1. Home
2. Conferences
3. 2015 Extension Risk Management Education National Conference

Financing Cow-calf Operations for Beginning Ranchers

Roger Sahs and Damona Doye

Summary

The potential for herd rebuilding has attracted considerable interest in Oklahoma due to the strong cattle economy and the state’s forage base recovery from a multiyear drought. For a beginning rancher, investing in a cow-calf operation is an expensive undertaking and can be financially stressful even for small enterprises. Gaining control of assets poses difficulties for beginning producers with limited equity and experience. In addition, without the economy of scale to spread costs over a larger herd, production costs can be difficult to control. Producers are interested in information on evaluating the feasibility of entry into the cow-calf business.
Case studies were developed for purchased or leased assets involving native pasture and livestock. Using enterprise budgets (agecon.okstate.edu/budgets) with Integrated Farm Financial Statement Software (agecon.okstate.edu/iffs), whole farm financial plans were developed and projected for 5 years. The results highlight differences in cash flow, borrowing needs, and changes in financial position over time.
Results will be incorporated into educational programs that first target Extension educators and then expand to Oklahoma agricultural lenders and producers. These materials allow beginning farmers and ranchers to make informed decisions under a variety of economic scenarios as both opportunities and financial risks may be great.

Details

---