More questions that arise than I may ever have the answer, so the most positive and usually the best reply to many of the questions I field in this business is, “I don’t know.” Contract grazing might be a really good example.
If you have been following our natural model thoughts and rules it should be noticeable that I recommend conservative stocking rates. Generally in two to five years it is to be expected that you will end up with more grass than you have cattle if you are following the rules. Most often if you are monitoring and paying attention this allows you to keep weaned calves a little longer and market bigger, more profitable yearlings in larger more uniform lots (hopefully potloads). But this may not always be true. There are exceptions.
Occasionally you will have 60 to 90 days of grass that is worth more in someone else's cattle than your own. We can usually work through this scenario and come up with a contract that is fair, legitimate and repeatable the next time it turns off dry. Hopefully we have already accounted for winter.
That 60 to 90 days of grass is not what a friend from Oklahoma called about the other day. He had a producer wanting to expand and send cows to his place for a 365-day, multi-year program. This opened up a new can of worms that neither of us had any experience with. It required lots of thought and figuring.
What we have come up with is interesting in that the figures for keeping a cow year around need to be quite accurate. Then we have to add a calf. Here is what we attempted to take into account:
- Pricing based on 1,000 pounds of livestock per day (very important).
- Time of calving season (also important).
- Average weaning age (important).
- Who does the weaning?
- Cattle supplement and cost.
- Hay days and amount per year.
- Stocking rate.
- Cull cows and deads.
- Health maintenance procedures.
- Profit expectations.
- Termination timing and procedure.
- Timing of payments.
My friend is a skilled, experienced grazier with enough pasture to average pasturing 200 cows with less than 650 pounds of hay per cow. He wants to net $200 per day. Below are some of the figures we used for expenses on a daily and annual average. We are figuring a 90% conception in the first 45 days and a 90% weaned-calf average but are not guaranteeing either. The grazier will have the right to wave off cows he will not accept to graze and pull the trigger on culls. He is an independent contractor not an employee of the herd owner.
Bull power and days in the herd will be important, and both parties will need to contractually agree and sign off. But we did not put any figures together except to say that the bull days should be charged at 200% of a cow day (2X 1,000 pounds or 30 pounds of dry matter). In other words, bulls will be charged for 60 pounds of dry matter per day. Here's how we priced those things.
Pasture per cow = $120/year
Supplement per cow = $45/year
Pasture fertility and maintenance = $30/cow/year
Fly Control = $5/cow/year
Health maintenance and calf processing = $15/cow/year
Hay and delivery and feeding = $45/cow/year
Profit expectations = $135/acre/year x3 = $405 (3 acres per cow)
Total price per cow/year = $665
When we figure expenses, the most likely mistakes we make are the expenses we fail to list. Notice that we are using a 1,000-pound model. Cows weighing 1,400 pounds will up the cost to $931, and 900-pound cows will cost $598.50.
If the national average cost of keeping a cow is somewhere in the $750 to $900 range, we are in the ballpark.
The herd owner should make money every year if he does these three things:
- Furnishes the right cattle.
- Weans the calves at 210 days of age or more at home.
- Markets short yearlings in single-sex load lots.
My friend's major asset is reputation and this is important. He grows lots of forage every year, moves cattle daily, pays attention all the time, and is honest. The herd owner does not have employee responsibilities and will have people-broke cattle. It just might work for both parties, especially if they are working with the efficiency of 900-pound cows.