# Thoughts, experience, opinions from the well seasoned



## tjrose81 (Oct 19, 2015)

Always had a few cows growing up but mainly a hay and corn soybean operation. Grandpa would breed to show and butcher one here and there and sell halves to family and friends. I took over the grain and hay operation on 'rent' and started updating and buying my own equipment a few years back. Raised a few steers for sale, nothing serious. Last month I purchased the family farm minus the house and 14 acres it sits on. I currently rent my house that's half mile away. (Family owned) Now I am putting an offer in on a farm a few miles away with 45 acres (39 in row crop) Always wanted to make a go at raising and selling beef and this place has the exact setup I need for feeding steers already there. Richie waterers, concrete throughout the barn yard, hay barns, silo. Maxed out could probably feed 125 head. Now I'm not looking to get that big that quick and I can always fill excess barn space with hay & straw we bale. But I'm leaning towards marketing natural freezer beef and maybe some conventional fed to take to sale yard. Have to fill some barn space if I buy it to justify the large investment. Any experiences, thoughts, advice welcome.


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## rjmoses (Apr 4, 2010)

It's all too easy to get over committed financially when starting out--especially when interest rate are low. My rule of thumb is "If I can't pay cash, I can't afford it."

But this doesn't mean I haven't borrowed. I just like to use this as a guideline to keep me from getting into trouble.

Besides, I have better use for my money than giving it to some Wall Street banker who would only spend it on wine, women and song. (Hmmm, maybe I'm on the wrong side of THAT equation.)

Ralph


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## tjrose81 (Oct 19, 2015)

I agree, I hate debt. All equipment Is owned. 05 duramax is paid for. Drive a cheap old work car daily. No credit card. No debts other than the land I have now (on the family discount to buy in). This property I am looking at now is definitely going to set me back and I have a private investor that wants to buy the cattle. He is putting up all inputs. I provide shelter, labor, electric and marketing. He is taking 100% risk in the animals at a 70% net take home on my side after his inputs. We haven't started yet of course but he approached me about it at the beginning and we're going to do a couple year trial to see if it pans out. If not. I'll then begin on my own and keep my customer base and knowledge i gained not betting my own money. (Except for the mortgage). Also getting married in a couple months and the fiancée has been urgin about getting a place of our own. Sidenote: we both work off farm jobs.


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## tjrose81 (Oct 19, 2015)

And I think we may both be on the wrong side of that equation.


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## Tx Jim (Jun 30, 2014)

tjrose81

I think utilizing credit card isn't a bad thing if one pays off balance every month. I've been using credit cards for years to purchase fuel & supplies but have "no carryover balance and pay ZERO high interest rate" plus get cash back bonus at end of year.


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## r82230 (Mar 1, 2016)

tjose81,

Have to agree with TxJim, on the credit card thing. I use a credit card, just as Jim does. Except, I take it a little farther.

Seems my local grocery store (Kroger's), has this crazy thing about 3-4 times a year, where they offer 4 times fuel points. Here is how I do it as an example: this spring I wanted to replace a few windows in the old farm house I live in and Home Depot had 15% off sale on the windows I was looking at. So I went to Kroger's and bought $1,500 of Home Depot gift cards, which gave me 6,000 fuel points. Took the gift cards to HD, ordered and paid for windows., Then took truck with empty fuel tank to Kroger's gas station, fill up truck and fuel tank in back for $1.00 off every gallon of fuel (35 gallon max. on each 1,000 fuel points). Then I still get the cash back on the credit card purchase of the gift cards.

Works out like this:

$1,600 dollars on windows, minus 15%, equals $1,360 plus tax.

$1,500 dollars on gift cards, 6,000 fuel points (six 35 gallon, $1.00 off fuel purchases), equals $210

Plus cash back on credit card (2%), equals $30

$1,500 minus $210 minus $30 equals $1,260 out of pocket, for $1,600 (plus tax) windows and I have a few dollars left to spend on HD gift card. (Plus a 'happier' wife, with new windows.)

I tell my sons "It is not what you make, it's what you keep".

Back to the rest of your question. Sounds OK today, with TODAY's cattle pricing, a couple of years ago it could have been a much different store. Starting small might make sense, because you will need to develop the market you are trying to supply.

Some questions you might ask yourself could include:


Is there enough population, close by to market to AND what is the percentage that may have an interest / ability to pay for your end product (beef, natural or otherwise)
What is your completion in this market space?

Good luck and don't give up your off farm job to quick.

My two and a half cents,

Larry


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## mlappin (Jun 25, 2009)

rjmoses said:


> It's all too easy to get over committed financially when starting out--especially when interest rate are low. My rule of thumb is "If I can't pay cash, I can't afford it."
> 
> But this doesn't mean I haven't borrowed. I just like to use this as a guideline to keep me from getting into trouble.
> 
> ...


Exactly, when I bought the Jaylor 3650 I could have paid cash, but would have been cash poor for 11 months till the next harvest, interest rates were low enough it didn't make much sense to skimp and scrape for 11 months when the interest cost on a loan thru my bank was negligible.

But I only borrowed $22,000 while a mortgage is an entirely different beast. We have a neighbor that always has a small mortgage of some kind, the tax deductions for interest paid and the mortgage deduction on our counties property taxes makes the mortgage cheaper than not having it.


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## bbos2 (Mar 20, 2015)

Tough market now. Hard to pencil and there is a big "?" on corn price. You grow your own corn as do I, but sure don't want to donate feed when fats are around 1 and corn goes up to 5. I do think if corn does go up that will hurt feeder cattle even more. May be some tight margins but maybe a little room left for the feeder if you get calves bought right. Buy and sell today might be close breakeven.

Packer and retail have to be making a killing right now. Not much price relief on the shelf.

You have a darn good deal if you get 70% no risk. In today's markets you can probably figure on feeding on your own in a couple years. But it's definitely a deal I wouldn't pass up. Focus on gain and health is the fun part

Disclaimer: I am not well seasoned. I just enjoy livestock and numbers


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## Tim/South (Dec 12, 2011)

^^^ ^^^^^

Good post.

The cattle business is very volatile right now and hard to get a handle on where we are headed.

Calf, stocker and fat prices are currently depressing. If you have someone willing to bank roll the cattle end than you may be safe. 30% is good when prices are up.



> Packer and retail have to be making a killing right now. Not much price relief on the shelf.


I will second this.

I pretty much donated calves at the sale barn yesterday. Prices here are lower than I have seen them in years. The packers and retailers are making a killing.


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