Walk corn to market through calves

Walk corn to market through calves

Crop producers could consider raising stock cows in times of low corn prices, but get good budget numbers first

Corn prices tumbling well off their drought-induced peaks entice grain farmers to add value to their crops by walking them to market through livestock.

Almost any cattle feedlot would be delighted to custom-feed a pen of cattle for almost anyone who cares to finance them.

Farmers who have some rougher land suitable for grazing, usable fences (or a willingness to build electric fences), access to drinking water, some sort of cattle-working facilities and at least some skill in animal husbandry, may find raising stock cows attractive.

Crop producers could consider raising stock cows in times of low corn prices, but get good budget numbers first

The lure is strong. Selling a 550-pound steer for $275 per cwt would gross $1,512. That's $547 more than the estimated cost of $965 per cow-calf pair in an Iowa State University budget. Those costs reflect an existing operation. As such, they contain some heroic underlying assumptions for someone who wants to enter the livestock feeding and beef production business.

Related: Young beef producers might learn from grain farmers' pain

Suppose you're contemplating buying 20 stock cows. The $65 estimated machinery, equipment, housing and fence costs per cow allow $1,300 annually to operate the facilities and equipment you need. That includes no front-end money to build or upgrade facilities and buy cows and machinery.

USDA's Market News Service reports cows bred to calve this spring are bringing $2,800 to, in some cases, $3,400.

At $3,000 a head, buying 20 will tie up $60,000 of cash flow.

Unfortunately, you won't sell a 550-pound steer for each cow you buy. Suppose you have a 92% calf crop, half bulls, half heifers. You'd sell 0.46 steer per cow. At $275 per cwt, that's $696. Suppose you plan to replace 20% of your cows each year. That leaves 0.26 of a 500-pound heifer to sell per cow. If she brings $250, that's $325. Suppose you have 2% cow death loss. Figuring to replace 20% leaves 0.18 cull cow per cow in the herd. Suppose the cow weighs 1,250 pounds and brings $200 per cwt. Cull-cow revenue would run $450 per cow in the herd. Total gross revenue is $1,471, which generates $506 per head of cash or $10,120 toward paying for the herd.

Related: Replacement Heifers: Raise, Buy or Sell?

If you don't need front-end money for any other production items, you might recover the $60,000 you invest in cows in six years.

TAGS: USDA
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