Monday, March 21, 2011

3 Ways to Run a Missouri Beef Ranch Profitably

Raising grass fed beef on a Missouri beef ranch can be fun as well as profitable. More info at:

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Here's the simple answer - have income bigger than overhead and any needed set-asides. This makes running a beef ranch simpler.

This was the situation I ran into as I took over running our family farm. Most had to get a second (day) job away from the farm. Because "conventional wisdom" says that you can farm (or ranch) until the money runs out, it's that additional job which pays the costs of farming when the crop doesn't.

That commodity basis farming is built on is what keeps dirt-poor farmers dirt-poor.

We had to study this back and forth, but kept coming up back to the same conclusion. Just getting "bigger" doesn't mean you get any more profitable. University studies showed that anything beyond 300 acres was about the same efficiency per acre. Regardless of "leveraging" your assets. All this would mean is that you are working more hours for the same cost per acre. There's simply a trade off in how many acres you farm to replace your day job. But you aren't working less, or even fewer hours. 

You have to get smart about what you are doing. As far as corn-fed beef (and it's lack of taste) we don't have much to say about it. Selling a lot of bland burgers as a discount price may be exactly what you want. That's the commodity beef business. And vertically-integrated packers cut out middle man cost.

But our difference with them is when we started crunching numbers. We found that our best profit point was to get away from corn-fed beef entirely. Half of our annual beef crop was going to pay for the feed costs. So the next year, we sold them simply as feeders (recently weaned) and didn't have to feed grain all winter and repair the water lines which broke from being frozen.  Much warmer in the house, too.

The next breakthrough was finding that we could almost double that again by simply selling them as year-old stockers to other people with cheaper corn (and who actually liked getting out every day to feed and water their stock regardless of how cold it was. We simply kept the weaned calves with the other cows and then stay in the warm house again.

After that, we found that by managing our grazing, we could make less hay and take our expenses even further down. So we are moving to managed grazing and getting away from the expense of haying altogether. This will move us over to grass fed beef and ultimately right over to ultra-high-density stocking or "mob" grazing.

Funny thing is: the more naturally we raise our beef, the cheaper it gets to raise it. So farm profits rise. It's not "buy more land and work longer and harder", it's "manage what we have smarter and work less".

And the next point is all due to you. As we sell directly to the client, and keep them happy with what they get, we can make more than we would by sending them to auction. That small premium allows us to farm more and save you more - as you can get a higher quality of beef which you can inspect your self (and also your processor) for much less than you would pay for inferior quality "mystery meat" in any supermarket.

If you buy the whole cow direct from us, we can get you 400 pounds of beef for about $2.00 a pound (right this second, anyway - prices change all the time). And that's the average price of the Gawd-knows-where-it-came-from-or-how-it-got-here variety hamburger in the supermarkets. And you get steaks and roasts and filets-mignon's all for the price of that questionable hamburger.

But all that beef won't fit in the average home freezer. And it's a huge chunk of cash to spend at once. So we use a local marketer to find clients and we sell the beef to four people at once. They each drive off with about 100 pounds. But it costs them a little more per pound so that the marketer makes enough to keep selling this stuff, and our farm still gets a little above sending it all to auction.

The answer is still the same. We keep figuring out how to help Nature do what She does best, and She rewards me in the marketplace with more of this funny green stuff that cattle won't eat and bankers will.

That's how our farm stays in business.

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