Money left on the Table

[flyingS]

This might be another one of those topics. I was setting here thinking this morning about profitability. Where do you think most operations leave money setting on the table? Is it genetics, grazing management, or just plain ole lack of management? I here lots of people say you have to do it this way, or you'll get caught one of these years. When does the law of averages kick in. We haven't seen but a handful of bad winters in this country since 49, but everyone remembers 49. How much money could have been generated by managing for those mild winters we have had, and buying resources during the bad ones to get buy. Do we manage for the extreme and not the mean? Thoughts?

 

[BRG]

Their are lots of places where money is either left on the table or wasted. I would guess the most wasted is feed. I see lots of ranches way over feeding their cows in the winter, and I don't mean just a little, then on the other side of it, they overgraze their pastures in the summer.

We cut expenses way back when we went to winter grazing on the cows. Last winter we had to feed them more than ussual, but the 7 before they hardly saw a bale. It is much cheaper for us to leave extra grass standing and let the cows harvest it than for us to cut it, haul it in, feed it, and then haul it back out in a manure truck. The cows even seem more satisfied.

The way I see money left on the table is in their marketing of their calves. Some still don't vaccinate for pre-weaning, that is an $8/cwt discount, lots don't source and age, you miss out on $3 to $5/cwt, and lots don't make phone calls to past buyers and possible new buyers, who knows how much that makes a difference. But all it takes is another bidder to make a huge difference in price.

 

[jodywy]

winter feed cost where I am at, big snow country. Probally be better to electric fence my hay meadows , plant my dry farms to grass and run grass cattle during the grazing season . but cow / calf just seems to take more of the risk out of playing a steer jocky

 

[cure]

Not only is it in feed costs but it is also in tradition. I used to get into with my grandfather all the because he wanted it done the same way as he did in 1920. it used to just drive me nuts to think that instead using the technology that we have at our finger tips he would sooner keep with tradition.

 

[RSL]

Money left on the table in no particular order or denomination...
pasture management
winter feeding / corral cleaning
marketing
overcapitalization (too much iron)

I think most have a pretty reasonable health program, some use pretty good genetics to match their management, but a lot feed 200+ days, then clean corrals, very few manage pastures and extend grazing seasons, lots market in traditional windows, and nearly everyone has too much "stuff" to run cows with. Whenever I see a farm auction where they are selling and getting out of cows, they usually have a lot more pages of stuff and newer stuff than the ones that are still plugging along.
The marketing thing is one we are guilty of. A couple of years ago I put a $65 ad in the paper and made an extra $250 on my heifers, plus the fellow came and I never had to pay trucking. Also in this category is marketing the same time every year. This can be a way to add value (same buyer knows these calves are coming), or it can be a habitual way to ensure you always hit the seasonal low price.

 

[flyingS]

RSL, you said a mouthful. I can't tell you how many people I see with good cattle sell in Oct. and Nov. at the sale barn. Not that some don't do well, but I have to wonder if they have thought about the other several thousand people that are selling at the same time. Then there is the cost of selling at the barn. The consignment fee, yardage, and freight are probably the least expensive part of a sale barn equation. Shrink is unbelievable. Say you sell 550 lb calves off the cow. You have sorted them off their mothers, loaded them on trucks, then resorted them when they got to the barn, not to mention the time they were away from water and feed. I know a yearling will lose 4% on a 40 mile truck ride, so we will figure 4% on a 550 lb calf. You just gave up 22 lbs, just to make it simple at $1/lb, it just cost you $22/hd before they ever got to the sale ring. I am not bashing sale barns, I just think that there are better ways to market calves. I would like to throw in a sales pitch but that is not the way I work. I am going to leave it at that.

 

[Justin]

RSL, you said a mouthful. I can't tell you how many people I see with good cattle sell in Oct. and Nov. at the sale barn. Not that some don't do well, but I have to wonder if they have thought about the other several thousand people that are selling at the same time. Then there is the cost of selling at the barn. The consignment fee, yardage, and freight are probably the least expensive part of a sale barn equation. Shrink is unbelievable. Say you sell 550 lb calves off the cow. You have sorted them off their mothers, loaded them on trucks, then resorted them when they got to the barn, not to mention the time they were away from water and feed. I know a yearling will lose 4% on a 40 mile truck ride, so we will figure 4% on a 550 lb calf. You just gave up 22 lbs, just to make it simple at $1/lb, it just cost you $22/hd before they ever got to the sale ring. I am not bashing sale barns, I just think that there are better ways to market calves. I would like to throw in a sales pitch but that is not the way I work. I am going to leave it at that.

i think you just did.

 

[flyingS]

Justin, not intentionally. I think that the way the market has been the last few years people need every penny they can get. I am not interested in telling someone how to run their business, I just want the family ranch to stick around. It would be great if that $22 would give some young family an opportunity that I will probably never have. I would like more than you can imagine to have a place of my own. If I am not able to, I am going to do everything I can to help someone else if they ask for it.

 

[BlackCattleRancher]

Justin, not intentionally. I think that the way the market has been the last few years people need every penny they can get. I am not interested in telling someone how to run their business, I just want the family ranch to stick around. It would be great if that $22 would give some young family an opportunity that I will probably never have. I would like more than you can imagine to have a place of my own. If I am not able to, I am going to do everything I can to help someone else if they ask for it.

Put the shoe on the other foot, if you are buying calves to feed or background, do you want to pay $22 for water and manure? Feeding is every bit as tough, and even tougher IMO, than ranching as you are working margins on corn and fat cattle spreads. Any buyer buying off the farm who has a clue what they are doing is not going to buy without some kind of a pencil shrink.

 

[cleland]

not to steal the thread, but what is your sales pitch related too.

 

[flyingS]

There is a different between 2% shrink on the ground and controling the environment that your cattle get shorted in and how they are handled in the salebarn is quite a bit. Stress has as much to do with calves getting started on feed and there gainability as anything. I would rather never have my cattle shorted at a sale barn if I could help it, it is not generally a low stress environment. I would think that the reduced stress would pay in more ways than one to a feeder.

 

[Angus 62]

Ranching is darn hard work. Many can remember the days of feeding thousands of small bales. So the progression of ever costlier ways of doing business has a certain logic to it. The problem is that it sets off a chain reaction of things that we don't anticipate.

If we buy that new piece of equipment the next thing we need is a shed to put it in to protect the investment. A new shed raises the property taxes and insurance. The first hail storm raises your insurance rates. In a commodity business there is a limit on how much you can buy retail when you sell your product at wholesale prices and pay the freight both ways. There aren't any easy answers. Trying to do things the way you always have done them in a constantly changing world has a lot of risk also.

What is interesting is that I have come across a few people who run successful operations that don't have a typical ag background. They often are more willing to look at things in a different way and aren't constrained by tradition.

 

[WYO HEELER]

In my small opinion, every operation has the opportunity to be profitable, it is a matter of taking a look at the operation and determining the necessary steps that need to be taken in order to achieve the setforth goal of being profitable. I believe it involves all of the factors being discussed here today: grazing management, capital purchases, genetics, marketing and so forth.

 

[Dylan Biggs]

winter feed cost where I am at, big snow country. Probally be better to electric fence my hay meadows , plant my dry farms to grass and run grass cattle during the grazing season . but cow / calf just seems to take more of the risk out of playing a steer jocky

Jodywy hit the nail on the head, the majority of people manage based on their personal preferences and biases which take precedent over profit. Myself included. If I was managing strictly for maximum profit I would not be running a cow calf operation but I like cowcalf and as long as I can manage this enterprise without going broke I am willing to leave some money on the table.

As assanine as this may be it is the truth.

 

[nortexsook]

winter feed cost where I am at, big snow country. Probally be better to electric fence my hay meadows , plant my dry farms to grass and run grass cattle during the grazing season . but cow / calf just seems to take more of the risk out of playing a steer jocky

Jodywy hit the nail on the head, the majority of people manage based on their personal preferences and biases which take precedent over profit. Myself included. If I was managing strictly for profit I would not be running a cow calf operation but I like cowcalf and as long as I can manage this enterprise without going broke I am willing to leave some money on the table.

As assanine as this may be it is the truth.

All true but when everybody goes to stockers (whether they be steers, heifers, old cows, gummers, young cows whatever) somebody is going to have to have the actual BASE COW HERD to produce the cattle. At some point a cow-calf operation will be profitable (or more than marginally as it is today).

 

[Northern Rancher]

You left a loonie on the table last time I was there but the girls beat me too it. The enterprise that leaves money on the table one year might just pull your proverbial stones out of the fire another. Most ranches have more than one profit center now a days. Bred heifers used to be our bred and butter but when BSE hit we not only left money on the table we almost lost the table-the last three years we've ventured back into it.

 

[Dylan Biggs]

winter feed cost where I am at, big snow country. Probally be better to electric fence my hay meadows , plant my dry farms to grass and run grass cattle during the grazing season . but cow / calf just seems to take more of the risk out of playing a steer jocky

Jodywy hit the nail on the head, the majority of people manage based on their personal preferences and biases which take precedent over profit. Myself included. If I was managing strictly for profit I would not be running a cow calf operation but I like cowcalf and as long as I can manage this enterprise without going broke I am willing to leave some money on the table.

As assanine as this may be it is the truth.

All true but when everybody goes to stockers (whether they be steers, heifers, old cows, gummers, young cows whatever) somebody is going to have to have the actual BASE COW HERD to produce the cattle. At some point a cow-calf operation will be profitable (or more than marginally as it is today).

Because of growth performance and carcass size increases, competitive pork and chicken production, the relatively recent shift in price setting power from processors to retailers and the depressed economy, the traditional beef cycle dynamics may not express it self as soon as or as decisively as would have historically been the case. I hope I am wrong.

 

[Dylan Biggs]

You left a loonie on the table last time I was there but the girls beat me too it. The enterprise that leaves money on the table one year might just pull your proverbial stones out of the fire another. Most ranches have more than one profit center now a days. Bred heifers used to be our bred and butter but when BSE hit we not only left money on the table we almost lost the table-the last three years we've ventured back into it.

Good point NR, Loonies on the table or around the table for that matter get put to good use and or entertainment by someone. Love turns the world but money greases the wheel regardless of who is pumping the gun.

 

[Dylan Biggs]

Jodywy hit the nail on the head, the majority of people manage based on their personal preferences and biases which take precedent over profit. Myself included. If I was managing strictly for profit I would not be running a cow calf operation but I like cowcalf and as long as I can manage this enterprise without going broke I am willing to leave some money on the table.

As assanine as this may be it is the truth.

All true but when everybody goes to stockers (whether they be steers, heifers, old cows, gummers, young cows whatever) somebody is going to have to have the actual BASE COW HERD to produce the cattle. At some point a cow-calf operation will be profitable (or more than marginally as it is today).

But because of growth performance and carcass size increases, competitive pork and chicken production, the relatively recent shift in wholesale price setting power away from processors to retailers and the depressed economy, the traditional beef cycle dynamics may not manifest as soon as or as decisively as would have historically been the case. I hope I am wrong.[/b]

 

[PureCountry]

Management. To me, it's all management.

If I manage my soils, everything I grow will be healthy and nutritious, tender and delicious.

If I manage my marketing, I can sell the spit out of anything at the price I choose.

If I do NOT manage my soils, everything I grow will require more and more inputs, increasing my costs.

If I do NOT manage my marketing, I will be reduced to selling when and where the market dictates I should, at the price the market players are willing to pay.

Alas, it all comes down to management.