Ranch economics

First off, this will be a rough look and just hit averages as to my opinion.

Land in my area recently sold for a high of $560 an acre. This land will take about 20 acres to run a cow/calf pair for a year, tho’ maybe with these newer larger cows, it might take a few more, so you are looking at over $10,000 to $11,000 per cow/calf unit at a minimum.

Part of that land will be in hay ground to put up the hay to feed the cows over the winter. Seems like most around here sell their steers and cull heifer calves in the fall. Then they winter their cows and heifer replacement heifers and also the yearling heifer who will calve for the first time in the spring. So if you ran 200 cows you would probably figure about a 10 % cull rate on your cows so you would need that many bred heifers to replace them and then that many heifer calves to use for next years replacements. You will need at least another 10 % of the heifer calves and replacement heifers as some will not calve and some will lose calves when they calve. So figure 25 bred heifers and that would make about 30 head of  heifer calves. So you got to sell 100 steers and about 70 heifer calves. Of course there was some death loss so you only probably had about 195 head of calves that were sold or weaned in the fall.

Depending on how you figure your costs and if your land if paid for or if you summer cattle out and pay rent or per head charges, you will have from a minimum of $300 per cow/calf pair charge per year, to a high of $600 at least. Most probably fall in the middle some where. I don’t think too many actually figure this. Might scare them!

So if you sell an average weight of 525 pound calves at $1.00 per pound you would have $525 per head, times 165 head of calves, to pay the bills. Now, if your cost of production was higher than that, you lost money, if it was less, you made money. And of course these are all averages. I am sure there were people who got more per calf this year, but there were some who got less.

Nailing down costs is hard to do as most people have different ways of charging themselves. Most figure if they made a profit they had a good year and worry about having to pay income tax. But I think too many worry about gross and not net. But then again, that is their business. My net is usually pretty gross!

How do you charge yourself or come up with a cost per ton of hay? When you pay $50,000 for a swather and $25,000 for a baler, $50,000 for a tractor to pull the baler, you have a lot of expense tied up in that years hay crop. Of course the swather and tractor and baler will be used for more than one year and the tractor will be used for other work besides haying. Most people have to do some farming to get the ground in shape to raise hay. And most will use the tractor to turn around and feed the hay back out.

I’ve asked neighbors what it cost them to put their hay up and have gotten figures of $25 per ton to $60 per ton. Many do not charge themselves a labor charge. They seem to figure if they made it for the year and got all the bills paid, they must have made some money somewheres!

We have just a few cows and mostly run yearling’s thru’ the growing season for people and get paid per head per month. They paid $19 per head per month this year. They all came in the first week in May and some went out in mid August, some in mid September and the balance in October. My most difficult problem is establishing how many I should take in. I want to use as much grass as possible so I need to run as many as possible, but at the same time I need to not run out of grass for my yearling customers or our little cow herd. Luckily I have been doing this for about 10 years now so am getting it fine tuned. But I worry about hail and fire tho’ I do have insurance, but don’t know how well it will pay in those instances.

Drought is always in the back of your mind in this country. We are always 3 weeks away from a drought it seems like. Our annual average moisture for a year is about 15 inches. Some years a lot of that comes as snow and then maybe hard rains that run water off  which fills dams but doesn’t soak in as good. This year was way above normal for moisture. A year or so back we only got about 10 inches. It seems like it’s not so much how much we get as WHEN  we get it, making the difference between a good, bad or great year.

I graze my hay ground and if it works out I pay a man to come and cut and bale some of the hay. I pay so much per bale and I have to pick them up from the field and stack them. These are large rounds weighing about 1000 pounds. This year we got 80 and then turned around and bought and traded for some more. And Chance also bought hay for his share of the cows. My hay cost about $50 a ton this year whether I bought it or had it put up. I bought a tractor a couple of spring ago. An old tractor and loader with no cab. $6000. It’s alright, but more of a stand by and then I don’t have that many cattle to feed in the winter, so I love my team of horses. Especially this year as they are older and better trained.

That is about it. If you have any questions just fire away. Please remember I am shooting at averages here. Some will be higher and some lower. Most would be in the mid range.

Bottom line, most ranchers do not ranch for the money, but for the job, love of the land and the work. Silly? Maybe, but there is more to life than money, tho’ it seems to make some things easier. Like paying the ever increasing bills!