Bucks For Your Beef, Or Beef For Your Bucks?

A blog follower recently asked me about the cost of raising cattle, and as a farmer, where our income comes from.  What an awesome question! Of course people who don't live on a farm really only see the prices on the meat that they purchase in the supermarket, and it isn't the money from those packages that are coming to the farmers!

So bare with me while I try to break down some farming finance for you! 

My family runs a commercial cow/calf operation as well as a grain operation.  This means that we have two sources for income, the cattle, and the crops.  But this also means we have two sources for cost.

When I tell people that we have crops and cattle, their immediate reaction is, "wow, you must be rich".  Rich as in lifestyle rich, yes.  Rich as in monetary rich, not quite.  They immediately think strictly of the income.  But what most people don't take into consideration are all of the costs that come with farming.  So I am going to lay it out on the line for you!

Keep in mind, that the cost will be different for every farmer.  Not all farmers swath graze so they will have higher feed costs.  Some farmers calve all of their cows indoors so they won`t have to use as much bedding, but they will have higher electricity bills.  Not every farmer feeds the same type of feed and the same quantities, so you get my point.

We'll start with the spring.

Spring

This is a busy time of the year on our farm.  Our cows are all calving, and it is time to start seeding the crops.  

Your immediate thought is probably "baby calves = money in the bank".  This is true, to an extent. 

Now, what you didn't consider:

• Calving. When a new calf is born we give them shots and they have to get their CCIA and RFID tags (read about this in the "All Things Agriculture" tab under the Traceability topic).  These all cost money.
• A tag applicator can cost anywhere from $15-$50.  Now you don't buy these every year, in fact, if you take care of them they can last for many years, but they still depreciate and they are still a cost
• RFID Tags and CCIA tags cost roughly $4.00/calf. 
• Shots- Vitamin ADE and Selenium.  A 100 mL bottle of Selenium will treat roughly 50 calves.  So we buy 4-5 bottles a calving season.  The bottles are usually $30-$40, so if you divide $35/50 calves, it is roughly $0.70 a calf.  For the Vitamin A,D&E injection, we can treat all of our calves with one 250mL bottle.  
• Calving. On our farm we calve our cows from March to May.  This means that calves can be born in pretty cold conditions.  Since the weather can be so bad, we have to bed our cattle (make them beds out of straw) to make sure they are comfortable and warm.  The cattle also need hay and silage for feed during this time.  This means that we have to use more diesel in the tractors and more straw bales, as well as more feed than in the summer.  This all costs money.  
• Right now, round hay bales (roughly 1000-2000 pounds) are selling for 45-80$, depending on the quality of the bale.  We were feeding our 200 cows, 1-2 round bales of hay a day, as well as silage.  So that would be roughly $120 dollars a day on hay.  Now you also have to take into consideration the silage.  We make our own silage on our farm, but we don`t have the macinery so we have to hire people to do the harvest for us.  
• The straw bales come from the straw that we bale after we combine our grain land.  This means that what we are paying for is the fuel in the machinery.  With the rising fuel prices, this is starting to get quite costly.
• Not all of the cows have a successful labor and each year we lose a couple calves.  Losing three calves if a pretty big financial hit.  Sometimes the vet has to get called to preform a c-section or to treat a calf.  Vet bills are not cheap. A c-section costs roughly $400, depending on your vet.
• Seeding.  Seeding crops can get quite costly.  On our farm we still use the till method of seeding.  So we have to go over our land with the cultivator, the harrows, the drill, and then with spray and fertilizer.  That equals a great deal of fuel consumption.  And the seed and products aren't free either.  We have to buy the seed, the fertilizer, and the sprays to fight off weeds.  We then have to pay someone to spray the crops for us.  

• To give you an example I will use barley.  This year we put in 400 acres of barley.  Seeding barley costs about $12/acre.  Multiply this by 400 acres, you're paying roughly $4800.00 to seed 400 acres of barley.  Fertilizer costs on the barley were roughly $50 an acre; 50X400= $20,000.  Since we don't do our own spraying, to spray our barley crops we are paying $30 dollars an acre, this includes the spray and the application; 30X400= $12,000.  So add the spray, the seed and the fertilizer, you're looking at $36, 800 to plant 400 acres of barley. This year we have acquired extra costs because of all of the rain.  Right after we seeded a few of our crops, it rained so much that the seeds started to rot.  So we had to re-seed part of our crops.  Then, if re-seeding wasn't enough, the rain washed the sprays from the fields and we had to redo some of the spraying also.  This means we had to pay for the spray and the man doing the spraying!
• Pasture. As soon as the snow melts the cows head out to pasture.  This is a way easier time of the year for us as far as cattle go.  The bulls get put out with the cows, and the temperature is warm so the babies start growing rapidly.  This year we were fortunate enough to have rain and fantastic pastures, but a few years ago during the drought, we were forced to feed hay bales to cattle, adding just another extra cost, and putting us in a position where we needed to save all of our extra bales for winter.  On our farm we usually have a surplus of round hay bales and are able to sell some for income.  This works well when weather cooperates and we have a good hay season, but we can`t always count on this. 
• Processing calves.  For our family processing calves involves giving cows and calves shots, branding, and castrating the calves.  
• Castrating- On our farm we have the vet come out to castrate our calves.  This means that she has to cut every set of testicles out.  It`s a pretty rough job, and it isn't cheap.  Our vet charges us $4/calf, when you're doing 100 calves (differs every year), it can get pricey.
• Shots- Before the cows disperse to their summer pastures we treat the calves with 8-Way shots and Live IBR.  The calves also get Ivomec.  We also treat some of the cows with Live IBR shots.
• IBR- 100 mL bottle treats 50 calves for IBR.  It costs roughly $2/calf
• 8-Way - 60 head can be treated with a 250mL bottle, costing roughly $0.50/calf.
• Ivomec - 5L jug of Ivomec can treat 70 cows, or 400 - 500 calves.  A jug of Ivomec costs $90.
• Branding- there aren't many costs associated with branding once you have the branding iron

Summer

The summer months for us are the least busy months.  Once the seeding is done and the cows are happy in their summer homes, we have time to do the odds and ends.  Of course we still have to check cows and crops.  The summer is also the season for Junior Cattle Shows! My sister and I are active in Junior shows, and have been for the past nine years.  There are entrance fees, travel fees and accommodation fees all associated with cattle shows, but I wouldn't give them up for the world.  Through summer shows I have made many friends, had countless opportunities and doors open for me, and have learned to do by doing.  Cattle shows helped me to find my passion for agriculture and helped me realize this is where I belong!  For the summer synergy show, I entered three yearling heifers; one Simmental, one Charolais, and one Red Angus.  My entrance fees were almost $200, not including accommodation, feed for the cattle, or travel expenses.  

Fall

Out of all of the seasons, fall is our money maker.

Fall brings our harvest and the steer calves get shipped to market.  

• Calves.  My dad hauls our calves to the market at the beginning of October.  The calves are roughly 700-850 lbs by this time.  This week at the Rimbey Auction Mart, where we sell our cattle, 700-800 pound steers were selling for $1.25/pound! This is a great price!  That means that for an 800 lbs steer, we're making $1000! That is a super price, especially if we are selling 70 steers! However, that doesn't mean that we have a net income of $70,000.  But we don't sell our cattle in the summer, so likely by fall the prices will be a less.  There is also a National Check Off of a non-refundable $1.00 that comes off of the price of every animal, as well as a Provincial Check Off of a refundable $2.00 that can be returned if applied for.
• Let me break down the cost of raising a steer to butcher size, say, 1300 lbs. 
• If we were to fatten a steer for butcher, we would likely start the calf on feed in September when the calf was roughly 700 lbs.  The cost before the 700 lbs isn't very high, roughly $100/calf, if you count the calf feed, any medical bills and extras.  Once they hit 700 lbs, we send them to the auction mart.  If we wanted to fatten the calf starting in September, we would likely butcher it in April.  For example, with a 4-H steer, the calf is on feed for 212 days.  The estimated feed costs for this calf are $420 in those 212 days.  
• There are also other costs:
• Straw bedding- $50
• Health Costs - $15
• Sale costs - $50
• Roughly $550 in deductions off of the sale price.  
• So if we sold a 1300 lbs calf today we would make $1625 - $550 in deductions so roughly $1100, not that much of a profit when you consider all of the money that went into making the feed and raising the calf.
• Harvest.  How much money we make all depends on how the weather treated us, and the yield of our crops that year.  Farming is one of those occupations where you never know how much you will make.  The prices of everything in the agriculture industry can change in an instant, for the better or the worse. This is what makes the industry somewhat challenging.  We cannot predict what the weather will bring, nor what the market prices will be, so we never really know what we will be making as income from the crops.  Interested in figuring out the daily grain and canola prices??? I know you are, you can find them HERE
• Swath grazing.  Our family swath grazes our cattle which helps us to save on fuel costs and time spent feeding.  It also allows us to naturally fertilize our crop land by having our cattle roam on the sections

Winter

The cows need feed and bedding everyday.  We have to use heated water'rs to make sure that the cows always have water.  Electricity costs are higher, and the depreciation on the loader tractor, and all of the farm vehicles increases.  The cost of machinery is not cheap, so my father and grandfather always work hard to take good care of their equipment so that we can make it last as long as possible. 

So hopefully that summed it up a bit for you.  It would take way more than one blog post to explain all the costs to farming, and all of the aspects of it all, but I hope I was able to put a bit of it into perspective for you!

I found a really great database all about farming! The Farm Budget Database breaks information right down to type of farm and everything! It is awesome! 

Another awesome farming website is 24-7 Ag TV, there are a bunch of different videos all about agriculture and different aspects of the industry! I love the site, and I can promise you will learn something!

Thanks for reading!