SE IL | tc806 - 12/18/2012 18:55 If you raise your own feed then why is it a cost to you to feed it. On here befor there has been question ask about how much you can make feeding calves out. The answer usually come's back as not much. But if you raise your own feed then the only expense you can really show is what it cost you to raise it. ( RIGHT ) Now some are going to say you could sell it for this much, Yes you are right, but you are problably using a price after the fact and you did not sell there for thinking it was going higher. If I raised it and fed it then I still sold it right so some where it has to show as income not expense, you never bought it. So the real question ( to me is ) did you do better marketing your corn or feeding what you raised over market or under market. Remember be fiar about how good you sold the grain you did not feed. Now for those that want to feed cattle go for it I say there is more money it then meets the eye. Every one once to put a cost on it an old barn standing on your ground your not using and paying taxes on it. ( that costing you ) But now you put cattle in and now you want to depreciate it. Why what was it doing standing there. I am sorry but some one please staighten me out. Yes I like cattle and always have so I am going to feed my corn and hay to cattle and that is how much I made on my corn this year. Pick it apart guys I am here ( try to defend my point of view the best I can.) This has all come about because my banker expenses my feed at market price but does not show any income from it in the sale of cattle. How do you expense something you never bought in the first place.
The others have given you some good answers. I have a degree in ag econ and am familiar with the concept of "opportunity cost". It is certainly a consideration in any economic endeavor. Now with that said I would like to say this. Tim, how much was that same banker figuring for feed costs in the days of $1.60 corn? If you were making money then, I doubt he went to the effort to figure "opportunity cost". You were most likely making more than a strictly grain farmer of comparable size. Now I don't know much of anything about how many acres you farm and don't care but I remember in those days we were told to diversify. Add another complementary enterprise to utilize some excess labor or capital items-custom work, seed sales, etc. My contention is this-if you are raising more crops/hay than you are using then you are "diversified" and the livestock enterprise is the one earning the least right now. But when corn goes back down below $5 the relative profit picture will change. Yes if you only bought feeders then "opportunity cost" is a factor when deciding how much (or at all) to pay for those calves that you haven't bought yet. But I believe you are cow/calf (as well as feed a few out). It's hard to jump in and out in that situation. If you thought corn was going to stay above $7 for the forseeable future (and cattle prices weren't going to rise to remain relative) then you should certainly consider the "opporunity cost" and seriously consider getting out of the livestock enterprise. As a cousin told me once when I quizzed him about having the cattle, "I'm in the cattle business". |
If you raise
