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View Full Version : How Are Farmers Making Money Off of 15 Beef Cattle?


Hello Again
12-03-2005, 09:44 PM
Where I live, along a semi-rural route, you can see any number of smallholdings 10-30 acres with about 10-20 cattle standing on them (often sharing pasture with a couple of ponies or a donkey). They are generally Black Angus or Polled Herefords, so they are being eaten, not milked. I'm constantly wondering how on earth there can be any economic gain in that arrangement.

I have a few theories:
1) They are raising the cattle for their own use, and sell a few every year to a few friends and neighbors. (10 almost seems too many for that arrangement. I think it takes more than a year for the average family of 4 to eat a whole cow).
2) The animals are fine pedigreed breeding cattle that are sold to other breeders for prices higher than meat prices (although the conditions in which the cows are kept, while by no means inhumane, do not suggest the animals are of particular worth)
3) Somewhere there is a meat cooperative they can sell into (along the lines of Ocean Spray Cranberries).
4) They have a connection to a restaurant or gourmet buyer that is willing to pay extra for grass-fed, free range, never-feedlotted beef.

Do any of these theories reflect real-life scenarios? How are smallholders making money on such a small herd? By the way, I know I am not seeing only a portion of a larger farm, because there is suburban development hemming in most of these small farms.

Turek
12-03-2005, 09:55 PM
My family has about 40 cows and yes, it's mainly for their own use. The do sell a few every year.

There's also a tax break on the land, since it's being used for agricultural purposes.

Shagnasty
12-03-2005, 10:06 PM
My FIL fits that category. He started raising Hereford's because he wanted to help subsidize his 300 acre weekend gentleman's farm in NewHampshire. I told that it wouldn't work and it doesn't. Small scale cattle farming is very expensive. He is up about 35 and still trying to get it to turn a profit on them.

Shagnasty
12-03-2005, 10:08 PM
The tax thing is important to him too. That might still make it worthwhile.

John Carter of Mars
12-04-2005, 01:03 AM
You can't make a living or support a family from a small herd of beef cattle. If properly managed, you can make some supplemental income.
The tax break on income taxes is not as much as popular opinion might think it is. There could be a significant property tax advantage to to having the land assessed as farmland, depending on the tax laws of the particular state or county.

There's no problem selling a small number of beef calves. Most areas have a livestock auction market within a reasonable distance.
Cattle buyers come to the auction on sale days (usually one day a week), and they can buy in quantity. Even if most area farmers have only a few head, with several hundred growers in the area the numbers add up.

A well managed herd of cattle should have an 80% calf crop of 500 pound calves to sell in a given year.

Lets assume a herd of 20 brood cows and 1 bull:16 calves minus one for the family freezer leaves 15 to sell.

Fifteen 500 pound calves X 90 cents per pound= a gross income of $6, 750 per year. Of course, feed and other operating expenses need to be subtracted from that to arrive at net income.

Footnote: Cattle prices have been at all-time highs for the past few years. Anybody with cattle that hasn't been making some money recently should sell out now, while they are still high! ;)

Gorsnak
12-04-2005, 01:31 AM
Footnote: Cattle prices have been at all-time highs for the past few years. Anybody with cattle that hasn't been making some money recently should sell out now, while they are still high! ;)
Yup, because the US border has been re-opened to Canadian cattle, and those prices will be returning to roughly where they were before BSE was found in Alberta.

Gorsnak
12-04-2005, 01:33 AM
I should perhaps add that the farm on which I grew up included a small beef operation of ~20 cows. The beef part of the farm was never the primary source of income, but it was almost always profitable. Course, since the primary part of the operation was grain, we were growing all our own feed.

DrDeth
12-04-2005, 01:37 AM
Tax Shelter.

Carnac the Magnificent!
12-04-2005, 11:22 AM
Tax Shelter.


Agreed.

ftg
12-04-2005, 01:38 PM
One of my cousins farms. He has a small field in front of his home that is too small for growing crops (with today's equipment size and all). So he keeps it as pasture and has 2 beef cattle in it. When they get big enough, they go into town and come back to the freezer.

So part of the economic equation includes the value of the land otherwise going to waste. He also raises alfalfa and wheat, so there's plenty of supplemental food for them.

His land is irrigated, but all around are large expanses of dry land. The only thing you can do with such land is graze cattle.

justwannano
12-04-2005, 03:09 PM
Right now we have a herd of 13 head.
6 cows and 7 calves.
4 of the calves (500 + pounds) will go to market soon. The other 3 calves will be shown at fair and 2 of them will be sold. The other calf will be added to the herd of old cows and next year it will start all over again.Well not exactly true. Its the last year for my kids in 4H so we won't have the fair calves.
We've been building this herd for about 6 years now and finally its going to get serious.
As long as we have pasture enough to feed hay it looks like it will it will be profitable. No where near enough to make a living from but a nice hobby. It keeps the wife and I off the streets at night :D
Its been a great learning experience for the kids and the ocasional 1/4 of beef helps with the grocery budget. BTW more that 1/4 usually results in freezer burnt meat.
the best 2ya
just

Hello Again
12-06-2005, 05:33 PM
Thanks everyone for your input. I had forgotten about the 4H angle, it's very popular around here, and the tax angle, which I hadn't considered at all in relation to small scale farmers (I think of the tax angle when I see a herd of 30-50 on a vaaaaaast many-hundreds of acres open tract of land, which is also a fairly common sight around here).

An Arky
12-06-2005, 07:59 PM
In my experience, as others have said, it's either supplemental income, tax shelter or hobby or some combo of those. My dad had about 35 head of very well-bred Angus (sold a few tubes o' love juice from our bull, Satan). :D

But it was a hobby/tax shelter (When I was growing up, I thought, "Why couldn't car racing or exotic travel be his hobbies?) :o

Where I grew up (semi-rural Arkansas), many people I knew had a job at the chicken plant, a few head of cattle and perhaps a chicken house or two, plus a pretty large garden. While part of it is certainly tradition, etc., it's just how make ends meet out in the country.

An Arky
12-06-2005, 08:04 PM
Oh, and to answer your #3 question, usually folks would either sell cows at auction or to someone they knew. Or trade. Many a small herd was built by trading a good bull for a couple of heifers.

enipla
12-06-2005, 08:37 PM
My family has about 40 cows and yes, it's mainly for their own use. The do sell a few every year.

There's also a tax break on the land, since it's being used for agricultural purposes.My Wife and I own 40 acres that are grazed. Itís unimproved, no house or buildings. We donít own any cattle.

We have a grazing lease. The only way we could keep cattle from grazing it would be to invest in about $10,000 in fence (WAG), which we donít care to do. And we donít care if cattle graze there. It's free range land.

The lease allows us to keep our agriculture zoning. We actually make a whopping $15 a year on the property (after taxes). And it helps the folks that are running cattle.

If we put up a fence, our taxes would go up. It would cost us about $600 a year.

We are sitting on our property. We go camping there about once a year. I go shooting there too. We may someday build on it, but I doubt it. Itís an investment, and a place to go chill.

lieu
12-07-2005, 09:40 AM
My FIL, easily the most knowledgable and savy cattleman you'll ever meet, runs many thousands of head on a rather large ranch, grazes on several others, and even with that relies on additional elements to make the living he wants. The feed lot, vet practice and sale barn help do what the ranch alone can't.

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