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What to do with extra income from selling beef

What to do with extra income from selling beef

Should profits be used to pay down debt, for personal use or to upgrade facilities?

By Bill Halfman

Calf prices are setting records and now that you have sold; you are looking at a substantial increase in revenue. A major decision that needs to be made is whether or not profits should be used for paying down debt, personal use or for reinvestment back into your operation.

Now is a good time to take an honest look at your beef enterprise and determine if some of that money could be wisely invested back into the beef operation.  This is especially true if you plan on continuing in the beef business for many years. 

What to do with extra income from selling beef

Here in Wisconsin, many of our beef operations are on farms using facilities that started out as dairy operations, and the usefulness and efficiency of these operations for beef production is less than ideal.  We manage to survive, however, the challenges are not only tough on the farmers, but may be causing problems for the cattle too. Here is a list of items to consider as you evaluate your operation for opportunities to make improvements.

How is your operation set up for keeping cattle out of mud and manure?  Mud and manure are detrimental to cattle health and performance in many ways. This may be the time to investigate barnyard improvement projects to help keep the cattle clean and improve run off situations that might exist.  Your local Land Conservation office and Extension office can be resources to help you look at alternatives to what you currently have. This may also be an opportunity to make them easier to clean by improving access or increasing space for skid loaders and other machinery that you use for cow chores.

How effective are your current feeding and feed storage systems at minimizing shrink?  Shrink is the term we use to describe the loss that occurs from what we harvest and place in storage to what the cattle actually eat.  Now might be a good time to consider different feeder styles, feed delivery systems, and feed storage.

Let's look at one scenario. If a farm is storing round bales outside and uncovered, and feeding in a ring without a panel at the bottom, to keep the hay in the ring, it would result in a total hay loss of approximately 50%.  If the farm changes to storing the round bales in a hay shed, and feeding the bales in a cone style feeder with a panel around the bottom, the total hay loss should be approximately 8%. This is a reduction in hay loss of 42%.  If an average beef cow consumes approximately 3.3 tons of hay during a 6 month winter feeding time period, we would need to harvest 6.6 tons of hay per cow in the first scenario to make sure she had 3.3 tons to eat. By implementing the changes, we would need to harvest about 3.6 tons of hay to make sure there were 3.3 tons for her to eat. At $100 per ton hay, that is a reduction in feed costs of $300 per cow per year.

How safe and efficient are your cattle handling facilities?  Are they cow and people friendly and safe?  One way to answer this question is how happy are the AI technicians and veterinarians when they come out to work with/on your animals?  Safety and ease of use for both the people and the cattle should be top priority when evaluating cattle handling facilities.  Now may be a good time to upgrade the current equipment. 

These are just a few ideas that you may want to consider for improving your beef enterprise. Others may include genetics, ventilation of housing, fencing systems, renovating pastures and others. Now that the checks are fairly large, it may be a good time for you to make the improvements that you have always wanted to do, but may not have had the cash flow to complete.

Halfman is the Monroe County Extension agriculture agent.

TAGS: USDA
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