Cattle investment

[yellowbelly]

I have noticed that prices for weaned calves seems to have increased in recent weeks though.

Expect them to drop now you have published the successful results of your first batch - everybody's going to be following your business model now

Seriously though, congratulations to you and 'Bob' on your success. UK farming needs more of this type of 'outside the box' type thinking.

Upwards and onwards. "This time next year, Rodney"

 

[curlietailz]

One thing to factor in especially for 2019 onwards, is Brexit.
There will undoubtedly be currency fluctuations that will impact your returns, and your purchased feed prices.
There is also the potential for Armaggeddon if we eventually leave without a trade deal and have to revert to WTO rules with their associated tariffs.
And the potential for unquota'd imports from the rest of the world flooding our market.... Argentina/USA/Africa etc

PS ...... I think you have come up with a proper business model/partnership than can work and can be scale able .... Well done.
I'm generalising ( perhaps a little unfairly) but a lot of farmers do not look at or do not understand the figures and just blindly base their farming/investment decisions on what their gut instinct/their dad/the bloke in the pub/their neighbour/the salesman tells them !!

 

[Jon75]

I'm pleased with a yield of 17.83%. I suspect this will be raised slightly when the bulls go to market in a couple of weeks time.

The plan now is to buy 60 to 80 more and repeat.

The only thing I'd add is I'd like to see what price they'd fetch at auction when 12 months old as opposed to being just 9 months old. The yield is for an investment of under 9 months, so pro rata it annualy and I think that's quite good. Deffo lots of potential for crown funding and investment in UK farming.

 

[Highland Mule]

17.83% - not bad, but you did effectively buy a Euro denominated product at around the time of the crash, but before the agricultural industry had re-baselined. I suspect the input costs were similar - bought on last year's grain price. For what it's worth, my stocks and shares have performed about the same, for what I suspect is less risk.

@Jon75
What wage did your friend charge on an hourly basis, and what were the other costs? Did you have any costs in for self supplied fodder? Any charge for the use of buildings/ other infrastructure depreciation? Diesel for transport (delivery of feeding?)

I'm sceptical that there may have been some economies of scale and you might not have taken a fair share of the fixed costs in this one, but am happy to be proven wrong.

Edit: FTSE made 12.7 % from Sept - June, DJIA made 18.5%

 

[JP1]

Something funny going on. Old threads resurrecting (fair enough) but I remember reading the 2016 posts yet my new post refresh takes me to post #1 ?

 

[Philip Watkins]

Something funny going on. Old threads resurrecting (fair enough) but I remember reading the 2016 posts yet my new post refresh takes me to post #1 ?

I've found that has always happened when old threads get resurrected but clicking "go to first unread" takes you to the new posts.

 

[balerman]

Well for those who were interested, the plan was to keep these for 12 months. Long story short is that the first batch were sold today. They cost £203 on average initially and went today for an average of £651 for the heifers. The bulls will sell in a few weeks. The investment return worked out at 17.83% for less than 9 months.

We experienced no losses, though I appreciate this may not always be the case. I have noticed that prices for weaned calves seems to have increased in recent weeks though.

That is a very good return,best time of the year to sell store cattle,and the fat trade is increasing all the time,your replacements may cost considerably more tho,best of luck with it good to see someone from outside the industry showing an interest.

 

[Jon75]

Expect them to drop now you have published the successful results of your first batch - everybody's going to be following your business model now

Seriously though, congratulations to you and 'Bob' on your success. UK farming needs more of this type of 'outside the box' type thinking.

Upwards and onwards. "This time next year, Rodney"

This time next years Rodders, I'll be a few grand better off. Hopefully....

I keep reading about divisions in society. The in laws are not wealthy, but are sat on a few quid and are forever moaning about the poor returns that banks offer these days. How many people like them exist in the UK today? How many farmers could up their production if they had a little more investment?

In my mind there is massive scope for schemes bringing these people together. I won't bore people with my thoughts on Brexit except to say that we really need more investment in British business. I'm annoyed greatly when i read a report that we need to cull more deer in the UK one day and then see imported venison for sale in the supermarkets!

Anyway, yes we beat the stock market, yes, economies of scale where a factor, but in this case 'Bob' couldn't get the funding from traditional sources and so wouldn't have been able to raise these in the first place. So now I plan on doing it again but also opening it up to a few friends and family members initially so that ordinary people get a chance to invest very modest sums of money. The risk is certainly high and I'm delighted but relieved we had no losses so more cows should in theory reduce the risk. There's a lot of work to do but it will be interesting to see where this goes.

We'll work on new costings very soon, but I've already secured some Limousin X bull calves for an average of £230. These are obviously not high quality animals and I'd love to see how the yield of pedigree or even other breeds stacks up against our first batch of Limousin X and British Blue X etc.

Being very naive in this game I initially suggested Aberdeen Angus or Hereford cattle knowing that they produce a good steak, but apparently in the North West neither sell as well as the other two. So I still have one hell of a learning curve to go.

Thanks for all the feedback. It's been interesting and useful.

 

[gone up the hill]

This time next years Rodders, I'll be a few grand better off. Hopefully....

I keep reading about divisions in society. The in laws are not wealthy, but are sat on a few quid and are forever moaning about the poor returns that banks offer these days. How many people like them exist in the UK today? How many farmers could up their production if they had a little more investment?

In my mind there is massive scope for schemes bringing these people together. I won't bore people with my thoughts on Brexit except to say that we really need more investment in British business. I'm annoyed greatly when i read a report that we need to cull more deer in the UK one day and then see imported venison for sale in the supermarkets!

Anyway, yes we beat the stock market, yes, economies of scale where a factor, but in this case 'Bob' couldn't get the funding from traditional sources and so wouldn't have been able to raise these in the first place. So now I plan on doing it again but also opening it up to a few friends and family members initially so that ordinary people get a chance to invest very modest sums of money. The risk is certainly high and I'm delighted but relieved we had no losses so more cows should in theory reduce the risk. There's a lot of work to do but it will be interesting to see where this goes.

We'll work on new costings very soon, but I've already secured some Limousin X bull calves for an average of £230. These are obviously not high quality animals and I'd love to see how the yield of pedigree or even other breeds stacks up against our first batch of Limousin X and British Blue X etc.

Being very naive in this game I initially suggested Aberdeen Angus or Hereford cattle knowing that they produce a good steak, but apparently in the North West neither sell as well as the other two. So I still have one hell of a learning curve to go.

Thanks for all the feedback. It's been interesting and useful.

Would be very intresting to see some detailed costing's that back up this claim you made a 17% NET return...

Beef trade has taken a dramatic leap upwards the last few weeks so even if you can back up the 17% a lot of this will be covered by the increase in the beef trade the last few weeks.

 

[Jon75]

Would be very intresting to see some detailed costing's that back up this claim you made a 17% NET return...

Beef trade has taken a dramatic leap upwards the last few weeks so even if you can back up the 17% a lot of this will be covered by the increase in the beef trade the last few weeks.

Well to be fair, if you don't believe me that's fine. But that just means I'm even happier. The 17.83% was based on heifer sales. The bulls will be sold soon and I'm advised they should do better so overall we'll beat the 17.83%.

Costings simply involved feed (milk, calf cake, finisher cake), cost of the animals, straw, transportation, vets contingency fees (including cost of dehorning and castration etc), auction costs resulting in the investor being paid a percentage of the overall profit. Buildings use and labour were met by Bob. However long term I may be investing in automated milk feeder etc.

 

[Highland Mule]

Well to be fair, if you don't believe me that's fine. But that just means I'm even happier. The 17.83% was based on heifer sales. The bulls will be sold soon and I'm advised they should do better so overall we'll beat the 17.83%.

Costings simply involved feed (milk, calf cake, finisher cake), cost of the animals, straw, transportation, vets contingency fees (including cost of dehorning and castration etc), auction costs resulting in the investor being paid a percentage of the overall profit. Buildings use and labour were met by Bob. However long term I may be investing in automated milk feeder etc.

Ah, so you made a profit because you exploited your friend's goodwill and didn't pay farmers a proper rate for their input/ assets. Let's take a sensible labour and housing cost of £10/day, which I admit is not scalable but would apply if that was all your friend had. For the 9 months, that's £2700. I don't know your sale price /costs, but why not add that to the costing, perhaps under the heading of 'goodwill' and then tell me how much profit the enterprise made.

And I don't think you beat the stock market either - perhaps based on the FTSE growth, but only just. My managed funds (which take a heck of a lot less effort than it does to feed 8 calves) returned much more.

 

[wilber]

I've found that has always happened when old threads get resurrected but clicking "go to first unread" takes you to the new posts.

I'm guessing the forum only stores the info of posts you have read in a thread for x amount of time?

 

[Hampton]

Probably not...

I'm finishing bought calves at 13-14 months. Heifers at around 520kg, Bulls at around 600.
Bulls currently averaging 185p/kg, heifers 195p/kg. blue heifers, blue or Lim Bulls.

 

[Jon75]

Ah, so you made a profit because you exploited your friend's goodwill and didn't pay farmers a proper rate for their input/ assets. Let's take a sensible labour and housing cost of £10/day, which I admit is not scalable but would apply if that was all your friend had. For the 9 months, that's £2700. I don't know your sale price /costs, but why not add that to the costing, perhaps under the heading of 'goodwill' and then tell me how much profit the enterprise made.

And I don't think you beat the stock market either - perhaps based on the FTSE growth, but only just. My managed funds (which take a heck of a lot less effort than it does to feed 8 calves) returned much more.

Ah, I knew this was coming. Internet forums are all so predictable these days.

FTSE100, FTSE250, FTSE all share.....

And not one minute spent feeding one calf.

Though the performance of my holdings in SXX (Previously of AIM soon to be FTSE 250) and 8EE annihilated the cattle investment and no expensive costs to fund managers either. But that's for the LSE forum. No point me being involved in some childish pi55ing contest on a cattle forum eh!

Anyway, I guess I have two choices. Continue working with 'Bob' and other investors to have a positive impact for all involved. Or pack up because some randomer on an internet forum implies I'm cheating a farmer and could make more by investing in the stock market. I guess there are no prizes for guessing which path I'll follow!

I know to some this will be hard to understand but it's actually about more than just money.

 

[Highland Mule]

For a start, the word is fora, not forums.

Agreed, it's not all about the money, but you did come onto here with the suggestion that this was some type of social funding and doing a favour to Bob, and I'm just trying to call you up on that. 18% interest charged (albeit with risk attached) and splitting the profits without rewarding his labour does not feel like a particularly generous benefactor.

By the way, I didn't imply you're cheating a farmer, I stated you were exploiting his goodwill and didn't pay hims proper rate for his input and assets. I stand by that, based on what you've told us. If it was about 'more than just the money', I think you'd have added back a fair wage for his time, and not accepted the wonga-esque returns that come from ignoring his input. Of course, you may well have done that - if so, apologies for the suggestion otherwise.

Given that you've come on an internet forum to seek advice about your venture, I'd offer a little. Base the investment around fair principles to all, and set the target return rate at something appropriate for the risk. I'd suggest a 10% ceiling would be appropriate, but others may disagree.

 

[unlacedgecko]

For a start, the word is fora, not forums.

Agreed, it's not all about the money, but you did come onto here with the suggestion that this was some type of social funding and doing a favour to Bob, and I'm just trying to call you up on that. 18% interest charged (albeit with risk attached) and splitting the profits without rewarding his labour does not feel like a particularly generous benefactor.

By the way, I didn't imply you're cheating a farmer, I stated you were exploiting his goodwill and didn't pay hims proper rate for his input and assets. I stand by that, based on what you've told us. If it was about 'more than just the money', I think you'd have added back a fair wage for his time, and not accepted the wonga-esque returns that come from ignoring his input. Of course, you may well have done that - if so, apologies for the suggestion otherwise.

Given that you've come on an internet forum to seek advice about your venture, I'd offer a little. Base the investment around fair principles to all, and set the target return rate at something appropriate for the risk. I'd suggest a 10% ceiling would be appropriate, but others may disagree.

Isn't what Jon is suggesting basically a share farming agreement? Jon is providing the stock, feed and meds in exchange for Bob doing the labour and halving the profits?

Are you suggesting that Bob be paid a rate for his time, assets etc AND receive a share of the profits? An interesting view.

As I see it, such an arrangement could be either a share farming agreement (as I believe Jon and Bob be operating) or a contract rearing agreement (in which case Bob would receive a fee but no profit share, as in BQP fattening/finishing contracts).

 

[caveman]

If it's not all about money........ I would be interested to know what the minimum return required on the stake would be before it is all about the money?

 

[MickMoor]

A certain amount of people on here don't understand my way of working and the breeds I have. I primarily focus on nett profit. I was in a similar position not been born on or handed down a farm. The normal way of farming selling produce to a large company with 3/4 others taking a cut is only achievable with subs. I wanted a system which did not rely on subs, easily ran with a quality end product with direct sales to the public. In my system I can make up to 50 percent more profit than others do by them giving third parties a cut of their hard work. I am not going to get in a breed debate as certain members on here get upset. My advice would be look at what everyone else is doing with their cattle in terms of end product and do something completely different.

Do what everybody else is doing and you will never be better than the best of them; do something different, and away you go!

 

[Highland Mule]

Isn't what Jon is suggesting basically a share farming agreement? Jon is providing the stock, feed and meds in exchange for Bob doing the labour and halving the profits?

Are you suggesting that Bob be paid a rate for his time, assets etc AND receive a share of the profits? An interesting view.

As I see it, such an arrangement could be either a share farming agreement (as I believe Jon and Bob be operating) or a contract rearing agreement (in which case Bob would receive a fee but no profit share, as in BQP fattening/finishing contracts).

They both sound reasonably fair arrangements, but I'm unclear what the system that Jon has in place - I got the impression that they were splitting the costs but not taking Bob's labour and assets into account. To suggest the 18-odd percent is being generous to Bob and is a model that should be rolled out to others is not fair, I'd argue. I refuse to believe that Bob couldn't secure funding at a better rate than that from the banks or his suppliers/ the mart. It does feel to me that Jon is claiming to be 'doing the right thing' whilst simultaneously making a rather pretty penny out of someone else's toil.

If I'm wrong, and they are splitting the profit then that would suggest that there's a margin in the system for 37% profit in cattle over 9 months, then I need to find some of these animals myself.

 

[Jon75]

For a start, the word is fora, not forums.

Ah yes, spelling and grammar, the second to last resort of those struggling in an internet forum debate...

fora

1. plural of forum

Usage notes[edit]
The English plural forums is preferred to the Latin plural [1]

But English lesson aside, at least we've not yet seen Godwin's Law applied to this thread eh?

Agreed, it's not all about the money, but you did come onto here with the suggestion that this was some type of social funding and doing a favour to Bob, and I'm just trying to call you up on that. 18% interest charged (albeit with risk attached) and splitting the profits without rewarding his labour does not feel like a particularly generous benefactor.

This is based on you not seeing any figures. In particular his slice of the pie which is obviously considerably bigger than mine. And where exactly did I state I was charging 18% interest??? Bob has not paid out one penny of his own money. I bought the livestock and everything needed to rear them etc as the banks wouldn't help. The pie was then sliced two unequal ways. I get all of my initial investment back plus a percentage of any profit. If we had lost animals and made an overall loss, then for me it's tough. I would have rolled the dice and lost. The money I receive back equated to a return of 17.83% on the initial investment.

By the way, I didn't imply you're cheating a farmer, I stated you were exploiting his goodwill and didn't pay hims proper rate for his input and assets. I stand by that, based on what you've told us. If it was about 'more than just the money', I think you'd have added back a fair wage for his time, and not accepted the wonga-esque returns that come from ignoring his input. Of course, you may well have done that - if so, apologies for the suggestion otherwise.

HM, I'm not going to lie to you I think you're posts are pretty pointless. You've failed to offer any constructive input, just take a pop without knowing all of the facts. First you state the return is "not bad", then you call it "wonga-esque" whilst pointing out that your own investments have beaten the return etc. I wonder if you can see what that looks like to others reading this?

He did all his own costings and was happy at the time of signing contracts and happy with the initial sales figures, I know he's looking forward to seeing what the bulls make too as we suspect they'll do better than the heifers And after all, the additional calves being reared would not have happened without this idea and the economies of scale and other incidental benefits would have been missed.

Given that you've come on an internet forum to seek advice about your venture, I'd offer a little. Base the investment around fair principles to all, and set the target return rate at something appropriate for the risk. I'd suggest a 10% ceiling would be appropriate, but others may disagree.

That advise is to be quite frank, very dumb. If you're fund manager beats a return of 10% do you return the rest? Though thanks for the chuckles that comment brought!

I actually assumed that other people would have done something similar, hence me signing up on here. Though the closest thing I found was based in Africa. Return wise it might have been easier to sign up with that scheme but investing in another country wasn't what I wanted.

Anyway, as I said we're working on costing for the next contract, team 'Bob' will have ample to chance to review their costs, the experience and take it from there. The challenge now is to try and beat the return by selecting the right type of animals to rear on for our specific market place and to try and make additional savings from economies of scale etc. What is clear is that it's all about buying well. I note with interest that one heifer cost 130% more than another, yet they made the same at auction!