The Cost of Ranching


Hi I’m Mike, today we take a look at the
actual numbers behind farming and ranching, the dollars and cents and not the common sense,
because after this, you might be wondering if I have any sense at all. Stick around on Our Wyoming Life. So, ranching is easy right? Basically, all you have to do is get some
cows, some land with grass on it and watch the cows grow and collect your paycheck. It sounds easy, but if it were really that
easy everyone would be doing it and driving Lamborghinis out to feed to cows. When it comes down to the cost of raising
cows, there are a bunch of different factors to take into consideration. You’ve got land, fencing, corrals, feed,
mineral, water, electricity, taxes, insurance and a whole mess of other costs. We are going to delve into all that as we
take a look at a pretend ranch here in Wyoming. You just bought it and its big enough to run
100 cows. Here in this part of Wyoming you need an average
of 30 acres per cow to support them, the grass they eat and the grazing area they need. So, your new ranch is 3000 acres, that you
purchased for 800$ per acre for a total of 2.4 million dollars. Congratulations, you are a Wyoming rancher. Let’s get to fencing this monster off, now
hopefully fences are already in place. That would be a good thing, because fencing
will cost you about 2$ per linear foot. Even if you have most of your fences in place
already, I’m going to say you are going to want to change things a bit and at least
put in a couple miles of fence to suit your needs. There goes another 20 grand, that includes
posts and fencing material. Now we have to put some cows on here, like
I said you have room for 100 cows, you are going to go out and buy bred cows, because
that is going to make your life easier and you will get a calf sooner and have an income
sooner. So, bred cows at this moment are selling for
about 1500$, you need 100 cows. $150,000. Let’s stop here, you have about 2.5 million
invested at this point. You’ve got cows, you’ve got fence and
you’ve got land. All this money has to come from somewhere,
so you have a very generous banker out there, who really believes in you and he is giving
you all the money you need. At let’s, be really generous and say 4%
percent interest. If you can get this loan for 30 years let’s
say, then your payment is 150,000$ per year. Are you starting to see the problem here? To make that loan payment, each of your cows’
calves have to sell for over 1500$ and that’s just to make your payment. Let’s change some things up. Let’s say your uncle left you the land and
the cows. Now you are starting at 0. There isn’t any operating capital to go
with it because most ranchers don’t carry a huge cash reserve. But you are very lucky to get what you have
and you are a Wyoming rancher again. Now we are back to the cows, they aren’t
an endless source of income and each cow is going to cost you in replacement costs and
death loss. When it is time to sell her, she is going
to bring less than half of what she is worth, so it’s a pretty conservative estimate to
say that each cow is going to cost you $100 per year in replacement cost. You have the cows, and now you have to feed
them. Here in this part of Wyoming we plan on feeding
hay for about 6 months out of the year. A cow will eat about a half of ton of hay
per month and in a year like this one you are going to have to buy hay at 180$ per ton. If we break this down by the cow, each cow
is going to eat 540$ worth of hay. Grass is cheaper, and worth about 20 per month
for the other 6 months of the year so that’s 120$ per year for grass for her. Its adding up pretty quick, we already have
760 dollars invested in this cow and she’s not even bred yet. So, we better get a bull in here. A good bull will cost you about 4000$, a good
bull will last about 6 years, so we have a yearly cost of him at 660 bucks and he will
breed about 20 cows, so 33 dollars per cow to own the bull, plus his feed which will
average about 30$ per cow. We are in another 63$ to get her bred. Now we are up to 823$ for this one cow. We get to throw in about 10$ per cow for vet
fees, we need her to pay her share of the tractor costs for feeding her which average
on the low side, 50$ per cow. Now if you want to get paid for your time,
which I’m guessing you do, lets give you 30,000 per year. That’s another 300$ per cow. Now this one cow is costing your ranch over
1100$ per year. Now this is a bad year, we didn’t put up
any hay of our own to feed the cows over the winter. Let’s pretend it’s a good year, and we
have lots of hay to harvest. Now we need a tractor and a baler and probably
a rake. The cost of putting up your own hay is maybe
90$ per ton. That brings the cost of this cow down to 830$
Keep in mind, these are the major expenses, we aren’t talking about taxes, utilities,
corrals, a truck and a stock trailer, a 40 thousand dollar used tractor, they all add
up as well. Let’s average a good a bad year and say
this cow costs the ranch 965$ a year. Now its time to look at the income. When we sell calves, we are hoping for a calf
that is around 600lbs. This year prices aren’t horrible and a 600lb
calf last week sold for 1.60 a pound. That’s an income of 960, not all of them
are going to weigh 600lbs so let’s average 900$ per calf and only 90% of cows will have
a calf all the way to sales time so brings us down to $810 income per cow. Then there’s the trucking of the calf and
the vaccinations we give them before they can be sold and now we are at 800$ of income
per head. So, in a good year and not including about
a million other little expenses this cow is costing you 30$ per year, in an average year
165$ and in a bad year $300. Take those numbers and multiply them by all
100 cows in your herd, and the numbers don’t add up. Did we screw up our math, no. These are the real costs. And now I’m going to tell you the secret
of ranching and ranchers. No rancher, recognizes all the true costs
of raising cattle. Each and everyone has some trick, or extra
cash flow or a way to ignore the inherent costs of ranching. Let’s start at the beginning, once again. Most ranchers have a herd that is bought and
paid for, they don’t account for the cost of cows. When ranchers put up their own hay, the equipment
and the land has been paid for, so you have the cost of fuel, and repairs. When it comes to labor costs, we take a huge
pay cut and look for ways to make up that loss somewhere else. Jobs in town, side jobs with friends, hunting
income, YouTube. A rancher ignores the value of his own cows,
the hay, the grass, and his time. If you get rid of all those costs, that’s
the money that is left. With that money, you can buy a new pickup,
every 10 years, or put up new corrals every 20. Keep in mind, every operation is different,
in some places land may be worth 10 times what it is here, and there they have a whole
new mess of problems. So, the question is, can it be done? Of course, it can, but it has to be done smartly. I’ve seen people inherent whole ranches
and couldn’t hold the operation together, but I’ve also seen people be successful
in what they do and love every minute of it. I think that’s the key, you need to love
it and have incentive to do it. Make a promise to yourself or someone else
that you will do everything you can to make every bit of your hard work, worth it. Speaking of hard work, I’m about ready to
head to work but I want to thank you for taking your time to hang out with me today. I know I threw a lot at you, but hopefully
it brings you closer, to us and to knowing why farming and ranching is important, another
reason we don’t want to lose even a single ranch or farm. In the US 40 acres of farm and ranch land
is lost every hour and once they are bulldozed and paved over they are gone forever. We are just trying to do our part. We all are and thanks for that also. Make sure you subscribe for more from the
ranch and exactly why through hard work great things can happen. Have a great week and thanks for joining us
in our Wyoming life.

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