Introduction

 

Services are available to manage investment cattle. This is a management service for cattle purchase, transportation, breeding, feeding out, health management, and sales. Investors make decisions on acquisitions and dispositions of calves and cows. Management provides managed pasture, breeding bulls, transportation, access to veterinarian services, etc. Management can provide buyer and selling guidance, but investment owners make buying and selling decisions of calves and cows. While under management, the owners are responsible for cost of feed, supplements, veterinarian costs and other expenses that are identified under the care plan. Profits are split 1/3 for investor and 2/3 for management.  Involvement by the investor is not required, but material participation should be determined by your tax advisor for Profit/Loss from Farming (Sche-F) benefits.

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Cattle Business

Cattle ranching is alive and well in the United States, but it looks a lot different than it did two or three decades ago.  At cattle exchanges, it’s easy to forget that for all the belt buckles, boots and cowboy hats, these people are commodities traders.

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Types of Cattle - Heterosys

Current breeds in our herds:

  • Angus - Black
  • Angus - Red
  • Santa Gertrudis
  • Texas Longhorn

Heterosis is hybrid vigor that is the performance advantage crossbreds have over the average of their straightbred parents.

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Cows, Bulls, Heifers and Steers

  • Breeder Heifers, replace aging cows
  • Feeder Steers, feed to sell at optimum weight & time of year
  • Cows, track productivity be ready to replace
  • Bulls, heterosys plan with complementary breeds
  • Replacement Plan, keeping the herd young and healthy
Cow-Calf life cycle

Investment Life Cycle

  • Appreciation & depreciation
  • Productivity lifecycle of cows and bulls
  • Market timing strategies, optimum weight and time of year

Cow-Calf Operation

  • Stocker heifers, replacements
  • Feeder steers
  • Herd managements, cows & bulls

 

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Budget Model (using 16mo strategy with 2017 numbers) 

  • Purchase of breeder heifer (Winter rate) @ 750lbs = $904
  • 1.5 months FSV (feed, supplement & vet) to breeding = $41
  • Total to depreciate = $284 ($945-$661 slaughter@1200lbs)
  • Useful life over 5 calves:  $57 each
  • 15 months to birth & wean, charged for 12 mos of FSV: $363
  • Total Basis: $420 ($57 + $363)
  • Sales @ 399 lbs (Spring rate): $643
  • Profit: $223
  • Investor 1/3 Share: $74 @ 13.3% Annualized ROI
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Sources for Buying and Selling

Local exchanges and sale barns

Texas Rangeland internal network of Cattle Investors will produce stocker heifers for sale, be available at exchange/sale events and is a good way to get started.