How Ranchers Make Money

Since the series Yellowstone came to our televisions, Montana ranching and ranching in particular has been at the forefront of many of our minds and conversations, even though the Duttons and their enormous ranch, Yellowstone, are fictional, representing a form of in real life,

ranchers

are some. of the most hardworking and independent people in the world and they are also working very hard to provide food to the world as we speak, but how do these

ranchers

make

money

? That's the question you've heard a lot of through the media today. Let's get to the nitty-gritty of what these ranchers do and how they

make

money

.

That's life in the west. Let's divide this into three parts. First, raise livestock. How do you raise livestock all year round? Because that's what they gain with number two? How much money do they earn from raising these cattle? And number three, how do they get the land for the cattle in the first place? So let's start with number one. Number one is raising livestock. So first of all, when we say cattle, I just mean any calves or steers that a rancher would raise together, they are known as cattle, so to start raising cattle, the first step is calving.

The calving season is usually in the spring, the area and type of land. It determines a lot about what you do and how you make money there, so I'm going to limit all my examples and my numbers to Montana because that's what I'm familiar with, that's where and also where the show Yellowstone is filmed. and the fictional Yellowstone ranch is supposed to be Montana or Cave ranchers starting in January, March or April. Now it's always a question of risk versus reward. If you start in January you will have bigger calves when you sell them in October but that is if they survive because January in Montana can be downright nasty so if you have a tough winter you will end up with a lot of calves that are missing ears and tails if you don't. they're dead because when it's 30 degrees below zero at 20 miles an hour wind chill that's hard to deal with when you've got wet calves falling all over the place and stuff here's a new one right here this is what we call a lake cave because this brood She was born a couple of days ago and this is August Wow cow, she's a little calf like that, she's looking at me, you have to take care of the mom, they can be trampled to death, this thing is like a day old calf, very, very new, just dropped her yesterday, uh, and this is August, so this is a big calf too yet and she didn't need help yeah, you're girly and curly, yeah, curly, yeah, little one, hey little one, say hello to the people in the chamber, hmm, say hello to the people in the chamber, there you go, friend, a little woolly boy.

Too bad I didn't have an ear tag with me, I'd tag you. Calving is very labor intensive because cows may have an easy calving time but they may have difficulties and if they have a problem with calving then without human intervention they will lose the calf or die themselves so if you are not around all the time time during calving, you can have a catastrophe, so as soon as the calves are born, they are tagged and vaccinated and it turns out that they are generally fed hay for a while after that and then when they are about a month, they take them all to a pen separate from their mothers and mark them and they also receive another vaccine and that is for their own health without that vaccine they would really have little chance of surviving there is a short-horned cow right here you can tell that she me he's looking stay here yeah what are you doing there shorthorn um so a rancher can't stop and think only about this year?

He has to think about next year and next year, so around June he takes the bulls out with the cow to breed them again. Bulls are truly an expensive necessity when it comes to livestock farming, there are between two and twenty-five thousand of them. dollars depending on the bull and you can only breed and use them for about five or six years if you keep using the same bulls every year. What happens is that eventually they start raising their daughters and granddaughters and that is not good after the bulls have been with the cows for a while, usually the cows are separated and go out to the summer pastures and are herded until October, when they are brought back at that time, the calves are old enough to be separated from their mothers. and they separate them and wean them and then take them to an auction or sell them to a buyer.

That's not the end of these calves, they're only about six months old, so someone buys them and raises them as calves, which means they raise them. on pasture somewhere until they are about a year and nine months old, at which point they are taken to a feedlot for a short period of time before being slaughtered, then the cows are taken back to pasture and, Usually if there isn't much snow you can patch them until about the first of January, sometimes it's best to patch them as long as possible because as soon as you start having to feed hay the expense column really starts to go up.

So let's get into number two, what kind of money do they really make when they sell these caps? Well, let's get to the point. How much do these ranchers really earn when they sell these caps? So to calculate that we need to calculate gross sales minus our expenses. I know it seems so basic it's ridiculous, but you'd be surprised how many people I talk to only give me the gross sales number and never calculate expenses when they look at something like this, which tells you absolutely nothing, so, for example, come on to use a ranch that I found that is for sale on the internet in Billings Montana, so this ranch is about 4,000 acres and they have 200 pairs year round, so let's use those numbers which is about 20 acres per towel, which it may be a little optimistic in some years, but we'll call it, we'll use it for this example, there you go, buddy, so if you have 200 calves, you'll sell 200 of them, good bad.

If you sell every calf you have every year, it won't be long before you have no cows left because all the cows you have get older every year, so you have to keep a certain percentage of your calves like what we do. call replacements to replace the oldest ones you are going to sell to keep your herd at an average age of five to twenty years depending on where you are, so if you have 200 cows and you save 30 of them, that means you have 170 to sell , so if you sell 170 calves at current prices, which are actually quite high, it costs about $83 a pound, which gives you 177,000 for the year, it doesn't sound too bad, so now let's calculate that the expenses They include things like taxes. hired help fuel costs vaccines and medicine hay in the winter and whatever else I have to pay to raise these cattle let's have these expenses for this particular hypothetical ranch which is 4,000 acres these are the expenses I have fuel costs and these These are also pretty close to reality.

Fuel costs 23,000 electricity bills 14,000. You may be wondering what electricity bills are for in winter. Here you have to heat the water. I mean, you can't heat the water, but you keep it from freezing with electric heaters, their waterers have to be frost-free, that kind of thing during calving, it has a lot of lights on, it heats barns, things like that, that costs a lot of electricity , um, horse care, because he has about 5,000 horses for that. ATV maintenance $1,500, that's probably pretty cheap, but you know, once they're maintained, once they're going for 200 head, you don't need, you know that much, you're on your own turf fencing 12,000.

I tried to take down this a bit, but the cost of steel lately has killed this completely, so even if you only replace just a small part of your fence each year, which many people don't do and it ends up completely going down after 20 years and have replaced it. all this, um, you're going to have 10 to 12 great employees a year, I put zero dollars because you can't afford to have employees otherwise you wouldn't make any money, so you just have to have kids and hope that they They will help you along the way with vaccines and medications, this is for the calves and the cows, they are both vaccinated and dewormed every year and if you have that, it's about ten thousand dollars, hey, fifty-five thousand dollars, that's paying by calculating the hay. from the first of January until calving season, which is not really realistic unless this number is not realistic unless you grow the hay yourself if you have to buy it it can be three times as much as the bulls four thousand dollars you have to sell tickets like I said every four to five to six years old and buy new bulls, they are very expensive, so the difference is never the same because you buy younger bulls, you buy younger bulls and you sell older bulls, so there is a difference in cost.

Land taxes are around ten thousand. I have no idea what that is, let's just add that for that amount of land. What I mean is that your gross sales are 177,000, your expenses are 134,000, and your total profits for that year, if nothing went wrong, would be 42,500 now. One problem with this is that we don't calculate any loss, so if a grizzly bear, you know, people ask me, oh, what's the problem? You shouldn't have your cows where the grizzly bears are, if you have a grizzly bear in your cab, this is a big deal every time a grizzly bear eats kills a calf, it eats your pocket and there's not much left over if you see, I mean, we're talking about a tight budget, since that's how wolves kill your livestock, grizzly bears kill livestock sometimes just die for no reason, so that's something I'm not really considering here, but you know. which for this hypothetical example we are not using that, even without that your total profit is 42,000 a year, so you can see why.

Ranchers don't pay taxes because they don't earn enough to pay taxes. If they buy a new truck, it's under the ranch and they write it off so they don't have to pay any taxes and that's another thing that's not here. is part of it, it has to come out of their income, sometimes the reason they buy a new truck is because they have to have something that is reliable, they have to be able to get where they need to go right now, time is money or means lose a calf. or a cow or something, so their vehicles must be pretty reliable.

Ranchers manage large amounts of money through their business, but they don't keep much, they don't end up staying in their business, they bring in a lot. and they spend a lot because their expenses are very large and this is, as you can see, this is a 4,000 acre ranch that could support maybe a family really this is all it supports because their paycheck is 42,000 for that year now You have all the gas paid for probably most of your food, which helps a lot, but if you hire someone or if you have a second family that you have to take care of as if the previous generation was still on the ranch, That's going to be a big hit to that budget, so to start making money or losing money in ranching, you have to have some assets, those assets are land and cattle, those are the essential ones anyway, now, in the people I know , most of them started the same way. like Kevin Costner did on the show Yellowstone, they inherited it from their grandfather, but if you didn't have a great-grandfather who settled here 100 years ago and gave you land and livestock, then you have a problem getting started, so get Started in the ranching means you have to buy the land and the cattle, so I tried to find a place in the east, closer to eastern Montana, that was less mountains, more just grazing land and this is what I found: it's a ranch from 4,800 something, now 800 acres. that's in cropland, which is not relevant to our discussion, so what I did was I just took that out, so we're saying 4,000 acres, I took out the relative price of cropland, so now we're talking to buy 4,000 acres for 5 million now, this doesn't include cattle, but let's see what that means.

If you buy a five million dollar ranch, then you will have a payment of around 432,000 each year if it is a 25 year loan that does not include the livestock. They don't add up very well if you use the numbers above and you're only making 42k a year, even if your grandpa gave it to you for free like Kevin Costner's dad gave it to him on the show Yellowstone, it's not a money-making proposition, so, as? Are ranchers coping well? They have more acres than before. You could raise a family with fewer livestock because the margin was about the same or the cost and price were about the same, but the cost of living was much lower now.

The cost of living is so high that you actually have to have a lot more acres for a family to survive and people also live longer, so what you have now is a generation, the older generation is still on the ranch when the generation younger takes over, so now there are two families. At least living there, you rarely see many hired workers because there isn't enough money left after paying the family to pay anyone to do any job. diversify and more and more landswhen people think, oh man, this rancher has so much. land and he doesn't deserve it, maybe not, but he can't make it without that much land, it's just not written, so to me it's pretty clear, I think you can be a cowboy as long as you don't expect to. live a lot, you can go get a job on a really big ranch somewhere and a cowboy become a rancher, that's something else, I think, unless you look for the money somewhere else and don't expect to make an extraordinary living, It's quite difficult, which is why I came up with the theme of cattle kings.

Donald Kings is a blockchain game where you can buy and raise your own herd of cattle on your own land, all in your wallet, and the blockchain makes it possible for you to own your assets just like you would in real life. I'm making this game just for people who may never get it. To experience the reality of ranching, you can at least learn about it in a fun, educational way and maybe also make a little money if you're interested in seeing what Kettle Kings is all about and finding out if maybe it's something that interests you. .

Go to cattlekings.i oh you can go next. I'll leave a link below and be sure to sign up for updates because it's not complete yet, but if you like the idea and want to start from the beginning. First, I will let everyone know that they have registered on the website and will be the first to try the nft cattle that is available there. That's all for today's lesson on how ranchers make money living in the west. I'm trying to defend an acre until next time God bless you and God bless America.