Luhman: Value Added Marketing
In a past Connect I discussed how in this region, according to University of Minnesota FINBIN data, the average cow/calf producer in Minnesota lost $275 in 2021. We talked briefly about some of the ways that you can reduce your cost to raise a calf, but for some, perhaps the question ought to be “should I be raising a cow at all?” In a later Connect we then discussed the opportunity that sheep and goats have to produce significantly higher profits on the same acres in the same amount of time as cattle.
Today we’ll discuss the option of having livestock on the farm only when your environment provides the ability to graze. We call this a “seasonal grazing enterprise.” Examples of this might be custom grazing somebody else’s cows, heifers, or steers for the grazing season and then sending them back in the fall. It could also include purchasing in a class of livestock that you plan to sell before winter, either steers or heifers you plan to breed and sell as bred females.
The beauty of this system is that in our northern environment, on most years we have a pretty consistent rainfall providing a regular abundance of high quality grass. We also don’t have the extreme heat and humidity stress on our livestock that much of the south and southeastern US have. This makes for a great livestock grazing environment during the spring, summer and fall which we can take full advantage of with a seasonal grazing enterprise. In this environment we also have a winter that presents wind, cold, snow and ice, and with a seasonal grazing enterprise we can eliminate all the expenses that are associated with bringing livestock through the winter. Imagine just the overhead reduction of not needing a haybine, rake, baler, tractors, hay wagons, TMR mixer, feeders, etc… It can be a savings in the amount of hundreds of thousands of dollars, or tens of thousands annually–not even mentioning the cost of the feed itself.
Let’s look briefly at the value of a seasonal enterprise. If you can find a livestock owner who is willing to pay close to the actual cost of the alternative for their livestock it can be a real win for you. I’ve heard costs for custom dairy heifer development in feedlots from $2.65 to $3.25 per head per day. Costs for cow-calf pairs in a dry lot of $2.50 or more per day. Steer costs at over $1 per pound of gain. On grass we can afford to offer a lower fee and still generate very solid profits to our bottom line. Raising a dairy heifer on one acre at $2/day for 150 days can generate $300/acre with very little overhead or direct costs associated. These numbers may vary based on your specific region, or farm. The point is that we do not need to own or keep livestock on the farm year round to be a profitable grazier!
In a future Connect I will look at how value added marketing can be another viable option to improve profitability in your livestock operations!