Hi I’m Mike, today we take a look at the actual numbers behind farming and ranching,
the dollars and cents and not the common sense, because after this, you might be wondering
if I have any sense at all.
Stick around on Our Wyoming Life.
So, ranching is easy right?
Basically, all you have to do is get some cows, some land with grass on it and watch
the cows grow and collect your paycheck.
It sounds easy, but if it were really that easy everyone would be doing it and driving
Lamborghinis out to feed to cows.
When it comes down to the cost of raising cows, there are a bunch of different factors
to take into consideration.
You’ve got land, fencing, corrals, feed, mineral, water, electricity, taxes, insurance
and a whole mess of other costs.
We are going to delve into all that as we take a look at a pretend ranch here in Wyoming.
You just bought it and its big enough to run 100 cows.
Here in this part of Wyoming you need an average of 30 acres per cow to support them, the grass
they eat and the grazing area they need.
So, your new ranch is 3000 acres, that you purchased for 800$ per acre for a total of
2.4 million dollars.
Congratulations, you are a Wyoming rancher.
Let’s get to fencing this monster off, now hopefully fences are already in place.
That would be a good thing, because fencing will cost you about 2$ per linear foot.
Even if you have most of your fences in place already, I’m going to say you are going
to want to change things a bit and at least put in a couple miles of fence to suit your
needs.
There goes another 20 grand, that includes posts and fencing material.
Now we have to put some cows on here, like I said you have room for 100 cows, you are
going to go out and buy bred cows, because that is going to make your life easier and
you will get a calf sooner and have an income sooner.
So, bred cows at this moment are selling for about 1500$, you need 100 cows.
$150,000.
Let’s stop here, you have about 2.5 million invested at this point.
You’ve got cows, you’ve got fence and you’ve got land.
All this money has to come from somewhere, so you have a very generous banker out there,
who really believes in you and he is giving you all the money you need.
At let’s, be really generous and say 4% percent interest.
If you can get this loan for 30 years let’s say, then your payment is 150,000$ per year.
Are you starting to see the problem here?
To make that loan payment, each of your cows’ calves have to sell for over 1500$ and that’s
just to make your payment.
Let’s change some things up.
Let’s say your uncle left you the land and the cows.
Now you are starting at 0.
There isn’t any operating capital to go with it because most ranchers don’t carry
a huge cash reserve.
But you are very lucky to get what you have and you are a Wyoming rancher again.
Now we are back to the cows, they aren’t an endless source of income and each cow is
going to cost you in replacement costs and death loss.
When it is time to sell her, she is going to bring less than half of what she is worth,
so it’s a pretty conservative estimate to say that each cow is going to cost you $100
per year in replacement cost.
You have the cows, and now you have to feed them.
Here in this part of Wyoming we plan on feeding hay for about 6 months out of the year.
A cow will eat about a half of ton of hay per month and in a year like this one you
are going to have to buy hay at 180$ per ton.
If we break this down by the cow, each cow is going to eat 540$ worth of hay.
Grass is cheaper, and worth about 20 per month for the other 6 months of the year so that’s
120$ per year for grass for her.
Its adding up pretty quick, we already have 760 dollars invested in this cow and she’s
not even bred yet.
So, we better get a bull in here.
A good bull will cost you about 4000$, a good bull will last about 6 years, so we have a
yearly cost of him at 660 bucks and he will breed about 20 cows, so 33 dollars per cow
to own the bull, plus his feed which will average about 30$ per cow.
We are in another 63$ to get her bred.
Now we are up to 823$ for this one cow.
We get to throw in about 10$ per cow for vet fees, we need her to pay her share of the
tractor costs for feeding her which average on the low side, 50$ per cow.
Now if you want to get paid for your time, which I’m guessing you do, lets give you
30,000 per year.
That’s another 300$ per cow.
Now this one cow is costing your ranch over 1100$ per year.
Now this is a bad year, we didn’t put up any hay of our own to feed the cows over the
winter.
Let’s pretend it’s a good year, and we have lots of hay to harvest.
Now we need a tractor and a baler and probably a rake.
The cost of putting up your own hay is maybe 90$ per ton.
That brings the cost of this cow down to 830$ Keep in mind, these are the major expenses,
we aren’t talking about taxes, utilities, corrals, a truck and a stock trailer, a 40
thousand dollar used tractor, they all add up as well.
Let’s average a good a bad year and say this cow costs the ranch 965$ a year.
Now its time to look at the income.
When we sell calves, we are hoping for a calf that is around 600lbs.
This year prices aren’t horrible and a 600lb calf last week sold for 1.60 a pound.
That’s an income of 960, not all of them are going to weigh 600lbs so let’s average
900$ per calf and only 90% of cows will have a calf all the way to sales time so brings
us down to $810 income per cow.
Then there’s the trucking of the calf and the vaccinations we give them before they
can be sold and now we are at 800$ of income per head.
So, in a good year and not including about a million other little expenses this cow is
costing you 30$ per year, in an average year 165$ and in a bad year $300.
Take those numbers and multiply them by all 100 cows in your herd, and the numbers don’t
add up.
Did we screw up our math, no.
These are the real costs.
And now I’m going to tell you the secret of ranching and ranchers.
No rancher, recognizes all the true costs of raising cattle.
Each and everyone has some trick, or extra cash flow or a way to ignore the inherent
costs of ranching.
Let’s start at the beginning, once again.
Most ranchers have a herd that is bought and paid for, they don’t account for the cost
of cows.
When ranchers put up their own hay, the equipment and the land has been paid for, so you have
the cost of fuel, and repairs.
When it comes to labor costs, we take a huge pay cut and look for ways to make up that
loss somewhere else.
Jobs in town, side jobs with friends, hunting income, YouTube.
A rancher ignores the value of his own cows, the hay, the grass, and his time.
If you get rid of all those costs, that’s the money that is left.
With that money, you can buy a new pickup, every 10 years, or put up new corrals every
20.
Keep in mind, every operation is different, in some places land may be worth 10 times
what it is here, and there they have a whole new mess of problems.
So, the question is, can it be done?
Of course, it can, but it has to be done smartly.
I’ve seen people inherent whole ranches and couldn’t hold the operation together,
but I’ve also seen people be successful in what they do and love every minute of it.
I think that’s the key, you need to love it and have incentive to do it.
Make a promise to yourself or someone else that you will do everything you can to make
every bit of your hard work, worth it.
Speaking of hard work, I’m about ready to head to work but I want to thank you for taking
your time to hang out with me today.
I know I threw a lot at you, but hopefully it brings you closer, to us and to knowing
why farming and ranching is important, another reason we don’t want to lose even a single
ranch or farm.
In the US 40 acres of farm and ranch land is lost every hour and once they are bulldozed
and paved over they are gone forever.
We are just trying to do our part.
We all are and thanks for that also.
Make sure you subscribe for more from the ranch and exactly why through hard work great
things can happen.
Have a great week and thanks for joining us in our Wyoming life.