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3 Key Steps to Starting a Beef Herd
So, you want to start a beef herd. Maybe you’re just out of college, rejoining the family farming operation, and want to expand. Maybe you want to diversify your operation by adding more livestock. Maybe you just like cows.
Whatever the reason behind your decision, there are factors you will want to consider, and steps you should take to increase your chances of success.
1. Make a plan
Dan Loy, director of the Iowa Beef Center, says the first step is to put together a business plan. Few producers have the capital at their fingertips to start such an enterprise, and that means your first stop will likely be the bank. Bankers expect a compete, professional business plan for ag ventures just like any other type of business, so break out an online template and dot those i’s and cross those t’s.
Where will your income come from? What is a realistic assessment of costs?
“What resources do you bring and what resources do you need to acquire?” says Loy. “Those are the questions to ask.”
Patrick Wall, ISU Extension and Outreach Area Field Beef Specialist, suggests the new producer make a plan and then work backwards. “Many people buy a bull and then figure out how to use him and hope someone buys the finished product,” says Wall. The process is a by-product of the commodity system – grow food and hope someone buys it. But Wall says it is no longer enough to sit at the sale barn and hope for a good price.
“The first thing you need to do is figure out who your market is,” he says. There are many niche markets these days, ranging from local and online direct sales to raising recipient cows for embryo transfer, as well as contract sales and the open market. Wall says once the marketing options have been assessed and determined, then it’s time to purchase cows and a bull that will genetically get you where you want to go. “When you determine the customer first, you can build the product you need.”
That money you just got from the banker doesn’t just go to purchase breeding or feeding stock. There are equipment needs and land.
Loy says if your stock trailer is worth more than your herd, you may have a problem. Be realistic with your equipment needs. “You’ll need a way to restrain and treat animals, and calving facilities for a cow/calf operation,” says Loy, “but be frugal, and sensible, and remember there are limits to the return on your investment.”
Wall says to beware the pitfall of abusing your land by cutting corners to save money on forage. Grazing at the wrong time of year can cause pasture damage, and it can take years and sometimes great expense for ground to recover from over-grazing. “Be flexible, every year is different,” he says. “Look at the long term. Know how many cows your land can support. Have a diverse forage plan that includes waterways, cover crops, and more than pasture and hay.”
And make sure you have an adequate water source.
Wall also says producers wanting to get into the cattle business need to be patient. “Get in when everyone else is getting out,” he advises. “That’s when bred heifer prices will be low. And don’t try to become the biggest and best operation overnight.”
2. Assemble a team
From the vet, to the feed rep, to the neighbor who will help work cattle at peak times, know and enlist your team of experts. The first step here is knowing your own strengths and weaknesses. Were you good at nutrition in school? Or are you the risk-management expert? Look for people who will complement your strengths and fill in the gaps of your weaknesses.
And, back to the business plan, know what these people will cost you.
Joe Sellers, ISU Extension Beef Specialist, says the newer, younger producer may want to look at partnering options to share costs and risk.
Sharing offers a broad range of possibilities – from custom grazing to shared ownership of the herd. Sellers says there are no hard and fast rules as to how labor and investment are divided, but be sure to include non-cash contributions such as labor and owned pasture land as well as out-of-pocket costs. Many cow share arrangements allow for transfer of ownership over a period of time, an aspect especially attractive to the beginning producer looking to eventually build his own herd.
“In surveys we have done, 90% of young producers say their goal is to own their own cows,” says Sellers. “A partnership arrangement early on can help build the financial resources to reach their long-term goals.”
He says you can be creative, but make sure all terms are spelled out in black and white.
Call in outside help
If your plans involve feeding cattle, you will likely need siting and regulation assistance. In Iowa, producers call the Coalition to Support Iowa’s Farmers. Other states have similar resources. The Coalition provides building site and environmental impact analysis, helps navigate the maze of state and federal regulations, and offers guidance for neighbor relations.
“Neighbors will have questions,” says Loy. “Having an open door and good communication can pay huge dividends.”
Some may find their best partner is a part-time job. Loy says a good rule of thumb is 1,000 head of cattle equals one full-time equivalent (FTE) of labor. So, a producer with 500 head would consider that a one-half time job.
3. Weigh your progress
Keep good records. Know your cost of production, and track your marketing success. Loy says if you are in a situation where you can generate closeouts, join a group where you can benchmark yourself against others.
Then review that information regularly. If changes need to be made, make them.
And last, Loy says have a contingency plan. “If your plan doesn’t pan out, or if you are unable to survive the inevitable weather-related downturn, know when to get out or get help. There are advantages and disadvantages to farming as a way of making a living,” says Loy. “Being independent and living in rural areas, the lifestyle is attractive. But you have to crunch the numbers and be realistic.”
Tapping the experts
There are many available resources to help the beginning beef producer, including your regional extension beef specialist and several online worksheets. Beef breed associations offer genetic selection information and advice.
Here are a few online resources to get you started: