I would argue there is more opportunity now than in 2014 for expansion and making a better life for our families. Now is the perfect opportunity to take control of our cost of production.
I don’t know about ya’ll (yes, I grew up in the South). My wants can become needs quickly, especially when cash is flowing in and I can justify it to make things easier on myself. Anyone else have that problem? Dang it, I knew I was the only one. Let’s make sure our expenses are warranted and attributed to the correct enterprise. A typical cow-calf operation may have the following enterprises:
1. Land enterprise
This is owned or leased land. First analyze income generated strictly from the use of the land through custom grazing, subleasing or leasing it to someone else, whichever is appropriate.
2. Cow-calf enterprise
This is the enterprise of simply raising calves for commercial sale from birth to weaning. Don’t forget to include the economic value of your grass if you own your land.
3. Replacement heifer enterprise
Can you raise them cheaper than you can purchase? Don’t lie to yourself. I know few that can raise them cheaper, but there is value to cattle that grow up under your management. They know where the water is, the gates, genetics, etc. Value to those attributes is hard to quantify, and everyone has to weigh that based on personal priorities. For a great replacement heifer strategy, check out this article on the On Pasture website.
4. Hay enterprise
Can you buy hay cheaper than you can raise it? Don’t lie to yourself. Why value your hay less than purchased hay? In my case, I am a lousy farmer, so if I raise hay, it will surely be worth less than yours, but I’d bet you’re a better farmer than me. Even so, I am savvy enough to know that my time and depreciation on equipment is worth valuing. When I came to the realization that I was far better with livestock than any type of equipment (just ask our mechanic – our frequent flyer miles built up, and whatever you do, don’t buy used anything that I have ever owned), I quit trying to be something I’m not and my life got a lot more enjoyable. That time I used to spend driving mindlessly around in circles is now devoted to herding cattle and riding young horses. It’s a win-win for everyone (except the mechanic).
5. Backgrounding enterprise
If you background calves prior to selling them as well, you just created another enterprise.
Make sure you truly account for the full cost (your wages as an employee of the business, equipment cost at market rates, your profit as the business owner, etc.). Otherwise, you are not getting an accurate measure of your cost of production. Too often we attribute purchases to the wrong enterprise. Is that new swather an expense to the cattle operation? Nope, that’s a cost of raising hay, not cattle.
Many of our production models today are the result of doing things the same way for decades with no thought to asking the question, “Why do we do this?” A lot of folks use the same production methods that dad or grandad adopted when fuel, feed, labor and equipment were cheaper. As a result they are going slowly backwards each year. Now’s a great chance to stop that trend. Ask yourself these questions:
- Can I downsize or get rid of equipment (including trailers and ATVs)?
- Can I change production to decrease feed needs (different cattle, calving time, etc.)?
- Can I identify little costs that don’t provide noticeable benefit?
We can’t control the market, but we can darn sure control how we produce our cattle.
Big cows, big equipment and lots of it are the fastest ways I know to increase your production and decrease cash in your account. Start asking yourself if what you are doing is truly working. Ask why you do things. You may find yourself totally restructuring your operation, and that’s alright, as long as you’re heading in the right direction. Keep your cinch snug and hang on – these next couple of years will be a fun ride. 
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Billy Whitehurst
- Extension Agent
- Montana State University
- Email Billy Whitehurst
PHOTO: Makale Livestock saves input costs by trailing cattle to fresh winter pasture without the use of fuel, hay or high-priced equipment. Cattle can feed themselves on winter pasture and move to fresh pasture without being trucked. Riding horses adds value to them as there is always a market for good ranch horses and, in our experience, makes for better and calmer cattle than ATV use. Photo provided by Billy Whitehurst.
