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NE Iowa | There was a post a few back about prices falling back to 2012 levels. Also lots of posts lately about cow-calf vs. feeder profits. If you think back to 2012 though those prices seemed great. The cattle price was higher than anything we had ever seen ever up to that point. Here was an article from February of 2012 talking about how it will be a great year for cow calf profitability:
http://beefmagazine.com/cattle-prices/cattle-prices-should-shatter-...
Yes, this year the profit margin is less then last year. But I would call last year a "fluke" or "gift" that I will likely never see in my lifetime again. My family has had a small beef herd my whole life (I'm 40) and the price of 700# feeder cattle was under $1/# until the 2003 timeframe. At the last feeder sale 10 days ago 700# steers were still bringing $1.70 in my area. I know costs have gone up but I'll take today's profits over 2003 profits any time.
Having beef cows is never going to be a high profit / return venture. Never has and never will. The reason is that having beef cows is "fun" and a "desireable" thing to do. In general farmers want to have cows so it doesn't take much profit / incentive for them to have cows. I grew up in an area that was all small farms that typically had both cattle and hogs. The sentiment was that you raised cattle because you "wanted to" and raised hogs because you "had to". Most wanted to only raise cattle but the hogs are the ones that paid the mortgage. Times have changed in the last 20 years and all the hogs disappeared from small farms but it just shows that in general people want to have cattle.
I wish I could say that the cow-calf producer is going to see decent profits in the next decade but in my heart I know that is not likely to happen. There will be profits but they will be less than the last few years. If you work an off-farm job your employer likely only pays you the minimum amount of money per hour that he thinks it takes to keep you. In general, companies pay their employees the least amount of money they can but still attract / keep the caliber / skill of the employees they think they need. The beef cattle industry is no different. The market only needs to reward the producer with enough profit for him not to sell his cows.
Personally, I enjoy having a beef herd and I'm likely to still have cows 30 years from now. I have pasture ground and areas to bale hay on that can't be planted to corn and beans so it makes sense to have cows to utilize these areas. But I caution anyone thinking of expanding and trying to make a living off of cows. If you get offered a good pasture next door to rent by all means go for it. But putting up buildings to dry-lot beef cows in my opinion would be very risky. There is still money to be made in owning cows but don't create a business plan with numbers from the last couple years. The cattle price the last few years was great but as a whole it is time to hunker down once again and return to we've done as cow owners for decades: Produce the best calves we can with the least cost and enjoy doing it.
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My thoughts on cow-calf prices / future
