Parts one and two of this series focused largely on cows. In this post I’ll wrap up with a focus on business and some final tips. I didn’t want to pry into David Hall’s personal finances. I asked him for the top-down view of his farm. David said they run 400 head of cattle on top of a couple of off-farm businesses. 400 cows and he has time to pursue other interests in town! So, where is the farm income? He sells 150 bulls each year. He sells culls at the local sale barn. When he ran hair sheep (something he suggests strongly, more later) he sold lambs and cull ewes at the local sale barn. They are into commodity production, seeking a high tonnage of medium-quality forage for a cow/calf operation instead of high-quality forage for a finishing operation. That distinction is key.
“To maintain profitability each cow has to bring in a calf at weaning time. Cows that are too hairy, too big or produce too much milk won’t last in a grazing operation.”
He breeds for fall calving. Cows are most fertile in the fall, the temperatures are cooler which helps when grazing fescue, those calves help soak up the spring flush of grass and he gets another flush of grass in the fall just as the cows are calving. He sells 18 month old bulls in the spring as well as weaned calves, just when both the local calf market and the bull market are at their peak.
Hall likes to feed hay. “Land costs are high. Feeding hay puts more head on the farm but you have to manage it carefully.” For 2-3 years he won’t need any hay. For 2-3 years he’ll need a little hay. For 2-3 years he’ll need lots of hay. Hall says to buy hay off-farm. This went well with his whole theme of allowing specialists to specialize. For example, someone else raises the stockers, he raises calves. Allowing someone else to put up hay and own the equipment frees up your time and capital. One less tractor could easily be 15 more cows. He drove home how important he thought this was by telling me his family had owned a green farm equipment dealership for 30 years. “Buying the hay off-farm may have $18-22 worth of fertilizer value (if you just roll out a round bale) we just rolled out for $25.” Once the cows eat it, the fertilizer value goes up and he doesn’t have to de-stock his farm when forage becomes scarce. I asked him how long he fed hay last winter (coming out of drought) and he said, “5 months. But each day I only fed the cows 20% of their diet in hay instead of feeding them 100% hay for 30 days.” That helped him stretch his stockpiled forage and increase recovery times. “Feeding hay can make you profitable.”
David, I’m just getting started, next year I’ll have 60 acres and 10 cows. What would you suggest to help me get stocked? Here are his quick tips:
“Think about a marketing plan for calves. Raise good heifers for the next few years as they will be in demand.”
“Buy 10-20 sale barn cows, 100 ewes (hair sheep), spend heavily on getting fencing and water ready and buy in all hay. You’ll need a dog and better fencing to protect the sheep but sheep can be quite profitable and will utilize forage the cows ignore. Parasites can be a real issue with sheep so you will need to lengthen the time between grazings.”
“Manage grazing as well as you can. Whatever happens, do your best…but push for diversity.” (I think he meant both in livestock and in landscape.)
Livestock are employees. “Fire employees that don’t work.”
“A short, defined breeding season will push things forward faster than anything you can do.”
I was thinking about his presentation and reviewing my notes and needed a little clarification so I shot him an email. This started because I’m working on the economics of each of our enterprises trying to answer a simple question: Would I be better off financially living in the suburbs? I don’t work for free and I certainly don’t want to pay my livestock for the privilege of owning them.
I asked David:
I heard you speak in Indiana this spring and you said, “Cows must be 6 years old and rear 4 calves to pay for her development costs. Optimal economic return is in years 8-11 for commercial cow/calf operations.”
I’m hoping you can give me a little more detail on that. Spell out for me what you believe it costs to raise a replacement heifer on grass, when you sell her calves and what your expected return per calf is. Also, how much should it cost a grazing operation to keep a cow each year? This article suggests $350 per head but I have a hard time with that math.
Rather than reply to my email, which he said would require him to write a book, he asked me to call him back. Over two phone conversations and nearly an hour of chatting I ended up with 5 pages of notes on top of the 5 pages of notes I took during his presentation. (Talk about a generous man!)
He was ready when I called and, after greeting me politely, started right in. “Cost is wildly different between ranches but you can roughly figure $500-550 for every weaned calf. This counts salt, mineral, vet, medicine, land charge (calculated on how much it would cost you to rent your neighbor’s ground) and how much time you spend.” Obviously packing more animals in per acre without raising your feed bill is a good thing and spreading your time across more animals helps with the labor charge, not to mention discounts for buying salt and mineral in volume. Labor is the big expense and reckoning the rest of the data as closely as I can I come up with $450 to keep a cow each year. Since some percentage of cows are going to come in without a calf at weaning that price should go up but let me be a little lazy in this post. We’ll stick with the $500 figure for my farm, you calculate your own for your farm. Feeding hay can really ratchet that annual maintenance up.
That takes us to point of weaning. Now that we know what a calf costs, let’s find out what she’s worth. Right now, that 450 pound weaned heifer – that cost us $500 to raise – is worth $2/pound. That varies by year. So, any heifer we keep this year should be reckoned at that price and we should work from there. Think of it this way, you could have had $900 but you got this heifer instead. It costs money and time to raise and maintain that heifer and it costs something to breed her…either by bull or by straw. However, not all heifers breed so you need to reckon your heifer costs by the group.
Hope you’re keeping up here, David was moving pretty quickly.
Let’s ratchet up the cost of that heifer. You ready? I’ll relate David’s example. Of a group of 30 heifers, 25 settle in your breeding window. Of those 25 pregnancies, 20 wean calves. Of those 20 heifers that brought in calves, 17 re-breed. Those other 13 heifers don’t fit our program. My cost per heifer is not reckoned per head…it’s divided over the 17 that were successful at breeding a second time. If that’s too harsh for you, Chip Hines says to measure profit by the calf across your entire operation but when talking to David, I was specifically talking about development costs of a heifer. He took it through the second pregnancy. As time passes and you select for thrifty, fertile, long-lived cows you’ll have a higher rate of success weaning calves but you should probably count on culling 10% of your herd each year. For the sake of simplicity, let’s pretend those 17 heifers are built to last in the example below.
Starting at the beginning (where else?) you are paying $27,000 for 30 weaned heifers..maybe 6 months old. You find a quality bull and pay $20 per head ($600) to have them bred at 15 months so they will calve at 24 months. I’m choosing not to buy a bull to keep total costs at a minimum. A bull eats every day, I need one for 6 weeks. We could have started with 30 bred heifers for $45,000 which might be worthwhile if they were high quality animals. More on that next time. Keeping those 30 weaned heifers for 18 months (until calving) costs you another $22,500 but when you breed again you are down to 20 cows (the ones that calved). The rest were sold as springing heifers who missed your breeding window or as open heifers. Let’s say you can sell them for $1,200 each ($12,000). After all of that we sold 20 heifer calves ($900 each) and 10 grown heifers for a total of $30,000 and it only cost us $50,100 to do it! The heifers owe us $20,100.
But we have to breed our 20 remaining heifers. That’s another $400. 17 of those breed in our window but we carry all 20 through the year. Our cows only owe use $10,000 for maintenance this year. We sell the 3 late breeders for $3,600 and sell our 17 calves for $15,300. This year we’re doing all right making $8,900 so the cows only owe us $11,200.
When those heifers (all 17 of them) drop their third calves (in our fictional scenario) we’ll see another $15,300 with breeding costs of $340 and maintenance of 8,500. We’re looking at $6,460 in profit as long as we can keep this thing running. This year the herd only owes us $4,740. Looks like the heifers will pay us back next year!
That’s why David says it takes four calves for a 6-year old to pay for her own development. “Optimal economic return is in years 8-11 for commercial cow/calf operations.” If she falls out at 6 years old we haven’t gotten ahead. Every year she calves after 6 increases the desirability of her offspring.
The cattle market is a wild ride at times…who knows what the price will be next year. Along with keeping my production costs minimal, I have to work to provide a quality product so I can make the numbers listed above. I don’t think Gordon Hazard is paying $2/pound for calves, but he’s not buying calves of the quality under discussion here (small, British breeds, grass-genetic, long-lived). We have always believed that it costs just as much or more to maintain a poor cow compared to a good cow but Hazard looks for the undervalued calf of any class, gets it to feedlot weight and sends it down the road. We can’t sell into that market with the numbers presented above. From what David described, he sells a fair number of culls and calves into the commodity market but sells 150 bulls each year for breeding stock to help make the numbers work.
Any business you start will require an investment and several years to achieve profitability. A cow/calf operation is no exception. Is it right for me? My pastures are currently pretty poor quality. Cows can get by on less than stockers…requiring a lesser quality pasture. Right now, cows look like a good way to improve my pastures…but the climb to profitability looks pretty steep.
That wraps up most of page one of my conversation with David Hall. Next time I’ll share my notes about buying or breeding genetics in your herd, stock selection, adding in other livestock types and keeping a job in town. Let me know if you have any trouble with my math or if you have any questions or suggestions. I want to emphasize, my goal here isn’t to discourage the raising of cattle. I’m sharing my thoughts and research as I analyze the costs and work to put my farm and my time to its best and highest use. You know…stewardship.
In nearly every posting I harp on the importance of verifying your farmer with your own eyes and nose. Go visit your farmer. If your farmer hasn’t invited you to his/her farm by the third conversation, find a new farmer.
We buy raw milk from Steve Mansfield of Roodhouse, IL. I have inspected, and continue to inspect, his facilities, pastures and herd. I trust that he is more concerned with my welfare than with his own wallet. In fact, I am reasonably certain that he prioritizes his wallet somewhere behind God, family, community and the ecology…though that list may not be in sequence. He is thoughtful, generous, educated, inquisitive and experienced…things you should look for when interviewing your prospective dairy farmer. I believe raw milk is good but not all raw milk is equal. You, the consumer, need to make sure your farmer has clean, slick, fat, healthy animals. Make sure his dairy is nearly spotless because there is no inspection service here. You are electing to be the inspector. You need to be an educated inspector. This PDF will give you a fair start.
Back to my farmer. Steve has lived here his whole life. He owns 140 acres across the road from his mother’s farm. Steve keeps a full-time job in town and, as a consequence, farms at a much smaller scale than he would like to. Steve keeps a beautiful herd of Jersey cows (mine are from his herd), raises a flock of layers (he bought from me), keeps a few pigs (he bought from Mike Butcher) and puts in a large garden in addition to his small orchard and keeps a collection of orchids in his solarium. Yeah. So where most “farmers” deal in commodities and buy food at the grocery store, Steve and his wife Cindy deal in finished product and shop down the hill from their house. These are real farmers.
Steve has been dairying for 20 years, initially selling to the creamery in a nearby town, later scaling back and selling directly to consumers. He currently milks 7 cows in a Grade-A milking parlor.
I asked him a few questions. Well, I asked him a lot of questions while we were hauling pigs, hauling cows and holding his grandson Saturday morning. I’m able to quote him most of the time but sometimes it’s just my memory of our conversation.
The Farm
Are you doing anything unusual…even among grazers?
Steve laughed when I asked this then offered a list. I am under the impression that these are the main points, not an exhaustive list. He “keeps the calves on the cows, milks once/day, gives no grain to his cows, the cows are on pasture for 20-22 hours each day and he doesn’t milk his cows out so there is plenty remaining for the calves.” If you have been raised around dairy at all you know this is all just crazy talk.
If you haven’t been raised around modern dairy, watch the video below. I could dedicate an entire series of posts to the video. Instead, as you watch the video try to calculate how much fuel is used to feed the cows and handle their manure. Just try. Ask yourself if it is more sustainable to bring the feed to the cows or to take the cows to the feed. Try not to think that their cows don’t get to lounge in the grass, how short their productive lives are or of the environmental impact of that slurry pond overflowing during a heavy rain. In fact, you might feel better if you just skip the video.
How do you maintain your pastures?
Steve says he renovates his pastures every 5-8 years to beat back the fescue. Our fescue is infected with an endophyte and rather than bore you with details I’ll just say it lowers feed intake and milk production. To fight this Steve tears up pasture and seeds a mix of either clover and perennial rye or alfalfa, timothy grass and orchard grass.
Give me a rundown of the typical day in the life of your cow.
“The cows walk to the barn from as far as 1/4 mile away.
“They then stand outside of the barn hollering for their calves until I get them into the barn to milk at 7:30.
“Then the cows rejoin their calves who enjoy breakfast and lick the udders clean. This is a boost for udder health and prevents me from spending my morning doing calf chores.
“The calves are then separated into a pasture of their own where they spend the day grazing.
The cows head back to the pasture and get down to business mowing the grass.”
What do most dairies do with calves?
“Most dairy heifer calves in the US are taken from the cow, fed milk-replacer and are kept in calf huts individually. Once weaned they will follow a grow-out program then will be added to the dry-cow herd, most likely in a free-stall barn so they have room to roam, lay down and eat at the trough. The bull calves are treated similarly but are shipped as early as possible to be fattened for beef.”
Here’s an overview of the very efficient, possibly immoral process courtesy of the University of Wisconsin Cooperative Extension…Wisconsin tax dollars at work.
Raw Milk
The May 2012 issue of Graze published several articles emphasizing the need for producers to educate consumers about the risks involved with raw milk and the need for consumers to evaluate the farm that supplies your milk. The risks vary from a number of possible diseases to our own weakened immune system and a need for our bodies to adjust before we can digest real, living milk.
Do you feel your average customer understands what raw milk is? “Most of our customers find us through the Weston A. Price Foundation or through Real Milk. As a result they are well informed before they find us.”
How are the risks of drinking raw milk different than the risks of consuming any other type of raw food?
“Well, there has been e coli found in Spinach so really it just comes down to evaluating the source of the food.”
…and later, “Johne’s Disease affects 70% of the dairy herd in the US. Confinement dairies don’t notice it because they burn out their cows in 2-3 years and it affects older cows. Pasturization doesn’t necessarily kill the organism that causes Johne’s disease and there have been links between Johne’s and Crohn’s in humans.” Steve runs his cows for up to 14 years, a good indication that his cows are disease free. He has tested in the past and it has always come back negative. Don’t be afraid to ask your dairy farmer. It’s pronounced “Yoh-knees”.
How do you help educate your customers?
“We just talk about food with them. Most customers are well aware that this is a different liquid than the stuff at the store. It’s just not a big deal.”
We are very happy with our dairy farmer. I hope you can find a similar farmer to build a relationship with. Steve isn’t just some guy I buy milk from. I count on him to enhance my family’s health and pay him a premium price for that care. Food isn’t just something you stuff in your face at intervals. We need to learn to look at it as medicine. Find a source of medicine you trust with your life.
Before you charge off to find a source of raw milk, take some time to educate yourself on the potential risks. The organizations I listed above are a great place to jump in. I also recommend this link. There are numerous CDC and USDA reports that indicate that raw milk is anywhere from slightly to significanly more dangerous to your health than pasteurized milk. I believe the real danger is not the lack of pasteurization, it’s the lack of farmer accountability. Weather you are buying meat, milk or spinach, get to know your farmer.
My friend Steve pointed us to the most interesting hog farmer I have ever met. He farrows on pasture, raises pigs in deep bedding and uses, of all things, large black hogs in his hybridization program. In a world of specialists and sub-specialists, I found a guy who is not only farrow to finish, he does it in a way that honors the pig-ness of the pig. There are things I would do differently (multispeciation) but he’s going against the grain and keeping his head above water.
I met Mike Butcher some months ago. The first thing noticed was that he was pigging on pasture…in February. I saw a number of huts spread across the field, each hut with a sow, each sow with a litter of little pigs. Out in the real world, sows are kept in confinement in crates to minimize the number of little pigs that get squished when the sow lays down or eaten when she expresses her stress level. Mike has selected for good mothering instinct and farrows in an environment that give the sow room to relax.
Yes, it’s a muddy mess, but we’re in monsoon season here. I really want to drive home the point that he’s pigging on pasture. His sows do such a good job of mothering the pigs he had one who kept 15 piglets this week!
Once the pigs are weaned they move to a series of hoop houses. Unlike other confinement buildings I’ve been in, Mike’s hoop houses don’t have slatted floors with a manure pit beneath. Instead, the shoats were bedded in a deep layer of straw and the larger pigs were bedded with round bales of corn stalks. As a consequence, there was little smell and enormous compost piles. Enormous.
Look at the space available to these little guys. And they have a foot of straw to root, play and sleep in. From a confinement perspective, this is hog heaven.
Again, Mike pigs on pasture, uses heritage sows with excellent mothering characteristics, raises pigs in deep bedding and composts everything. I don’t know what else I could expect from him. I was so pleased I bought 8 pigs. I was so pleased with his price I gave him a free chicken along with the check. If you’re in the Palmyra area and want to see hog confinement done artfully, find Mike Butcher.
At one time this was normal. I’m happy to support Mike in his business.
We had a few problems keeping these little guys fenced when we got home. Look for an article on that in the near future.
Glossary:
Farrow (verb) – To give birth to a litter of pigs
Pig (verb) – See Farrow. Also written as “pigging”
Shoat (noun) – Weaned pig male or female
Chism Heritage Farm 