Glacier FarmMedia — When all costs are factored into the equation, raising cattle should be more profitable than growing crops in 2024 — and in some cases, much more so.
“Right now, I can tell you that the returns per acre are higher than any of the crops,” said Ben Hamm, a farm management specialist with Manitoba Agriculture.
“If there are any people in the grain industry looking for something that makes a little bit more money — maybe it’s time to buy some cows.”
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Hamm shared the latest estimates for beef profitability last month during Manitoba Ag Days in Brandon.
Using the example of oats, Manitoba Agriculture’s cost of production guide says oats will return a profit of $26 per acre, over the fixed and input costs.
For a 300-cow beef herd, to which the producer feeds corn silage, Hamm pegs the profitability at $72 per acre.
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That figure is from a scenario where a cattle producer has little equity in land and equipment. If a farmer owns most of the land and machinery, the profits would be much higher.
The Manitoba Agriculture cost of production guide for beef says returns over operating costs are $158 per acre.
“Most of us in the industry aren’t financing 100 per cent of it. We’re probably closer to 80-85 per cent of equity in the farm,” says Hamm, who farms in southeastern Manitoba.
“When we do look at what is financed and what is not, it makes a huge impact on (profitability).”
They critical number right now in the beef industry is price. Calves that are 500-600 lbs. are selling above $350 per hundredweight.
Those strong prices have convinced a few more farmers — or wannabe farmers — to raise cattle.
“I have a friend’s son who has been an engineer out in Alberta, but ran a small hobby farm out there,” says Tyler Fulton, a cattle producer from Birtle, Man. “He sold a quarter section and bought 10 (quarters) here (in Manitoba). Never previously in the beef industry. He moved back about two months ago.”
Hamm has heard similar stories. Some people are reported to have sold $15,000-per-acre land in Ontario to buy farmland for cattle production in Manitoba.
That’s positive, but that influx of new people hasn’t moved the needle on beef production in Manitoba.
On July 1, 2023, the number of beef cows in the province was 389,000; that’s down 36,000 from July 1, 2021, when the cow herd was 425,000.
Nonetheless, there is more enthusiasm in the cattle industry. A crowd of over 200 people attended Hamm’s presentation at Ag Days.
Children are taking over their parents’ ranches and others are selling assets to buy pastureland in Manitoba.
Hamm is concerned, however, about financial barriers for these new entrants.
“It’s so hard for a young producer to come in and buy land, buy equipment and buy the cattle. You (need) supplementary income to start off that way,” he says. “If we have to finance the entire farm… what do the economics look like? It’s pretty bleak.”
He encourages all farmers, experienced and novice, to do their homework before purchasing a chunk of land.
“With land values the way they are, (the) productivity becomes so much more important,” he says. “You have to run the math. Work it backwards, to see what value that land is producing… You need as much history and information as you can (get).”
Producers should also consider available risk management tools such as livestock price insurance and AgriStability, Hamm says.
“Risk has to be something we look at…We’re right at the peak (of prices). Maybe it will continue, maybe it will go sideways,” he says.
“There’s so many dollars left on the table by producers who aren’t in AgriStability. It is a harder program to grasp. But once you do, it is the best (tool) we have for production insurance. It’s something I would really encourage you to do.”
