Podcast Episode #149
Episode #149
Chad Peterson boasts a wealth of experience in various grazing-based enterprises spanning multiple states. In our conversation, we delve into many of his learning experiences throughout the years and explore the reasons behind his current venture—a stocker operation in Montana. Our discussion covers topics such as ultra-high stock density grazing, forage utilization, supplement feeding for stockers, and much more!
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Hey Jared, listening to this episode, you asked Chad for essentially the difference in profitability margin between owning stockers and taking them in on a custom basis. I have done quite a bit of figuring on that exact thing for my situation here in North Central Oklahoma, and the figures typically come out to the custom grazing cattle returning right around 40-50% of what the owned cattle will return. I am a pretty small stocker operator and I could see the custom cattle profit margin increasing some with more scale.
I have a full time job and a family, so my time is valuable. I will buy, background and then run on grass as many calves as I can comfortably handle (pasture, time, money), which is typically just around the 50 head mark. A new lease I have picked up is capable of running around 90 head of stockers for a 4 month summer graze and I have a deal worked to take in some custom cattle on that place. Though I know the custom cattle do not have as much profit potential, I will have less time and dollars tied up.
For me, I think a mix of custom and owned cattle makes the most since at this time. I highly agree with Chad that owned cattle done appropriately have a much larger profit potential but take a lot more work and time, as the the bulk of the time spent and money made is during the first 45-60 day backgrounding phase. I think that custom grazing is a great tool to use when it fits your goals, but will likely have a significantly lower return when compared to ownership.
Lastly, even being in Oklahoma with very little snow, I don’t necessarily own cattle year round. I operate with quite a bit of seasonality due to my personal goals and resources. For me its a combination of down free time with my family and other activities as well as the math on the cost of gain compared to the value of gain through the fall and early winter. Like Chad said, I think there are typically cattle that value can be added to throughout the year without having to keep a consistent livestock inventory. Sort of like custom grazing, it may not be quite as profitable, but it might fit your goals and resources better than year-round ownership.
Duel
Fantastic response Duel, thank you so much for sharing your perspective and experience. Definitely seems like there are advantages to each and everybody needs to determine their own goals and risk tolerance with it. If you are getting started, it might be good to custom graze and focus on grass management and livestock health management without the stress of picking the right cattle and determining when and how to market them. As you master one piece of the business and build some equity seems like livestock ownership becomes a logical next step!