How many cows do you need to make a profit?

[mrtea]

I'd like to know if anyone can give me a rough indication of how many cows you would need to be able to run on a property, before it becomes profitable?

The reason I ask is, there seem to be a lot of people, particularly hobby farmers and tree-changer types, attempting to run smaller numbers and at the end of the day they find they haven't even generated a profit (and sometimes a loss). So I guess after tagging, transporting them to market, agent fees, drenching, feed costs etc. their costs have exceeded their returns.

So assuming one kept their inputs to a minimum (e.g. minimise dependence on bought feed), roughly how many cows are necessary before an beef cattle operation becomes profitable?

I'm guessing there must be some economies of scale involved, but I'm not sure how?

Any help/advice appreciated!

 

[Aaron Sice]

i think the only way to make serious money in hobby farming is to be certified organic.

that way you can make good profit on small quantities locally.

i often wonder why someone would take the cattle route. i mean, there's so many other things you could do with a hobby farm - me personally, i'd be investing in sheep & goats and making organic milk and cheese and moving it locally.

or look for a local halal market and pay for halal butcher/slaughter of mutton and goat.

everyone always looks offshore, but there are so many premium markets locally it makes no sense.

 

[topcropper]

I'm guessing there must be some economies of scale involved, but I'm not sure how?

Any help/advice appreciated!

The problem with most hobby farms and lifestyle blocks is that the land is too expensive. It's probably been bought as real estate because it's pretty and green and lush and not far from a city.

To get economies of scale you'd really need to buy something that's valued as a farm, and bought by a farmer. Typical grazing land in my area sells for say $2,000 to $4,000 dollars per hectare. Thats for pretty good soil and 700 mill rainfall. This land is probably just as productive per hectare as something very close to Sydney or Brisbane or Melbourne. But the land close to the big city might cost $20,000 to $40,000 per hectare. So by buying land thats too expensive to start with for running cattle, you can only buy 10% as much, going on the made up figures I suggested.

But if you buy land that's priced as a farm, it's probably not where most people want to live who want to own a hobby farm.

Even in the bush, land just a few minutes from a little town might be worth a heap more than real farm land.

We run about 30 cattle. But it's just a hobby for us. Not sure if we make a profit or not from them. We probably do, but only because all the gear I use, as in tractors, utes, bikes, we already use for a grain growing operation. I'd think you'd need to run about a 100 to start making a decent profit. Most people on hobby farms wouldn't make a profit from cattle I can guarantee.


See ya's.

 

[lizzie]

going back a few years - but - I grew up on a 10acre hobby farm and my parents ran sheep.

When my parents bought it (38 years ago) the wool and lambs would pay for the council rates and fencing. 20 years later the income barely covered the cost of the shearer and transporting the lambs to market.

To make a small sized farm profitable you have to produce for a niche market such as sheep/goat cheese, high intensity cropping of a unique product like garlic, flowers or herbs - preferably organic.

Aternatively you can run a steer and a lamb and some chickens - then have then knocked on the head for your annual meat supply. Combined with growing your own veges you could be pretty much self sufficient.

There is a reason they are call "lifestyle" blocks not farms.

 

[locko24]

Hi mrtea,
How much land do you have? Do you know the carrying capacity? Have you considered lambs, or dorpas, if the thought of shearing turns you off. 200 per lamb, sometimes 3 at a time is pretty attractive!

 

[pursefattener]

How many cows do you need to make a profit ?

Well i suppose if you are in the live export business it won't matter how many you run if the govt is going to turn around and shut your market down then that is going to make it pretty hard eh .

Most people I know with hobby farms or life style blocks wouldn't make a profit from it or even set out to do so . Like Lizzie says , there is a reason they are called "lifestyle" blocks .

Welcome to the forum but don't run sheep or we will start to worry about you

 

[battler]

You can do Ok with mules.

Dad & Dave saw an ad in the Daily Newspaper in Geelong, Victoria and bought a mule for $100.
The farmer agreed to deliver the mule the next day.
The next morning the farmer drove up and said, "Sorry, fellows,
I have some bad news, the mule died last night.."
Dad & Dave replied, "Well, then just give us our money back."
The farmer said, "Can't do that. I went and spent it already."
They said, "OK then, just bring us the dead mule."
The farmer asked, "What in the world ya'll gonna do with a dead mule?"
Dad said, "We're gonna raffle him off."
The farmer said, "You can't raffle off a dead mule!"
Dad said, "We sure can! Heck, we don't hafta tell nobody he's dead!"
A couple of weeks later, the farmer ran into Dad & Dave at the local grocery store and asked.
"What'd you fellers ever do with that dead mule?"
They said, "We raffled him off like we said we wuz gonna do."
Dad said,"Hell, we sold 500 tickets fer two dollars apiece and made a profit of $898."
The farmer said, "My Lord, didn't anyone complain?"
Dave said, "Well, the feller who won got upset.
So we gave him his two dollars back

 

[mrtea]

Thanks for the replies so far.

Most people I know with hobby farms or life style blocks wouldn't make a profit from it or even set out to do so . Like Lizzie says , there is a reason they are called "lifestyle" blocks .

This is the trap I'm trying not to fall into, I would want to actually generate some sort of profit.

So assuming I bought land at agricultural prices away from the city, without the pretty ocean views, that had reasonable soil. Any ideas if a profit could be turned from say a 20 hectare farm? What about 50 or 100 hectares? Or am I wasting my time? Do you need many hundreds of hectares or more nowadays to make a go of it?

 

[Aaron Sice]

you've got to have good land to run cattle, so good in fact it's shame to run cattle on it.

it can't be rocky, gravelly, loamy etc -it's got to be good, fertile, sandy soil to grow lots of grass.

that's why i recommended sheep or goats - you can use less arable land (more suited to livestock than crops) and make a go of it at possibly cheaper prices.

 

[lizzie]

Any ideas if a profit could be turned from say a 20 hectare farm? What about 50 or 100 hectares? Or am I wasting my time? Do you need many hundreds of hectares or more nowadays to make a go of it?

hmmmm - well - considering Topcropper talks in square kilometres for his spread ...

Personally I'd do some research. Look at Tasmania or New Zealand as examples of what can be run of smallish acreages for profit. Usually it would intensive farming of some sort - organic cropping - or specialist animal rearing of pigs/goats/sheep for specific markets.

These are usually run by people who are passionate about what they produce and are labour intensive.

Even dairy farms have to get massive nowadays to stay viable - whereas 50 years ago a herd of 20 cows would see you right.

Another alternative - if you find a block in a lovely ocean viewing area, nearish a large city/town ... eco lodges, weekend retreat, b&b with a twist - think uber-luxury and self-contained (but food/wine stocked by you at a markup) for those busy employees who want a quick break to refresh and feel pampered.

 

[topcropper]

. Any ideas if a profit could be turned from say a 20 hectare farm? What about 50 or 100 hectares? Or am I wasting my time? Do you need many hundreds of hectares or more nowadays to make a go of it?

Maybe go to Europe or Japan where it's subsidised. I think in Japan some farmers make a living with 5 cows. But it costs the government 60 billion a year. No wonder they have so much debt!



200 hectares you'd be starting to get there, but it would be tough. You'd probably need another job too. Yep, definately.

My next door neighbour has 150 hectares. Land value would be 600k. I will ring him tonight and suss him out a bit, but I wouldn't think it would be anything for profit. He's real job is a coal miner. Most miners I know all want to own a farm. He owns his farm hoping to make capital gains, which he will, plus he just likes owning a farm, for the lifestyle, horses and dirtbikes for kids, free and unlimited firewood, being able to make a great big bon fire and invite neighbours around for a booze up and let off a heap of fire crackers and not get in trouble, build a house and have no one looking over the fence, etc.


See ya's.

 

[Icarus]

Maybe if you are clever enough and buy in the right genetics, you could market your services as a small scale stud? Although, without a background in the area and proven results, sales might be a bit slow. Or possibly breed unique cattle - small acerage types for city slickers - dexter, square meaters etc, they seem to sell ok. That way you could run a few more head if you have a small acerage.

The way land prices are around any of the major, or even minor centres; you would have to be very lucky - or extremely smart to make anything like a profit.

Land doesn't need to be that good to run cattle, but the better it is, the more you can run! On some land I was agisting last year, I was running a beast to 20 acres. Each paddock was 40,000ac and I was paying just under $1 per week/head, which was very cheap for that area - pick a bad week when prices come down when you're going to sell them and a lot of your profit will disappear.

When it comes down to it, you have to go very big, have the right season, get the gov't to bugger off and pick up good country at a reasonable price to even come anything like drawing even.

Maybe your best bet might be to buy a few poddies in @ $50 each, feed them a couple of bags of palastart @ $50 each and flog them off as weaners to other city folk @ $400ea.

 

[eXc]

I can't offer any numbers, but I know my Uncle makes a profit, but it's not enough to live on. His property is all paid for, not sure about tractors etc.

He did work for Dairy farmers, but they screwed him (and other dairy) years ago, so he lost his dairy setup and moved to beef.

The problem is anytime coles/woolies etc drop prices on meat or milk, the farmer wears it. If they won't wear it, they just don't buy from them, they'll just import it.

It's really hard, as a consumer, I look at $1/litre milk, then the $2 / litre (or whatever the figures are) and have to decide between supporting Australian farmers for twice the price...

i think in the case of dairy farmers they may only be taking Victorian/overseas milk? I forget now, it was 15 years ago or something

 

[charlieandkath]

You need one cow to make a profit or a loss. Buy 5000 you will make a profit or a loss. Profit or loss will come down to management. The best way to make profit is like in any business and that is to reduce overheads, increase turnover and increase gross margin.

You would be lucky to make $1000 off 20 hectares unless you niche marketed.

 

[topcropper]

My next door neighbour has 150 hectares. Land value would be 600k. I will ring him tonight and suss him out a bit, .

My neighbour has leased his farm to another cattle farmer/trader now, for a dollar amount per beast per week rate. Anyhow, pretending he still ran it as a cattle farm,

He'd run maybe 70 to 80 cows. So assume the odd calf death, and to keep the odd heifer to replace the odd old cow, you might be turning off 60 to 65 steers and heifers a year. Might gross 40k? But then add all the costs. You'd be lucky to make 10k.

10k from a 600k asset base, about 1.6% return. So it's sort of a bit like residential property investing. It's a shocking return, but you hope to make capital gains to justify owning it. And agricultural land should be a growth asset. A typical farm is nearly all land content. It has been a good asset as far as capital gain goes.




See ya's.

 

[lizzie]

What area are you buying, Mrtea?

... I want 10 acres with ocean views near a city too! ...

 

[Aaron Sice]

was looking at ex-state forest yesterday. $500k for 650ac.

wondered just how much that would go up in value once i can sign up a 30 year sequestering ticket for the lot.

OR EVEN BETTER

sign up a 3 year deal @ $23/t and then a 10+10+10 option post 2015.

not even a shed to worry about....!

can you insure trees against bushfires?

*edit* at 46lbs/ft³ (736kg/m³) and the current minimum price of $11/t sequestering, each tree trunk alone roughly 30m tall and average 1.5m girth (2.0m at bottom and 0.5m at top) would mean the trunk alone would have roughly 140m³ of timber. add another 30% for all the branches would mean about 180m³ of timber - per tree.

gee that adds up quick

Forestry Tasmania states that each cubic meter of dry, cut timber sequesters 250-300kg of atmospheric carbon, which is about 0.9 - 1.0t of CO2. Page 3/8 - Storage in Products.

http://www.tastimber.tas.gov.au/Species/pdfs/Reduce_brief.pdf

I'll assume the upper rate of sequestration because the timber is alive, so each tree can sequester 180t of CO2, which means each tree is worth $1980 @ 2011 ($11/t) rates and $4140 at 2012-2015 rates of $23/t.

times that by 650ac of trees at a approximate outside figure of wild stand density of 1 tree per 4sqm gives approximately 650,000 trees - round that down to 500,000 to allow for bare spots, etc.

4140 x 500,000 =

can someone please pick this apart?

 

[Aaron_C]

I think you've struck gold here courtesy of all of the other taxpayers!

 

[mrtea]

What area are you buying, Mrtea?

... I want 10 acres with ocean views near a city too! ...

Undecided as yet! I've allways lived in Brissy but I'm willing to consider just about anywhere in Australia - as long as it's within a few hours of the coast.


It's sounding very much like unless you have thousands of hectares, cattle farming just doesn't make any money.
So if I want to make even a very modest living off a smaller sized farm...I'm going to need to think beyond cows

 

[Graingrower]

can someone please pick this apart?

Ok, I'll give it a go.

was looking at ex-state forest yesterday. $500k for 650ac.
might be cheap, whats the rainfall? you need high rainfall to grow trees
wondered just how much that would go up in value once i can sign up a 30 year sequestering ticket for the lot.

It won't go up in value, as you collect carbon credits the future potential for collecting carbon credits diminishes
OR EVEN BETTER

sign up a 3 year deal @ $23/t and then a 10+10+10 option post 2015.

not even a shed to worry about....!

can you insure trees against bushfires?

Yes, but the premiums would be too high for a carbon credit scheme

*edit* at 46lbs/ft³ (736kg/m³) and the current minimum price of $11/t sequestering, each tree trunk alone roughly 30m tall and average 1.5m girth (2.0m at bottom and 0.5m at top) would mean the trunk alone would have roughly 140m³ of timber. add another 30% for all the branches would mean about 180m³ of timber - per tree.

That's a bloody big tree and would take over 50 years to grow
gee that adds up quick

Forestry Tasmania states that each cubic meter of dry, cut timber sequesters 250-300kg of atmospheric carbon, which is about 0.9 - 1.0t of CO2. Page 3/8 - Storage in Products.

http://www.tastimber.tas.gov.au/Species/pdfs/Reduce_brief.pdf

I'll assume the upper rate of sequestration because the timber is alive, so each tree can sequester 180t of CO2, which means each tree is worth $1980 @ 2011 ($11/t) rates and $4140 at 2012-2015 rates of $23/t.

times that by 650ac of trees at a approximate outside figure of wild stand density of 1 tree per 4sqm 9sqm would be more realisticgives approximately 650,000 trees - round that down to 500,000 to allow for bare spots, etc.

4140 x 500,000 =

can someone please pick this apart?
A common yield for forestry is 9-12 cubic m of logs per hectare per year, if we add your 30% we get at most 16 m3 per year equivalent to 15 tonne of CO2 according to your figures, thats $165/ha/year (@$11/tonne). 650 acres is 260 hectares. 260ha*$165/ha=$42,900 annual return on $500,000 investment - but there is a catch. When the trees reach their maximum biomass you stop collecting credits. If you cut them down and sell the timber you have to pay back the credits, Bugger!