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Young can make money in cattle
If young people are going to be brought back into farming and ranching, you'd think it would be now. The opportunity to make money in the cattle business has never been better, especially with mama cows that usually don't eat grain or purchased feed. High calf prices convert to higher net income for the owner.
So wouldn't this be the time to incorporate a new generation of young cattlemen and women? Especially when you consider that, of all the farmers and ranchers, cattle producers are among the oldest. (See chart.)
Rabo AgriFinance relationship manager Matt McKamey from Montana says a ranch that can support the labor and management of one family unit is in the 300- to 500-cow range. For example, say it's 300 calves, sold at 550 pounds at an average of $1.60 a pound (all conservative numbers). Those are $880 feeder calves with gross sales of over $260,000.
All the costs associated with that business – land, equipment, fuel, cows, health – are inflated. It will take at least 3,000 acres of Montana land and a line of credit in the area of $250,000 (give or take), says McKamey. Still, the potential net is a good income, probably better than most young professionals outside of ag earn.
While other enterprises in agriculture look as promising, the cattle business is the best place to get a start.
At the Cattle Industry Convention last winter in Nashville, Tennessee, ranchers gave the following responses when asked if they thought the trend of bringing youngsters back into agriculture was improving.
Bill Rhea, an Arlington, Nebraska, farmer who backgrounds cattle on pasture and also runs a feedyard, says absolutely yes; we are attracting young talent. His farm is a prime example, where three of his sons are partners.
“It's been the lack of money in farming and ranching that has pushed so many of our young people into urban jobs,” he says. “The money is back in farming. The cattle business, in particular, looks attractive, where a young person with ingenuity can get a start with a few cows and grow. I don't think you can do it now with hogs or poultry. But with cattle, you can see potential for an income that competes with the city job.”
Big farms turn small
Jana Malot of Harrisonville, Pennsylvania, has similar optimism, but it comes from a different angle in her area.
“We have more young people coming back into agriculture around us on small farms,” she says. “In some cases, people are taking what was once a large farm and breaking it down into maybe four small farms, then producing things such as beef for the local market. It's young people – in many cases young women – who are leading this. Our farm numbers are growing. It's not a bad thing.”
Ultimately, with a land-intensive business like farming or ranching, it's the cost of dirt that limits the participants.
So says Steve Anderson from Carthage, Tennessee. Development of land for homes and businesses there is going to put everyone – young or old – out of agriculture, he says.
“It's hard to justify running cattle on a piece of ground where you might make $100 an acre, when you can sell that land for 20 times what you paid for it originally,” says Anderson. Other businesses in his area, notably banks, don't seem very interested in cattle or agriculture, either, he notes.
Double the costs
The new president of the National Cattlemens' Beef Association, J.D. Alexander from Nebraska, says there is definitely more money in farming and the cattle business than ever before, and income potential matches that of urban jobs. But he tempers any enthusiasm with the sheer cost of running a cattle business today.
“If I total up my feed and cattle inventory, my rental rates, and my machinery costs, I think it costs me twice as much to run my operation as it did five years ago,” says Alexander. “It's still not easy on the farm.”