(PLAYLIST) Raising Beef Small Scale

Why I Sold All My Cows in a Skyrocketing Cattle Market
This video is for anyone considering investing in a cow herd but unsure of the best approach on small acreage. It’s also for those who, like I once was, own a cow herd but find it too costly to maintain. I’m going to do a quick review of how money is made in the conventional commodity cattle system.
We, as small-scale producers, can observe this system to develop something cost-effective or even profitable for ourselves. I will also break down how I’m raising grass-fed beef on my 30 acres without owning a single cow and explain my decision to get rid of all my cows.
By the way, I made six videos on raising beef cattle on a small scale. You can find the playlist in the pinned comment of this video, along with my free guide, The Absolute Beginner’s Guide to Raising Grass-Fed Beef.
The Three Segments of the Commodity Cattle System
First up, understanding the three segments of the conventional commodity cattle system and how money is made on cattle, period.
Cow-Calf Producers
The first segment of the commodity cattle system is the cow-calf producer. This rancher raises a herd of cows that produce healthy calves for market. Those cows need to raise a calf that then sells for more than it costs to raise for the year. For example, if a cow weans a 500-pound calf that sells for $2.50 per pound live weight, you earn $1,250 for that calf.
In order to turn a profit, the cow-calf producer has to keep the expenses associated with raising that cow and calf for the previous year under $1,250. This is typically very challenging. I cited a live weight price of $2.50 per pound for a calf because we are at the peak of a cattle cycle, meaning we see higher prices than in a very long time, if not ever.
However, during the valleys of these cattle cycles, which come quickly and harshly, a cow-calf producer considers himself very blessed to get $1.70 per pound live weight for a calf.
Backgrounders
The second segment of the commodity cattle system is backgrounding. Backgrounders buy those calves, now called stockers, and graze and supplement them for five months, aiming to add about 300 pounds. They then sell them to feedlots as feeder cattle. The profit in this segment comes from adding that 300 pounds to the calf as cheaply as possible, typically on pasture.
For example, as a backgrounder, you take that $1,250, 500-pound calf, grow it to 800 pounds over five months, and sell it for $2.30 per pound live weight. You earn a gross total of $1,840 for that feeder animal. That’s a $590 difference, and you will make a profit as a backgrounder if you can keep the expenses for that five-month period under $590.
Feedlots
The third segment of the commodity cattle system is the feedlot. Feedlots take those 800-pound feeders and feed them a ration of 80 percent grain to 20 percent roughage until they are ready for slaughter. The profit in feedlots lies in having access to grain and feed as cheaply as possible, which is why they are commonly owned and operated by commodity grain producers.
So basically, the rancher’s job ends where the feedlot begins. This is a very simple, some may argue oversimplified, look at the U.S. commodity cattle production system, but it does give you a general idea of how and when money is made. Payday comes whenever the cattle are passed on to the next segment of the system. As you’ll notice, the system is segmented to guarantee the rancher a payday at least once a year.
Considerations for Small Acreage Cow-Calf Operations
Now, if you start up a cow-calf operation to finish your own beef, like I did, your first payday will not come until 36 months after your bull joins those cows. Another consideration for small acreage cow-calf production is that you need to budget three times the pasture that the initial dry herd will need.
So, if you buy six dry cows and a bull, you really need enough pasture to support 18 head total. A dry cow, one that is not lactating, has its lowest nutritional requirements and eats the least it ever will in its whole life. Once the calf is born, the cow will eat the most it ever will in its whole life.
If you are raising that cow herd with the intention of producing food for yourself or meat for resale, you’ll be raising for 24 months. There will be a nine to twelve-month period where you have two sets of calves that your land needs to support, or you’ll need to bring in a lot of extra inputs to support those animals.
My Personal Experience
For me, I found that such slow cash flow exposed me to way too much risk. By exposure to risk, I mean that 36 months was too long to continue spending money before receiving any return. It also meant too much time for unpredictable expenses to pop up. With cows, unless you have an endless supply of pasture, those expenses escalate very quickly.
In the process of doing cow-calf on small acreage, I came to understand why most successful cow-calf operators run on hundreds, if not thousands, of acres, with additional leased land as backup. I had a few firsthand experiences that showed why cow-calf is riskier on small acreage without these backup resources.
The Impact of Drought
As an example, I hit a major drought about 12 months into the 36-month establishment period. At that point, I had 14 heads. Once the grass was gone, the 14 head were eating 10 to 12 round bales per month. At that time, if accessible, round bales cost between $100 and $120 per bale.
It was game over for half of my herd. I held on to the other half for another year before selling every last cow and keeping only what would qualify as stocker cattle. I am now raising stockers for grass-fed beef on my 30 acres, assuming the role of backgrounder and finisher according to the conventional cattle production system.
Benefits of Raising Stockers
Here are three reasons why this works well on my 30 acres and in my specific context.
Lower Expenses and Resource Demand
First, I don’t have the expenses or demand on my resources that I did when maintaining those mama cows and that bull. This offsets the cost of paying more for stocker cattle.
Minimal Equipment Needs
Second, raising stockers requires no heavy machinery or equipment. When I buy stockers, they’ve already had all the treatments typically administered in a chute system, and all that’s left for them to do is graze. That’s not to say something crazy couldn’t happen, but in the past four years, it just hasn’t with the stockers.
When I was raising my breeding cows, I faced situations where I really needed a head gate and a chute but didn’t have them. I foresaw that keeping the breeding group would require investing in large cattle handling equipment.
Flexibility of Stocking Rate
Third, stockers offer flexibility in stocking rate. For example, if I have larger demand for grass-fed beef orders one year, I can simply increase the number of stockers I purchase for my land.
Conclusion
Ultimately, I sold my breeding cows despite the hot cattle market because I don’t see a future in beef cattle. This video specifically explains how the commodity pork market crashed and why I believe the commodity beef market will soon follow. Watch it next.
“Ah Lord GOD! behold, thou hast made the heaven and the earth by thy great power and stretched out arm, and there is nothing too hard for thee…” Jeremiah 32:17