from miniatures to commercial, seed stock to feeder operation) but not too many people include the numbers.

WHERE do people see growth in the ranching world?

Again, just looking for rough estimates.

Thanks again Jason!
 

Jason

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100K sounds like a lot, but in Ag it really isn't.

There is a difference of about $250 profit between the best and worst (average) bottom lines in cattle.

To make 20K a year in cattle, some really rough numbers could be used. Let's assume a cost of $365 a year to have a cow. Let's assume calves at $650 each. This year they are bringing more but never base a business plan on the record prices. There is a gross margin of $285 per calf. Figure deathloss, if you have livestock you will have dead stock, 5% say. $14.25 per calf less. $270.75 By the time you pay breeding costs, marketing costs, taxes etc. take another 25% off. $67.69 your left with $203.07.

Based on that you need to run 100 cows.

Soapweed just posted some numbers of bred cattle selling for $13-1700, we just blew your 100K plus 30K more for the cheaper ones, and still haven't got a piece of land to run them on.

In some places like Texas leases are cheap, if you can find one close by. You could start with some cows and get land later.

In some places land is $500/acre but the capacity is varied, you might run 20 cows you might run the 100 with some extra summer leases.

Like I said it's tough to get exact.
 

Halo Beef

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Great info! Thanks. On top of the 100k we are going to purchase a house with land in the area of 300-500k. We are only looking at cattle as a part time venture (probably a misnomer). 20k to 30K may not be possible with a full-time job off the farm.
 

Jason

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Halo Beef said:
Great info! Thanks. On top of the 100k we are going to purchase a house with land in the area of 300-500k. We are only looking at cattle as a part time venture (probably a misnomer). 20k to 30K may not be possible with a full-time job off the farm.

Or to make the 20-30K you will need the off farm job :lol:
 

DiamondSCattleCo

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I'm not sure if this will help you much, as I'm in Northern Saskatchewan where our costs of production are going to be considerably different than yours south of the border.

I run a commercial herd, but am making the switch into a purebred operation because purebred operations are a little more resilient to outside price pressures. I'll likely maintain the commercial side just for diversity sake, in case something really goes wrong with the purebred Shorthorn market.

All my land is paid for, except one quarter section, and all the equipment is newer, except for the tractors.

After all my costs are calculated, including fuel, equipment, repairs, etc etc, I figure it costs me about $300 Cdn per cow/calf pair per year. This includes backgrounding the calf to 800 weight.

My trick? Don't really have one except I grow my own hay and swap labor for grain (my father is a grain farmer) so I'm about as low cost as you can possibly get. I also do almost all my own repairs, and keep equipment costs as low as possible (in my area, equipment costs are likely the number 1 expense. Land is cheap here. $500,000 USD up here would buy a decent home and 8 quarters of good land)

Rod
 

Halo Beef

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Thanks Diamond! Great stuff!

Why is land inexpensive in your neck of the woods? The remoteness?

Thanks,

HB
 

DiamondSCattleCo

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Yeah, people don't like seein their kids being chased by polar bears and whatnot :)

Actually, its been a few hard years up here, so people are gettin out. Grain prices have been depressed for years, and of course the BSE scare pretty much knock the heck out of any rancher who was heavily in debt. Prices are coming up though. I paid $50K for a quarter of land that five years ago wouldn't have fetched $30K.

The land up here is excellent for cattle. 2 - 3 good acres of grass will keep a cow/calf for the summer (4 - 6 months grazing) and another 3 acres of good hay land will feed that pair for the winter. Most people will double that land base, as in dry years the hay land won't produce and you need a couple quarters to rotate alfalfa production on.

Rod
 

Jason

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Halo Beef said:
Jason,

Where would be some good places to post my original post, in your opinion?

Thanks,

HB

Your going to get as much input here as anywhere.

Like I said specific numbers tend to be pretty hard to pry out of most guys.

Land prices and acres per cow are pretty easy.

Come up with specific questions and see what you get.

One thing to consider is if you could find an older rancher that wants to slow down etc... he could teach you what he knows or could sell part of his place to you as he needs retirment funds. Not always an easy find.
 

YoungFarmer

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Halo beef, Up here our land economics are similar to northern Saskatchewan. I always try to compare the productivity on land by $ invested per cow. Here the cost of a average quarter of pastureland runs 35k which in turn averages carying capacity of 35 pairs. Cost would be $1000 per cow cdn. or $900 U.S. Iam assuming land prices are cheaper here as compared to some western states and Alberta due to the fact their are no Corporations, weathly billionares, or hobby farmers competing for land or ranches. Usually it's just farmers competing amongst themselves. Productivity of pastureland can be tricky sometimes to compare. Some Alberta farmers have sold there "million "dollar ranches and have purhased similiar productive farms in Manitoba cheaper while providing themselves with a lot of cash in there bank accounts or becoming debt. free.

Living in "Grain country" can make producing cheap forage for the winter a challenge. Rely on growing alfalfa and corn grazing in field from Nov. to Feb. We bale up to %25 of our hay out of ditchs witch helps to keep costs down. I would say our costs easily run $400 per cow after you figure in the cost of deprieciation of your cow herd depending if you bought in at the low or high time.

Here is another Idea, what if a person spent 200k on a small acreage and had a few horses or cows for a hobby and invested the remaining 400k conservatively and made 15k of the investment if you have to work the fulltime job anyways. This would provide for more free time than having 100 cows on the side but those are priority choices every body makes.
 

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