Background
• Intro
• Timing – where I am w/ business (sold out)
• Slow growth (river property) vs. rapid growth
– Will get to cattle production projections
Scaling Up…Yay!
• Leave w/ a rough idea of how/why to scale up.
• It is a major change in business
Visioning process/long term planning…find help
assessing business plan (SFBB example not growing
produce…focusing on most profitable enterprise)
What track are you on?
- Know where you are.
- What are your ethics/goals/moral
– Know where you’ve been (records, records, records)…SFBB
records
• Record keeping spreadsheets
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Labor
Production
Sales
Separating expenses between enterprises
– Where do you want to go? (Business Plan)
• Do you want to drive a tractor all day every day or be alone on
horseback in middle of nowhere doctoring cows
• Are you willing to manage a labor force and oversight of quality of
laborers work
Drivers
• Market demand (simple supply vs. demand)
• Bored (Excess resource) (example – excess
hay)
• Not at an appropriate economy of scale (not
profitable)
• Need to do something with the land
Economy of Scale
• Economy of scale graphic (does not show revenue)
– Inputs (expenses)
– Outputs (revenue)
– Generally speaking: if your producing at a small scale, your cost per
unit may be high but you’re probably also selling your product for a
higher cost per unit
• Don’t fall into a trap thinking you can grow 1000 acres of mixed greens and still
move all of your product at your local farmers market. If you can…let’s talk!
– Maximizing Outputs per Input
– Example of equipment for row crop
– Cattle production (feeding, haying, grazing, etc).
• Anecdotally, very little increase in labor per head
• Substantial increase in acreage (irrigating, fencing, haying, etc)
• Ultimately, how large do you want to be?
Economy of Scale 2
• Cost per unit goes down, volume goes up,
eventually revenue per unit goes down.
– If you can maintain same revenue per unit, net
profit goes up
– As volume goes up, revenue per unit goes down
• Where is the sweet spot?
• Move on to Mike (vegetable production)
Livestock
Present different challenges than expanding veg. production
- purchase price of animals, etc.
- long term commitment to a living being
- slower growth cycle
- Livestock can also work “for” you – mowing, pasture
health – get into that momentarily
Basically, it costs more money and takes more time to expand
livestock operations
- When you invest in breeding stock, you’re making a
capital investment, not incurring a “COGS”
Before you go buy another 500 acres
• Step 1
– Optimize the resources you already have (easiest
way to increase profits)
• May take longer than you would like or have time to
“float” the business
• Should always be a high priority
Grazing
• Planned and properly managed grazing is one
of the best ways to improve/maintain soil
health, cycle nutrients, and manage weeds
– Grazed perennial pastures create more “bioligical
capital” (solar energy into biological energy) per
acre than cropland
• Coverage
• Photosynthesis
• “successions” every time it’s grazed
Planning your Grazing
• Focus on
– Animal performance
– Forage quality
• Grazed at proper stages increases production and uniformity
– Soil health
• Grazed plants exuding sugars + compounds to feed soil biota
• Dung, urine, trample
– Human component
• Time, energy, profits
• Does not necessarily require more acreage
What sector?
• Many different sectors to raising livestock
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Hay
Weanling
Stockers
Butcher
Breeding stock
– Diversification
– Use forage resources to help make this decision (drought,
short season pastures, etc)
• Is there enough of an increase in revenue to
justify each life stage?
- $800 increase in weanling vs. butcher
- 1 year
- 1 winters worth of feed
- time and energy
- @ SFBB: 2 acres/hd to finish (1 year)
- could I be more profitable having
more cows and just sell calves in fall?
Inputs for Livestock
Breeding stock is not profitable for several years
Can’t expand season by season
Be consersative when buying breeding stock
Suffer loss if buying stock in “good” years
but having to sell stock in “bad” years.
Diversification minimizes risk (hay, calves, butcher)
Winter feed costs can sink you quick.
Having an established market for fall calves
gives you more options depending on your needs
Outputs (Revenue)
• Direct farm Sales (for each sector)
– Allows some control over price
– Takes more inputs to manage (is ratio of in to out
worth it?)
• Marketing, delivery, etc
• Auction
• Cattle Production Spreadsheet