Thursday, August 19, 2010

Beef Farming in Tennessee

Tennessee has one of the largest populations of beef cattle in the nation, despite the state's relatively small size. While there are a whole bunch of reasons for this, the biggest two are a) a climate that permits good grass growth almost year round, and b) a plentitude of steep, rocky terrain that is little suited to any other kind of agricultural venture.

Most beef farms in Tennessee are small acreage, part time "mama cow" outfits which are almost all "lifestyle" farms to some degree. While the great majority of beef farms are part time operations, most folks count on them to provide some level of extra income. Until a few years ago, many of these small farms split the risk on their farm income by growing a few acres of tobacco as a money crop. In many cases the tobacco crop grossed and netted as many dollars as did the beef cattle.

As I mentioned, after the tobacco buyout program a few years ago caused a precipitous decline in tobacco acreage, Tennessee decided to support and fund an agricultural diversification program, which is mandated to help TN farmers try to replace the income they lost when they stopped growing tobacco. Some sections of this bill make a reasonably good stab at doing this. The beef section of this program is not one of them, in my opinion. It's great if what you want to do is buy a better bull, build a better hay barn, or buy some better cattle handling equipment. However, if what you want to do is figure out how to actually make more money with your beef cows, in most cases this program is going to let you down. At best, some of the covered equipment and feed storage facilities make it possible (and easier) to do some things slightly better, albeit at great cost. Unfortunately, niether the equipment nor the educational component of this program does anything to help farmers address HOW to make more money with one's cows. And sadly, there is A LOT of income being left on the table by TN beef producers.

An "average" Tennessee beef operation might have 30 cows, and if the cows are exceptionally well managed they might produce as many as 30 calves that could be sold each year. Since there are no large scale feedlots in the state and no large packing houses, most calves that are born here don't spend their lives here. Instead, most commonly they are sold at auction to a large feedlot out west when they are a little less than a year old to make room for the next group of calves. Again, if they are exceptionally well managed, they might weigh 600 lbs, and they might, in a good year, fetch $ 1.00 per lb, grossing the farm operator around $ 600 per head (or $18,000 in aggregate) and, hopefully netting him something more than zero dollars.

There are a whole host of excellent ways that the farmer could choose to add value to his beef, but for the sake of agrument and brevity, let's jump straight to selling it to the consumer as natural, healthy grass fed beef (which I'm very familiar with since it makes up the other half of our farm business)instead of selling the cattle at auction when they reach 600 lb. Incidentally, we feed grass not only because it's healthy for the animals and for us, but it also grows here well and it's "free of charge", unlike any grain crop I've ever grown. Interestingly, grass fed beef sells at a considerable premium to grain fed beef in this area of the state. So by choosing this method, I get to do what's best for the animals and I get "paid" several times to do so. Anyway, on to the economics. We sell our beef wholesale to folks for about the same money that they could buy grain fed feedlot beef at Kroger for. This works out to the equivalent of $ 2.25 per lb liveweight. We typically slaughter when the animals reach 1200 lbs, which grosses us roughly $ 2,700 per head.

If we apply my gross number to our hypothetical "average" 30 cow Tennessee beef farm, he would be grossing $ 81,000 per year under this methodology vs $ 18,000 under his current marketing arrangement. To achieve this, this farmer would have accrued absolutely no additional expenses to his farming operation except some additional time and possibly some additional pasture acreage to feed the cattle out on grass, so I feel comfortable saying that much of the difference would be net income.

I don't want or need state or federal money and frankly I wish they would kill this program entirely and put the money saved toward balancing their respective budgets. Since this is unlikely to happen, maybe they ought to look into this "value added" concept a little bit more ? Or maybe they'd rather keep on helping the people who sell farmers things instead of helping the farmers themselves.


Daun said...

Hi Jason, I am a long time reader and have a small farm in New Hampshire. I am a big fan of exactly the topics you are talking about: grass farming, intensive grazing, better welfare for livestock, and direct marketing to consumers.

I have a question about your beef operation. If you sell your beef at 1200 lbs, are you not incurring additional expense to overwinter the calves until they reach this weight? Can you overwinter entirely on pasture on TN so the additional cost is just more land? You would need to pasture your yearlings as well as your new crop of calves, correct?

In NH, you cannot overwinter on pasture (NH is not beef country for this reason, and others) and most of the meat animals are sheep, pigs, and goats, which don't require overwintering to reach market weight.

Thanks so much for your insight!

Jason said...

Hi Daun;

In answer to your question, yes, beef cattle can be kept entirely on well managed grass in a normal Tennessee winter. In fact, cool season grasses never really senesce down here...fescue, bluegrass and especially ryegrass stay bright green and will do some growing, even in the dead of winter.

Most producers make and feed hay every winter down here. I think this has more to do with a lack of grass management skills and operant conditioning of the farmers than anything else. An average January day here would show a high of around 50 degrees and a low around 30 degrees, much like April in NH or Ontario.

Yes, you'd need adequate pasture for your yearlings and new calves. This could be done most affordably on leased land. Unlike in places where row crop agriculture thrives, there is no relationship between the selling price of land and it's agricultural rental potential. Land in our immediate vicinity sells at upward of $ 5000 per acre in large tracts. This same land rents for pasture at $ 20-30/acre.

Funder said...

Land sale prices - Sounds like everybody wants to win the Subdivision Lottery.

My uncle has a hobby farm in Como MS. He does cow/calf the traditional way. Never makes money, but it honestly is his hobby, so no big deal to him.

When I thought we'd stay in the South forever, I wanted to do what you're doing. The market for direct to consumer grass fed beef isn't quite as good in Memphis, but it does exist.

Jason said...

Funder; I think there are lots of folks who'd buy in Germantown/Collierville for sure. Melissa's great uncle has a large farm just north of the TN/MS line in Hardeman County (Bolivar). He has been watching what we do with great interest. There is an excellent USDA inspected slaughter facility in Hickory Withe. The biggest downside and the hardest thing to do is finding a good, reliable and trustworthy butcher.