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Switching from dairy to beef
Dairy farmers dealing with years of consolidation and tight profit margins may be thinking of switching to a beef operation. The most likely candidates are at the end of their career or discovering their dairy isn’t competitive in the current environment and are looking for another way to make use of their farm.
Joe Horner is an extension ag economist at the University of Missouri. He says typically, you can run about the same number of beef cows on a farm as you can dairy cows and there are many similarities in their care and use of resources. However, there are important differences as well.
"The big one to start with is probably income. Gross income on a dairy cow is probably six times what it is on a beef cow producing feeder calves. Likewise, labor requirements are about six times as much on a dairy than it is on a beef on a per-cow basis. You’re talking about 50 hours a cow versus 5-10 on a beef cow," says Horner. "In terms of number of heifers, we’ve typically got a 30% cull rate on dairy cows and maybe a 10% cull rate on beef cows."
Financially, in a beef operation most of the wealth comes through land appreciation. The capital turnover is where Horner sees a big difference.
"If you just take capital invested divided by gross income to get an idea of the number of years it takes to turn over your capital on a farm, on a good, well-run confinement dairy you’re probably talking about three years to turn over your capital. On a beef operation, a cow-calf operation depending on how land extensive that is, it’s probably 10-15 years," he says. "It’s a much slower business financially than a dairy operation."
The good news is you don’t have to milk beef cows every morning and night, and it’s easier to get away from the farm for a few days.