It is almost time to sell my last 56 heads of cattle! I am not really happy about it, since the profits were really great and it has been a totally passive investment, but the pasture at the ranch is getting scarce and keeping the calves longer may mean that they lose weight by not eating enough.
We may head to the ranch this week to sell the cattle. The good news it the price of livestock is up, I sold last September at $0.8/lb and this time the buyers offered $0.89, a 10.9% increase. To project how much to expect from the sale, I have been looking at the numbers from last year, when I sold 50 heads in total.
I held 3 heads for 9 months, after which BF bought them back from me to keep breeding as bull, they were strong, beautiful animals, that he wanted to keep to have the best race possible. Not all the bulls are mixed with the cows, only the ones you want to reproduce. Otherwise, the bulls would spend all day going after the cows, exhausting both animals (they would lose weight, not good for $$) and you would have no control over race. My 50 calves were kept separate from everyone, so they got to eat the best pasture, and be less vulnerable if a disease spread. None of the 150 animals I have held over the past 2+ years have died. Mortality is high for the first 9 months when they are still on milk but after they can still get sick. We only gave them an anti-parasite shot twice a year.
The majority I kept for 13 months, and a dozen came from an earlier deal that I bought 22 months ago, and weren’t big enough the last time I sold.
You can read more about the full details of the deal here, to make it short I bought the animals without weighting them, at the age of 9 months, when they wean and weight an average of 400lb. The price was $253, or $0.63/lb, a bit higher than the $0.57/lb the grown animals were selling for meat at the time. This is a standard price and BF had an offer from local farmers at that price.
Then we went half way on the profit, since I put the capital and he provided the ranch, cow boys to supervise and the medicine shots. Once we weight, I get back my $253 and half of the profit. Here are the numbers from 50 heads I sold last year.
| TOTAL BOUGHT | TOTAL SOLD | TOTAL PROFIT | TOTAL MY SHARE | AVERAGE TIME | AVERAGE PROFIT | AVERAGE PROFIT/YEAR |
| $12,666.67 | $24,654.00 | $11,987.33 | $5,993.67 | 14.92 | 47.32% | 37.70% |
| price bought | price sold | profit | my share profit | time held months | profit over period | annualized |
| $253.33 | $450.00 | $196.67 | $98.33 | 9 | 38.82% | 51.75% |
| $253.33 | $390.00 | $136.67 | $68.33 | 9 | 26.97% | 35.96% |
| $253.33 | $423.33 | $170.00 | $85.00 | 9 | 33.55% | 44.74% |
| $253.33 | $473.33 | $220.00 | $110.00 | 13 | 43.42% | 40.08% |
| $253.33 | $496.67 | $243.33 | $121.67 | 13 | 48.03% | 44.33% |
| $253.33 | $486.67 | $233.33 | $116.67 | 13 | 46.05% | 42.51% |
| $253.33 | $513.33 | $260.00 | $130.00 | 13 | 51.32% | 47.37% |
| $253.33 | $483.33 | $230.00 | $115.00 | 13 | 45.39% | 41.90% |
| $253.33 | $453.33 | $200.00 | $100.00 | 13 | 39.47% | 36.44% |
| $253.33 | $453.33 | $200.00 | $100.00 | 13 | 39.47% | 36.44% |
| $253.33 | $446.67 | $193.33 | $96.67 | 13 | 38.16% | 35.22% |
| $253.33 | $466.67 | $213.33 | $106.67 | 13 | 42.11% | 38.87% |
| $253.33 | $460.00 | $206.67 | $103.33 | 13 | 40.79% | 37.65% |
| $253.33 | $420.00 | $166.67 | $83.33 | 13 | 32.89% | 30.36% |
| $253.33 | $500.00 | $246.67 | $123.33 | 13 | 48.68% | 44.94% |
| $253.33 | $460.00 | $206.67 | $103.33 | 13 | 40.79% | 37.65% |
| $253.33 | $446.67 | $193.33 | $96.67 | 13 | 38.16% | 35.22% |
| $253.33 | $433.33 | $180.00 | $90.00 | 13 | 35.53% | 32.79% |
| $253.33 | $406.67 | $153.33 | $76.67 | 13 | 30.26% | 27.94% |
| $253.33 | $426.67 | $173.33 | $86.67 | 13 | 34.21% | 31.58% |
| $253.33 | $430.00 | $176.67 | $88.33 | 13 | 34.87% | 32.19% |
| $253.33 | $430.00 | $176.67 | $88.33 | 13 | 34.87% | 32.19% |
| $253.33 | $433.33 | $180.00 | $90.00 | 13 | 35.53% | 32.79% |
| $253.33 | $476.67 | $223.33 | $111.67 | 13 | 44.08% | 40.69% |
| $253.33 | $443.33 | $190.00 | $95.00 | 13 | 37.50% | 34.62% |
| $253.33 | $460.00 | $206.67 | $103.33 | 13 | 40.79% | 37.65% |
| $253.33 | $430.00 | $176.67 | $88.33 | 13 | 34.87% | 32.19% |
| $253.33 | $416.67 | $163.33 | $81.67 | 13 | 32.24% | 29.76% |
| $253.33 | $413.33 | $160.00 | $80.00 | 13 | 31.58% | 29.15% |
| $253.33 | $446.67 | $193.33 | $96.67 | 13 | 38.16% | 35.22% |
| $253.33 | $420.00 | $166.67 | $83.33 | 13 | 32.89% | 30.36% |
| $253.33 | $473.33 | $220.00 | $110.00 | 13 | 43.42% | 40.08% |
| $253.33 | $426.67 | $173.33 | $86.67 | 13 | 34.21% | 31.58% |
| $253.33 | $456.67 | $203.33 | $101.67 | 13 | 40.13% | 37.04% |
| $253.33 | $456.67 | $203.33 | $101.67 | 13 | 40.13% | 37.04% |
| $253.33 | $436.67 | $183.33 | $91.67 | 13 | 36.18% | 33.40% |
| $253.33 | $430.00 | $176.67 | $88.33 | 13 | 34.87% | 32.19% |
| $253.33 | $480.00 | $226.67 | $113.33 | 13 | 44.74% | 41.30% |
| $253.33 | $664.00 | $410.67 | $205.33 | 22 | 81.05% | 44.21% |
| $253.33 | $604.00 | $350.67 | $175.33 | 22 | 69.21% | 37.75% |
| $253.33 | $656.00 | $402.67 | $201.33 | 22 | 79.47% | 43.35% |
| $253.33 | $640.00 | $386.67 | $193.33 | 22 | 76.32% | 41.63% |
| $253.33 | $600.00 | $346.67 | $173.33 | 22 | 68.42% | 37.32% |
| $253.33 | $624.00 | $370.67 | $185.33 | 22 | 73.16% | 39.90% |
| $253.33 | $680.00 | $426.67 | $213.33 | 22 | 84.21% | 45.93% |
| $253.33 | $680.00 | $426.67 | $213.33 | 22 | 84.21% | 45.93% |
| $253.33 | $620.00 | $366.67 | $183.33 | 22 | 72.37% | 39.47% |
| $253.33 | $600.00 | $346.67 | $173.33 | 22 | 68.42% | 37.32% |
| $253.33 | $604.00 | $350.67 | $175.33 | 22 | 69.21% | 37.75% |
| $253.33 | $632.00 | $378.67 | $189.33 | 22 | 74.74% | 40.77% |
You can see the oldest ones I kept for 22 months sold for up to $680, while the younger ones went for around $450. The first one got fat really quick and BF bought it back after 9 months (18 months of age that is) at a weight many of his brothers didn’t reach after 13 months (22 months of age).
It is hard to tell how an animal will fare but they roughly put on a pound a day, until they are 3 years old. Then they are of adult age and the weight curve slows down. The average on my lot is 0.94lb/day.
I wish I could keep the livestock until they are 3, the younger ones are barely 2, but I need the cash to put on the 90 acres land development and from now until September with the rain season and the cold it is likely they won’t put on much weight anymore.
Important considerations that won’t make all cattle investments that good
– BF owns the ranch and his payroll did not increase because I kept the livestock there.
– I bought only males. Cows have the advantage of reproducing but lose a lot of weight when they do and for the 9 months they feed their little ones. Once they get too old they aren’t worth much even for meat.
– Over 30 months the price of livestock increased 57% from $0.57 to $0.89/lb, apparently thanks to Mexico who had a shortage and heavily imported from Northern Guatemala. Drug lords are said to have played a part by using cattle trucks to smuggle drugs, sometimes even inside the poor animals, this I don’t know for a fact, it may be a tale from the local farmers.
– Apart from making fancy spreadsheets, the only time I spent overseeing this investment was a few hours checking the scale while the cattle was weighted and taken away, BF dealt with his employees for all the rest. It took less time than stock picking, and was a real passive investment. Most livestock deals aren’t that hands off.
If all goes well this time, I will get 38% return since I held the animals for an average of 13 months, and turn the initial investment of $15,000 into $20600. Fingers crossed!
Have you ever thought about livestock investments?
This post was featured on the Carnival of Passive Investing, PF Digest, The Money Principle, thank you!
Sounds like a great investments for a relatively short amount of holding time. I’m not surprised the price of cattle has gone up double digits since last year. It seems like everything related to agriculture has done well lately. Probably due to food scarcity in certain parts of the world. Good thing for ranchers and farmers 😀 I’ve thought about livestock investments before. I prefer to buy into a livestock investment fund or something like that but haven’t found one yet. In Canada a calf goes for $1,200 and a fully grown cattle sells for about $2,200 a head. Interesting how prices are different in different parts of the world 😀
If they had the strength (and passport) to walk all the way there I would walk them to you and sell them over there! Looks like over there the best business is to sell a calf, because holding an animal for 3 years, feeding it (pretty sure you have to buy or harvest food for winter), and so on just so it puts on $1,000 doesn’t seem worth it.
Wow that’s awesome Pauline. I don’t know that I would ever invest in cattle, I don’t have the current resources. Though I may look into buying and leasing farmland in Northern Michigan. I’ve done some reading, but still need to do some more. Thanks for pointing out unusual investment opportunities. I’m starting to take a look into them.
I think farmland can be lucrative, especially if later on you are able to cut a piece of land for residential property and keep the rest. You really need to be well informed about expected harvests especially in the North, with such a short window to grow, and livestock may have to stay inside too.
True. It would probably be sugar beets or a cherry orchard or some other fruit orchard I would imagine.
Very interesting investment. From the numbers, it looks like you did pretty well too. I’ve never invested in livestock. I know so little about farming that I’d probably lose money in a heartbeat.
Apparently a few farmers in the US offer shares in their livestock heads. Mine was totally hands off so required farming knowledge was about zero. Another way to “invest” is buying a whole animal or half to provide meat for the next few months.
Man, I’m constantly surprised with you 😀 You are into everything!
I’ve never invested in livestock and wouldn’t have even thought about it. It looks like you are coming out pretty well. Congrats!
thanks!
Wow, that’s a nice little return Pauline! We know some people who invest in livestock and they love doing it, so I know it can be a great source to provide some income. We’ve never invested in livestock, but would definitely be open to it in the future.
yes, the numbers aren’t too bad!
Great info here, Pauline. We think alot about cattle investments, as they seem like a good way to make some cash and the risk seems relatively low.
If you have enough land you can start with a few sheep, they reproduce faster. The main risk with cattle is early mortality, apart from that it is really safe.
That is some really amazing returns, I had no idea cattle farming could be so profitable.
Plus they keep the grass trim!
no. they make a big mess of the grass with their heavy weight on such small legs!! and they do need a lot, about 1 acre per animal to allow for the grass to grow back. It is profitable if you own the land, many farmers are in debt and can’t make ends meet.
I have not thought of livestock investing, but I definitely would like to do some commodities trading down the road. It’s been interesting hearing about your livestock investment because investing in livestock is something I would never have thought to do. It’s nice that you were able to make such a passive investment out of it and receive a good return.
it is pretty neat. By commodities do you mean gold or corn and sugar? I saw the Chicago exchange was big on agricultural stuff.
I have never considered a livestock investment. Even after reading this I don’t think I will consider one. Of course we don’t really have access to good grazing land so maybe that is a factor in my decision. We have thought about getting a couple chickens to raise in our backyard for eggs, but there are a couple feral cats around that would probably love an easy meal!
Of course I do love reading about alternative investments from a personal prospective and found this to be quite informative! Also it is a shame someone would use a cow as a drug mule, that makes me sad.
yes, that is terrible, poor animals. About the hens, we cage them every night, throwing a bit of food in the cage they come back quickly and only once at the beginning the door was not properly sealing and an animal came in to eat one. Since then they sleep safe, and by day no animal comes around.
sure looks like you got a decent profit from the livestock investments! I hope it`ll help toward developing the land development!:-)
haha this money is long gone! hoping to sell the rest this week to get $$ for the land.
If I could only find a BF with a ranch! Oh wait, I’m married. Don’t let my wife read this 🙂
Great initiative, Pauline, and thanks for sharing, if only to get us to think outside our boxes!
The ranch is a nice added feature 🙂 when I can’t sleep at night because he is snoring I can count the pounds the cattle is putting on!
This is something that fascinates me, but also something that I would never do. I think it is cool that you have done it, but it is not my cup of tea. I also am not near any place where I would be able to house such animals.
I don’t think I would raise livestock for investment, but I do dream of owning a small homestead one day.
A homestead sounds really cool, I like the idea of not depending so much on the outside world for food. Just need some serious improvement in the garden though!
I’m always fascinated to learn more about your various investments. While this wouldn’t be something I would probably never do- have little knowledge about farming – but it has been a great investment for you. Will you be able to do this again or was this a one-time investment?
It was an ongoing investment for 30 months or so, as I bought a total of 150 heads in four waves. My BF needed cash and now he just sold a property so I don’t think he will be looking for partners for a while and I don’t trust another farmer as much so I guess it is over now 🙁
Does your investment cost include feed and other costs? A 38% return seems a little high.
I just put the capital while my boyfriend put the land and workers. He owns the land and we don’t feed them anything but pasture. Three workers cost about $1,000/month for 700 heads so that would be under $100 for 56 heads. He needs to take off the costs for that on his 38% but I don’t. The numbers are very high because I bought them at 9 months of age, when 10-15% had died early or in the womb, which was also a loss he took.
Never underestimate alternative investments. It seems beef is really expensive right now, so you picked a great time to sell.
I think it is only going up, especially here where a growing middle class can now afford meat on a regular basis, the population is growing so more agricultural land is being turned into residential and there are no intensive breeding so the supply doesn’t follow as fast.
Living vicariously through you and your cattle investments. Can’t say I’ve ever thought about livestock as an investment. Would be hard to fit them in our 800sq ft condo 😉
yes, that would be a little crowded…
No, can’t say that I’ve thought about livestock investments but the more I read about it maybe one day if we live on a farm rather than in the city. 🙂
If you are already gardening, the next step is chickens for eggs!
We are planning to move to the farm areas after two years from now. One of my farm business plan is to have a cattle for meat and goat for milk production. You are right it is not easy to handle this type of investment but there is a big potential to passive income in the future.
yes there is. Reproducing every other year is already a great return.
That’s a nice ROI. Livestock investing just isn’t an option here in the city, but if I ever end up on a farm one day I’ll have to strongly consider it!
have plan to start with 30 calves and the bank have asked me to submit business plan.
kindly help me.