Cattle investment

[Jon75]

Hi all, my name is Jon. I'm not a farmer, never have been, never will be. However I have friends who are and we've been having a discussion on investment together.

In essence, my friend has a small farm with a small number of beef cattle. It doesn't support his family and so he has to work elsewhere. He'd like to expand his operations with the long term goal of going it completely alone. The banks are of limited help and he could do with some investment.

I've taken a look at the cost of calves and the costs associated with rearing them for twelve months and a lot of historical sales data from the auction websites etc to work out a realistic return.

We've come up with a scheme where if I buy young British Blue x dairy or Limousin x dairy calves and then make four quarterly payments to cover the rearing costs that we should make a large enough profit to split in a way that it's worth his while we I should be able to beat the poor returns offered by banks these days. So it looks like it should work for both of us. I like the idea of supporting British farming and for me it's not like anything I've ever become involved with before.

Contracts are in place and it looks like it has potential. I'm obviously not going to post any info on specific figures, but I'd be interested in any constructive feedback from the people on here. Have any forum members entered into any similar agreements etc?

Thanks in advance for your replies.
Jon

 

[gone up the hill]

You would be better doing the above with Stirks, calves are very expensive for what they are and rearing them isn't cheap, if your mate has a off farm job as well the most important thing he needs to factor in is the time/ tie with rearing calves.

 

[milkloss]

You'd be better with weaned calves imo, numbers is important not only due to the time factor (not so much for weaned calves) but also disease risk is not to be under estimated.

 

[Jon75]

Thanks for the replies. Time is a valid point so I should have added that this isn't an issue as his wife is able to spend time with them. They have been doing this for a long time, they've just not had the opportunity to rear a lot of their own. He works for a much larger farm so has a lot of experience as a stockman. He simply needs a bit of help with finance etc. Spread sheets and KPI's are not really things he's too familiar with.

I should have also added that I'm happy to accept a good degree of risk when it comes to 'alternative investments'. I understand that diseases such as pneumonia are a very real threat etc. What I would be interested to know is what percentage of calves would you expect to not make it to an age of 12 months?

I'd also be interested to know what kind of prices you'd expect to pay for reasonable quality lim x dairy and bb x dairy calves aged roughly three to four weeks?

And is anyone brave enough to state a figure that they would expect it to cost to raise one of these calves to an age of 12 months?

Just curious to see if they're in the same ball park as the figures we came up with.

 

[Beef farmer]

I don't believe there is enough money in beef for 2 party's to have a slice of the pie, be that farmer and you or farmer and bank. If you want to invest in stock, then invest in dairy stock, or better still invest your money in the city.

 

[gone up the hill]

Thanks for the replies. Time is a valid point so I should have added that this isn't an issue as his wife is able to spend time with them. They have been doing this for a long time, they've just not had the opportunity to rear a lot of their own. He works for a much larger farm so has a lot of experience as a stockman. He simply needs a bit of help with finance etc. Spread sheets and KPI's are not really things he's too familiar with.

I should have also added that I'm happy to accept a good degree of risk when it comes to 'alternative investments'. I understand that diseases such as pneumonia are a very real threat etc. What I would be interested to know is what percentage of calves would you expect to not make it to an age of 12 months?

I'd also be interested to know what kind of prices you'd expect to pay for reasonable quality lim x dairy and bb x dairy calves aged roughly three to four weeks?

And is anyone brave enough to state a figure that they would expect it to cost to raise one of these calves to an age of 12 months?

Just curious to see if they're in the same ball park as the figures we came up with.

Work on £1 head a day from buying them until 12 months old.

Good cont x calves will be between £260/350 head depending on trade, best time to buy them is the run upto xmas as many people don't want the work over that period.

Losses will depend on many factors, housing, stockmanship, type of calves you buy etc etc.

 

[czechmate]

Work on £1 head a day from buying them until 12 months old.

Good cont x calves will be between £260/350 head depending on trade, best time to buy them is the run upto xmas as many people don't want the work over that period.

Losses will depend on many factors, housing, stockmanship, type of calves you buy etc etc.

So, £600. Would they be worth much more than that?

 

[bobk]

So, £600. Would they be worth much more than that?

Probably not...

 

[Drillman]

@Jon75 If you have done your figures (and it sounds like you have) and you and your farmer friend both think it's a venture worth pursuing give it a go. Just start conservatively and if alls well build it from there.





Nothing ventured nothing gained.

Good luck

 

[franklin]

I should have also added that I'm happy to accept a good degree of risk when it comes to 'alternative investments'. I understand that diseases such as pneumonia are a very real threat etc. What I would be interested to know is what percentage of calves would you expect to not make it to an age of 12 months?

This to me looks more like a business than an investment. Who is going to own the calves? It sounds from the original post that what is going on would be:

1) You buy / have bought for you some calves.
2) Friend houses, feeds, tends etc for them for a fixed fee.
3) They are sold and any profit is divided on a fixed basis.

If so then that is a business. You have accepted the risk that the final value may be less than the original value plus any fees.

It sounds like you have all done the homework and that you are happy with the risk / potential, but for me an investment would be you lending this chap some cash for a fixed return. If this is a business, you would (potentially) need to be VAT registered, insured, have your own holding number (even if friend adminstered it as an agent) and all that. This need not be a bad thing, but given that you are getting into the following situation:

1) Money
2) Friends

then you need to be *extremely* clear on responsibilties, risk, and what you are paying for. As "Spread sheets and KPI's are not really things he's too familiar with" then it sounds doubly important. Its the sort of thing you really want a chat with your accountant over, and a couple of hours friendly accountant fees are going to be well spent to avoid souring a good friendship.

 

[Top Tip.]

Go for it try it with a limited no to start with maybe 20 to give you both a chance to see if it's going to work.

 

[wasted years]

As Guth says, reckon on £1 a day, maybe more for intensive B and W bull beef and at least 10% losses.

 

[The Son]

Give it a go, I do this on a reasonable scale, but take the animals through to fat.

From your post you seem to have taken most things into account, and by choosing BBx and Lim x animals you will have something that fattners can turn into a good supermarket spec carcass.

The best advice I can offer is to look very hard at your sourcing policy for calves, avoid markets and collection centres if at all possible, the biosecurity risk is high, and the effect of a day at market on a young calf is considerable. If you can try and find a dairy farm, producing the animals you want, you then need to be sure you are happy with their colustrum policy.

Good luck and keep us informed of your progress, it will be interesting how you veiw our industry, fresh eyes like yours have a great deal to offer.

 

[Forever Fendt]

Would it not be better for the op to buy stores ,say spring born suckled calves about now and finish them ,am i correct in thinking less work less loses but maybe more outlay as i guess these would be the thick end of £700 each

 

[Top Tip.]

Would it not be better for the op to buy stores ,say spring born suckled calves about now and finish them ,am i correct in thinking less work less loses but maybe more outlay as i guess these would be the thick end of £700 each

Well he wouldn't have to factor in 10% losses as quoted earlier.

 

[milkloss]

Would it not be better for the op to buy stores ,say spring born suckled calves about now and finish them ,am i correct in thinking less work less loses but maybe more outlay as i guess these would be the thick end of £700 each

This is what I thought and as @Top Tip. said, less losses (you hope!).

BUT possibly more work (lively/feral) than his wife might be able to manage and higher handling costs to boot.

 

[Forever Fendt]

This is what I thought and as @Top Tip. said, less losses (you hope!).

BUT possibly more work (lively/feral) than his wife might be able to manage and higher handling costs to boot.

This is what I thought and as @Top Tip. said, less losses (you hope!).

BUT possibly more work (lively/feral) than his wife might be able to manage and higher handling costs to boot.

if you had 300kg heifers in at less than£700 would £300 finish them without taking cost for buildings and machinery into the equation ,so it would need to cover feed ,bedding, meds, water and losses

 

[Beef farmer]

if you had 300kg heifers in at less than£700 would £300 finish them without taking cost for buildings and machinery into the equation ,so it would need to cover feed ,bedding, meds, water and losses

So £1000 before taking machinery and buildings? Maybe make £1200 fat?

 

[bobk]

if you had 300kg heifers in at less than£700 would £300 finish them without taking cost for buildings and machinery into the equation ,so it would need to cover feed ,bedding, meds, water and losses

Would it bollox ... then again if you're paying 700 for 300kg heifers you're bonkers anyway.

 

[Forever Fendt]

Would it bollox ... then again if you're paying 700 for 300kg heifers you're bonkers anyway.

thats probably the wake up call i need to get this idea out of my head then,a pal is just putting a new shed up to do this but for 180 and i consider him realistic with his sums , he is tagging this onto a large suckler enterprise so all machinery is in place