A Midwest Journal

(For part one, part three – visit those links. Meanwhile, we re-join our author after he just explained how he got into raising grass fed beef cattle in the Missouri instead of pushing pencils in California…)

Our profit numbers reflect the efficiency of grass fed cattle. Inputs are some hay during the winter, for the two years you are raising them, plus the vet costs when you wean them. If you sell your cattle at 1,000 lbs and get about .80 per pound at auction (on average), you’ll net about $800 per head. Direct market this and you can make about $1K. Take out about $300 in hay cost and you’ll profit $700 after two years.  (The trick is that the same cow which gave you that steer or heifer you just sold meanwhile produced another which is one year old, and is about to deliver a third.

If you sell that calf immediately after it is weaned, you get about $500, but have to take off what it took to keep that mother (plus one bull per about 50 cows) on hay during the winter before, so you make about $350.

Let’s look at the land. As I mentioned, we’ve been doing both crops and cattle as production. Under conventional farming methods (moving cattle when they ate everything they could), a cow needs about 2.5 acres to live the year in Missouri. (And you have to hay some of that against winter.)

The 60 acres we have in cropland would then generate sustenance for about 15 cows. Those 15 cows, after a 9 months gestation and 7 months to weaning, would produce 15 x $350 = $5,250 profit. If you wanted to feed those calves out to get a higher profit, you’d have to replace some of those cows with yearlings.  You only have so much land and so much grass. Say you had 10 cows and 100% survival on birthing – so you then sell 5 of those calves so you can keep 5 to feed out to full maturity.

5 calves =  5 x $350 = $1750

5 calves fed to maturity = 5 x $700 = $3500

Total = $5250

Profit is the same for all that extra weight you put on, right?  Trick is that you can set up more options with direct marketing so that if you get them properly inspected and butchered (read: higher cost of overhead) and then sell the parts at farmers’ markets – you can make as much as $3,000 per animal. Of course, that is a lot more work. Your profit for farm-raised grass-fed beef would run probably about $2,000 per head.

Compare this to row crops, where we make about $1,000 t0 $2,000 profit off that same acreage every year. Net margin increase using pasture-finished cattle over row-crops = $5250 – $2,000 = $3250 at minimum, with the potential for about $10,000 if you inspect, butcher, direct sale  = $8,000 profit margin increase.

Row-crops are low-profit because you deal in commodities. The seed companies, fertilizer companies, chemical companies, and equipment dealers – all work to get the biggest slice of that pie you create by farming. If I wanted to raise stuff which was non-commodity – or would direct sell specialty seeds, for instance, to gardeners, I’d make considerably more income from row crops. (Sell a bushel of corn, you make $4; buy a bushel of corn seed – pay $100 – $200. The reason corn is profitable is because some places can make 200 bushel an acre out of 1/5 of a bushel of seed. Not on my land – it grows better grass than crops. Our average is about 80 bu per acre.)

Pasture-finished cattle has less variables than grain fed or finished beef – if it rains too much so you can’t get a crop in, you can raise grass anyway. If it’s a drought, you simply sell the calves early instead of having no crop at all (and still have the expenses of planting and soil prep and spraying.) Corn depends on the weather.

Needless to say, I’ll be taking our farm over to entirely a grass-finished cattle operation shortly. Just need to finish building my herd up to size. We’ll be at about 20-30 head and able to then generate $7K – $10.5K each year as profit.

Further profit will be by lowering inputs through real intensively managed grazing, which will minimize/eliminate hay costs. Dropping our cattle frame size will improve efficiency by about another 20%, so we can add another 5-6 head, or another $1750 to $2100 profit annually. If we direct market (part out) those beef, we’d add another $6K profit.

The next step is to move entirely out of winter hay, through managed grazing practices and so make grass-fed beef pure profit, since the pastures don’t have to be fertilized or sprayed to get production. (One further step would be to certify these pastures as organic, but this is really just adding another input cost. Right now, locally-raised grass-fed beef gives the same premium as organic – so government-trademarked organic beef is less profitable.)

While there is a ceiling on what you can make, it’s much, much higher than conventional farming methods with commodity products. Your profit is under your own control.

Key takeaway points are that by moving to grass fed beef production you lower input costs and are able to move into a much higher premium by direct marketing to local consumers. This model is consistent with marginal land which is normally used for beef production in the Midwest. Deep topsoil areas of Iowa and Illinois are natural for raising corn and other row crops – more power to them. But you won’t see my beef going to their feedlots…

(Next: Life on a profitable grassfed beef farm – how much money do you really need to live on and how prosperous is prosperity and how poor is “poverty”?)

Having some fun just living life. Things are starting to work out.

I was listening to an MP3 from Greg Habstritt at Finer Minds, who mentioned that phrase above, ” You have to eat your own cooking and drink your own Kool-Aid.” So I thought to share what I’ve accumulated and been practicing.

Just returned from an all-day farm tour yesterday, and this is a partial debrief from this. I was there to study grass fed beef in southern Missouri farms (although we also saw plenty of grain fed beef as well – just no organic stuff.)

First, my lifestyle choice has been to live on a farm and work it while I got my online business operating and producing income.

Let’s review that farm first. (Now, the below figures are based on my own experience on my own farm – your mileage may vary, go ahead and see if you make make yours more profitable…)

My Dad was ailing and my life in California under a corporate cult (most are, actually) was miserable. So I left everything I had established over 20+ years and moved back to Missouri. Call it a mid-life crisis resolution or whatever – it simply made sense, though I had no savings, retirement, insurance – anything people would call security.

The farm  was mixed row-crops and cow-calf finishing operation.  And it wasn’t really sustainable. The farm was supplemented by my Dad’s pension. When he passed, my Mother paid off the bills with his life insurance (which is what that is actually for) and then started running the farm based on her pension plus what we made the farm produce.

The grain crops, if we made anything, pretty much ate up any profits in equipment, fuel, seed, and fertilizer costs. The time I spent on the tractor was discounted (free) as the farm costs paid my room and board. Theoretically, anyway.

The cow-calf operation theoretically made about $4,000 per year, based on 20 calves being backgrounded. This was after the feed bill. Now I was able to increase that to $5K by selling them as feeders (right after they were weaned) and not having to grind, mix, or buy feed. Vet bills for the occasional sick steer also dropped. That feed lot started producing forage again.

But $4K for a 250 acre farm wasn’t really sustainable, since we had electricity, water, taxes, etc. Still basically running on my Mother’s pension and savings. (The government started making her take out certain amounts of her savings after she go so old… Thanks a lot.)

My own ideas were to make a living, home-based on my online business activities. So farming hours were slotted out, and the rest of the day was my own to invest. No wife or kids of my own, so I could simply throw everything at that. (But let’s not digress — back to the farm.)

Grain crops gave some profit, but it took all summer to produce. And was the most variable based on weather.

While this may seem non-sequitur, the two crops that are the easiest to raise on our land are grass and trees. Very little inputs, but harvesting eats up your profits. Usually, it costs more to bale hay than you can buy it for. And trees take longer to grow, such that you can only sell a tree after 50 years, usually.  Doesn’t pay enough in that one sale to pay someone to grow them.

The best harvester for grass and trees is a natural one: cows (or sheep and goats, or a combination or two or three of those.)

Reason being is that grass grows better in partial shade and cows will eat more grass in the shade than in the sun. Cows eat grass and turn it into meat. Meanwhile, they’ll trim the trees within reach and keep down the competition of new sprouts (mostly) by stripping off their leaves (it helps de-worm the cattle.)

Cows take about two years to grow on just grass.

And if you generally leave them alone to fatten on grass, they do fine. Better than fine, actually: beef which is pasture finished is lower fat, lower cholesterol, higher omega-3 & -6 – so is generally considered “heart-healthy”. So it’s better for you to eat.

Meanwhile, cows deposit their manure (and urine) on the grass and under the trees to fertilize them. The trick is to manage your herd so that they spread their wealth more widely – as they tend to rest under trees and deposit there when they get up, just before they go out to eat again.  You want trees in your pastures, spread out so that there is probably a 50/50 mix of sunny and shady grass at most times. And move your cows regularly so that they let the grass grow back.

(This author continues telling how he brilliantly rescues a small farm and returns it to sustainable profitability overnight – well, at least he sees the light after 8 years of hard work… See Part 2)

Here’s the dollars and sense on corn fed beef: it’s cheaper and faster, resulting in cheaper beef for the consumer and more income for the farmer.

Why we feed grain:

“Many folks within our own industry do not truly understand why we feed grain to feedlot cattle. Many cattlemen believe grain is fed to enhance the flavor of beef. Not true. Grain is fed to decrease the cost of gain. Grain contains much more energy than forages.

It also means we would have to cut down on the cow herd, to make room for the slaughter cattle that are usually hauled off as calves or yearlings. The bottom line is that if we went to ‘grass fattening’ we would only be able to produce 30 to 40% as much beef as we do today.”

Looks like we’ll be sticking to a mixed farming scenario rather than going solely grass-fed.

The key point here is whether it is still cheaper to raise cattle for two years on grass, or farm with chemical fertilizers (and mechanical, fuel inputs) and feed corn to feedlot cattle which are ready 8 months earlier. Means you have income every year from that year’s cattle, not a continuing investment – the longer the runway, the more chances that the plane doesn’t take off.

“With corn yields exploding, it was cheaper to fatten cattle in the feed lot than off grass. Breeders paid more attention to the yields butchers could extract from a beef carcass than to their live animal’s hardiness. Disease pressure in crowded feedlots was alleviated with the adulteration of the feed with antibiotics.

Meat got cheap, middlemen got rich, and grass-based cattle ranching entered a long economic decline.

Back on the farm, the high nitrogen fertilizers applied to the corn fields burned up the micro-organisms that had contributed to soil health and made grain farmers dependent upon chemical inputs for their fertility.”>Andy Griffin: Down on the Farm A brief history of beef: From prairies to corn to bombs February 9, 2005: “With corn yields exploding, it was cheaper to fatten cattle in the feed lot than off grass. Breeders paid more attention to the yields butchers could extract from a beef carcass than to their live animal’s hardiness. Disease pressure in crowded feedlots was alleviated with the adulteration of the feed with antibiotics.

Meat got cheap, middlemen got rich, and grass-based cattle ranching entered a long economic decline.

Back on the farm, the high nitrogen fertilizers applied to the corn fields burned up the micro-organisms that had contributed to soil health and made grain farmers dependent upon chemical inputs for their fertility.”

This is slanted to Hades and back, but an interesting quote overall.

If you were to raise only grass-fed beef, the probable strategy would be to geld the bulls into steers and release them back into the herd, once weaned. Take the heifers and sell them either as feeders or as heifers for breeding by others. Means you’d be keeping half your progeny on your pastures. Question is how much your crop land would generate in terms of pasture compared to farming it for corn and beans. Just a math problem, based on average hay versus corn yields. But if a farmer is raising corn and beans anyway, with cattle being only a part of his farm income, then taking a bit of this to feed his cattle would make sense.

We have a max of about 20 head on the land we can use for pasture, with about 60 acres arable for beans and corn. Probably it would be cheaper in terms of input to simply go to pastures all around and sell the excess hay we raise, leaving the cattle to winter forage on those hay pastures and fertilize them as they go. But I’ll not throw the bathwater and baby out yet until I can make economic sense of it. Right now, our corn and beans are the least profitable, as I’ve figured out how to make our own fat-cattle food with just grain corn and soybeans (plus some minerals). Once I’ve adjusted back to saving our own seed and changed my rotations to get legumes back into nitrogen fixing and so able to cut well back on nitrate fertilizers, I’ll be able to see what can be done on that other side of the farm. Until then, these people crying only for grass-fed beef can keep crying. The buck talks.