Once again, Jim Gerrish, owner American GrazingLands, pens a thorough and relevant article. This one published in The Stockman GrassFarmer June , 2020 issue. Click here if you’d like to request a free copy of The Stockman GrassFarmer.
A Perfect Match
May, Idaho
Some things just seem to fit together really well. Bacon-lettuce-tomato sandwiches come to mind, among other things.
How about no-till, cover-crops, irrigation, and MiG? That is another combination that is hard to beat.
Industrial farming with conventional tillage has led to widespread land degradation through soil erosion, loss of soil carbon, and destruction of soil life. No-till minimizes soil disturbance and the concurrent loss of organic matter soil life. The downside of no-till farming over the 50 or so years since its inception has been heavy reliance on potent herbicides like paraquat and glyphosate. To eliminate the need for those herbicides and their toxic side effects, innovative farmers have figured out approaches. The roller-crimper as a mechanical tool can terminate existing vegetation and turn it into moisture-conserving mulch. High stock density grazing can also terminate or suppress existing vegetation and turn it into dollars.
The exponential growth in cover-crop use over the last decade has also accelerated the adoption of no-till farming across the USA and around the world. While many farmers started using cover-crops based solely on soil health benefits, others came to realize livestock were the missing link in their efforts to heal the land. We quite talking about sustainable ag a few years ago and started talking about regenerative ag. Why settle for sustaining the agricultural wreck we have created over the last century? Why don’t we try fixing it instead?
Ray Archuleta uses a great example to illustrate the difference between the sustainable and regenerative concepts. ray asks, “If your marriage is a wreck, why would you want to sustain that? If your farm is a wreck, why would you want to sustain that?”
Regeneration is meant to create something healthy and strong that will last your lifetime and beyond. I think it is a valuable lesson in world selection and world viewpoint.
In a similar vein, many years ago I said the most tragic divorce that has happened down on the farm was the divorce of livestock from the land. Taking grazing animals off the landscape and locking them up in concentration camps removed a critical component of ecosystem health. We will only regenerate a healthy landscapes with effectively managed livestock as part of the process.
We can argue about the sustainability of irrigation. Around the world, including the USA, aquifers are being pumped to the point of depletion. Land is being degraded due to salinization from irrigating with high salt content water. Pumping costs are increasing in many irrigated farming areas as water is pumped from deeper and deeper wells. No, irrigation in that sense is neither sustainable nor regenerative.
Living in the Intermountain Region of the USA for 16 years now and enjoying a different type of irrigation basis. I think there is a time and place for irrigation in a regenerative ranching or farming context. With direct snow-melt as our water source we avoid aquifer depletion and most of the salinity risks associated with irrigation in semi-arid landscapes.
For many years, a lot of this region was flood irrigated. There are a number of benefits to flood irrigation. Flood irrigation can rely entirely on gravity flow of water so there is no pumping cost. It can hydrate parts of the landscape outside of the farmed fields. The infrastructure investment is fairly low. However, Water use efficiency cannot be counted as one of the favorable aspects of flood irrigation.
Per ton of forage grown, flood irrigation typically uses about 50-80% more water than sprinkler irrigation. As we think more and more about the pending worldwide water crisis, all of us in agriculture must become better versed in water conservation whether we are in high natural rainfall or irrigated environments. That brings us back to thought of no-till farming with cover-crops and the role of grazing animals in groundwater management.
We have all heard and read those popular press articles citing how many pounds of water it takes to produce a pound of hamburger or a steak. Some beef industry estimates are as low as 1000 lbs of water per lb of beef all the way up to 12,000 lbs of water/lb of beef claimed by some vegan groups. Since a pound of beef only contains about 10 ounces of water, the rest of all that water has to be somewhere else. That somewhere else is mostly in the soil or the atmosphere meaning that same water will be used for something else tomorrow or the next day or the next.
Our job is to get as much back into the soil or the deeper ground water system. This is where MiG comes into the picture. We use time-controlled grazing management to manipulate the amount of living plant residual and the amount of trampled litter we create in the pasture. Both of those grazing management responses are critically important factors in managing soil water. Infiltration rate and surface runoff are directly tied to our day-to-day grazing management choices.
When we can easily produce twice as much animal product per acre using MiG compared to ineffectively managed pastures, that translates to a doubled water use efficiency. Think about the cost of seeding cover-crops on irrigated land and the relative return on investment between those two different management scenarios. Regardless of the particular pasture in question. MiG always increases the return potential.
Jim Gerrish is an independent grazing lands consultant providing service to farmers and ranchers on both private and public lands across the USA and internationally. He can be contacted through www.americangrazinglands.com. His books are available from the SGF Bookshelf page 20.
Can’t be done. At least that is what conventional wisdom says. I’d agree that it can’t be done, if you follow the rules of traditional ranching – running cows the way everyone else does and owning everything. If you are willing to break some rules and challenge conventional wisdom maybe you can join the amazing group of people that have done it.
Agriculture is steeped in tradition. These traditions serve as a source of pride and continuity which help make us who we are in agriculture. However, these same traditions create a paradox of sorts when it comes to managing the business of ranching. Balancing respect for traditions and fostering innovation can be tricky to navigate. Another complicating factor in ranching is that business leadership is often slower to transition than most. Generally this is because the decision making is in the hands of a generation that would have retired 10-20 years ago in any other industry. This generation is often making decisions from a place of risk minimization … rightly so from their perspective. However, when Junior is wanting to expand the business to support a growing family this can pit two very different business strategies against each other which often creates conflict on the family ranch.
June 24, 2020 at 3:57 am, james coffelt said:
Excellent discussion
Ranching is a great life style.
Is it a great business? Peter Drucker, the great business writer, suggests every business, every idea, every activity, and every employee, should be on trial for its life, every day.
Can a ranching business succeed? Yes, and there are plenty doing it. However, that is not the right question.
We should ask: How are these assets, efforts, labor, and risk, performing relative to other alternatives?
An S + P 500 index fund has averaged a 12% return for years.
So, is the equity invested in the ranching business, cattle and land, performing better than 12% ? Note, I used the word equity, not assets for the comparison. That is, net assets.
I would suggest the following:
The only management model to consider is a low input management model. Work toward eliminating or reducing, shots, worming, tagging, calf checking, weaning, machine work, hay. Let the cows rehab the land, and produce cattle genetically fit to thrive in the all-natural survival of the fittest, model.
Work from set stocking, to rotational grazing, to mob grazing, as able. Each step is better for the land, and permits an increase in stocking rate. Stocking rate influences profitability more than any other trait, more than performance, milk, growth, marbling, etc..
Find a way to sell into premium markets. A quality animal sold by the piece is 3-4 k retail, $800 at the sale barn. That spread requires sales and marketing effort.
The land is a separate business which can include revenue from gas and oil, hunting, fishing, timber, tourism, etc..
The choice to ranch for love of lifestyle is admirable. However, it is a business which requires economic performance.
June 24, 2020 at 4:09 am, JOSH LUCAS said:
Learn how to be an effective communicator! (Like they teach at the rfp school) Managing the landowner relationship when leasing can be challenging if you don’t communicate your goals for the property well enough.
Oh and definitely don’t buy equipment!
June 24, 2020 at 6:07 am, Shelly Oswald said:
Good points but where is the marketing component where you know the intrinsic value of your products, communicate that to your customers and obtain the premium you need to be profitable without cutting corners?
The other point missed is that your approach conserves capital investment in the land and treats it like the profit center it should be. In order to conserve our farmland and keep it in the hands of our citizens, we need to be paying fair rent to ourselves or our neighbors and not asking them to subsidize the food we produce.
I love the principles you teach!
June 24, 2020 at 6:15 am, Rebecca Patton said:
My husband and I came back to his family ranch in the hopes of developing a succession plan and being able to take over and run a successful ranching business, however, we were stuck in the paradigm that there is such a huge barrier to entry in ranching that our only opportunity to make money with cattle was to be successors to a debt free ranch. Apparently the older generation had different priorities than ranch transition, so we are now looking to break away with the new perspective that we can do what we want through custom grazing and leasing, and we have never been more excited! Thanks for sharing Profit Tips with us!
June 24, 2020 at 6:20 am, Clint Hoelting said:
If you are going to take care of other people’s cattle on other people’s land, you might as well get a job on a ranch. Same thing, except with Custom/Lease you will have to pay for overheads a ranch hand wouldn’t.
June 24, 2020 at 7:42 am, Justin Tollman said:
I was stuck in the “How To Own It” traffic jam for a while, and then was introduced to Ranching For Profit. In 2014, my wife and I had no ranch, and no idea how to step into a ranch, but I knew I wanted to. We went to a RFP School, and that really sparked an idea for me to set up a business plan that I could get people to buy into: Leasing a ranch!
Prior to that shift in paradigm, we were stuck. You see, I grew up on the ranch that we now lease. But, so did my sisters. It’s been in the family for over 120 years, but my parents were stuck in the asset transition trap: How do you be fair to everyone? My wife was extremely scared of going into a huge amount of debt, and quite frankly was scared of what happens if it doesn’t work.
The lease model has opened many doors! It got us unstuck. Has it been perfect? Of course not! I don’t know a ranching family that has everything go perfectly. When the all of the cattle issues go right, people issues may flare, when the people are happy, water issues might pop up, this business has a way of humbling anyone who knows everything. And then, there are always customers to deal with, and luckily almost every “contentious moment” with my customers has been built up worse in my mind than in reality. But, I’ve heard it said that people get paid by the size of the problems they can solve, so if you want paid more, choose bigger problems.
I’ve heard so much “I don’t think you can do that!” Well, my favorite saying now is “You never know what you can do until you have to.”
June 24, 2020 at 7:44 am, john marble said:
I think the biggest roadblock to starting or maintaining a successful ranching business is the commonly-held belief that ranching is somehow different than other businesses or industries. Loving to work outside, handle livestock, smell the new-mown hay…all of that is fine, but it doesn’t have much to do with running a successful business. People who want to enter the ranching industry need to do the same things that new entrants to the gas station or motel or bowling alley business have to do: market goods and services at a profit. Not very romantic, but clearly true. Successful business people study marketing and logistics. They develop relationships with other progressive, smart operators. They avoid enterprises that lose money.
Sorry to break the new: ranching is just not that special.
June 24, 2020 at 11:02 am, Marc Cesario said:
John – love it!
June 24, 2020 at 8:01 am, Davene Finkbeiner said:
I started from scratch at 50 years old. Now I am 62. I followed ranching for profit Allan Nation Joel Salatin Bud Williams.Turing the ranch over to my children. It has been one hell of a ride.
June 24, 2020 at 8:48 am, Marc Cesario said:
It’s amazing how often you can hear advice, even believe the advice that’s been given, then somehow rationalize why your situation is different. It’s so easy to fall into the trap of machinery, equipment and barns but it’s a dead end more often than not. Grass, appropriate fence and a good water system is really all what most start from scratchers should focus on.
It’s good and necessary to believe in ourselves, but too often we think we can do more than we actually can. At best, I feel we can only do two things well, and more likely it’s probably just one thing. Often multiple enterprises just drain resources from the each other. Stay focused.
The word priority was only ever used in the singular until the 1900’s. There can only be one priority.
June 24, 2020 at 8:52 am, Marc Cesario said:
Josh- yes, Managing expectations is extremely important. underpromise and over deliver.
June 24, 2020 at 9:54 am, Ross Macdonald said:
Don’t get caught up in a recipe, what you know today will change/evolve over the next several years.
Let your definition of profit drive your decisions and recognize that it is never perfect but with effort, desire and experience it gets much better.
Soils, grazing, stockmanship, marketing, relationships are get better if you work to make them better but it is a journey not a destination, so your definition of profit had better include happiness.
June 24, 2020 at 11:49 am, john marble said:
Gosh, Clint, I haven’t found that to be true at all. I’ve rented quite a number of places over the years, and the amount I pay in rent has absolutely nothing to do with land overheads. On occasion, I’ve had land owners express their desire for the rent to cover property taxes or some other irrelevant item. I try to be fair with owners, but in the end I will only pay a rental rate that allows me the opportunity to make a good profit, and that is often based on running “other people’s cattle” on that rental land. Sorry, but negotiating land rentals, signing contracts on custom cattle and designing business plans that result in profit are not “hired hand” jobs. Those are business owner jobs.
June 25, 2020 at 9:45 am, Justin M Tollman said:
I think John and Clint may be looking at two sides of the same coin. To paraphrase Clint “you’re working for someone else if you custom graze on leased land.” I will say that the thought has crossed my mind over the last 3 years that I would be better off financially if I just worked for someone else. That’s on a cash taken home basis. But, when you look at net worth vs. cash flow, that isn’t the case. To John’s point, working on the business is different than working in the business. If I didn’t want to set direction, plan my own time, work on the big picture stuff, and play the virtual 3-D chess game that is forecasting, contingency planning,etc., then yeah, working as a hired hand on an outfit might be better. But, always know, you are always working for a customer. Whether that customer is someone who writes you a paycheck for labor, or a customer who writes you a paycheck for cattle that you sell, or a customer that writes a paycheck for custom care. But, ranching from scratch, to me it’s about setting the direction, the mission and vision, the building for a brighter and easier tomorrow, and taking ownership of that process. I’m not as excited about the ownership of land or things, but the ownership of happy business partners.
June 26, 2020 at 6:14 pm, Amber said:
I totally agree. My husband and I and our two kids lead a great life on leased land, with custom grazed cows and building our own cowherd on the side. We work for ourselves, while functioning in a great network of relationships. It is all about how you treat people.
June 27, 2020 at 12:36 am, Graeme Bear said:
A great topic Dallas. Often the most thought provoking topics are those that challenge traditional thinking and paradigms. Love the collection of views and contributions by everyone on this one. The fundamentals of successful business are the same whether it be a cattle ranch or transport or manufacturing business, exactly the same principle apply.
June 28, 2020 at 5:12 am, Doug Dillon said:
It can be done! I have done it twice. I purchased my first ranch in 2009 after graduating college. Purchased another ranch in 2014. Sold the first ranch in 2015. I attended two RMC schools and was in the Executive Link from 2010 until 2015. The two biggest things I think any one starting from scratch needs to keep in mind is you have to be passionate about what you are doing, it’s going to be tough. Keep you pencil sharp and make the hard decisions that make you money.
The 2nd is don’t get married to a ranch. In 2015 Mike Hall spoke at the RMC summer meeting in Laramie WY. He talked about “not being married to a ranch.” I realize not all ranches are equal, and its hard to walk away from something you have built. He talked about making your land business profitable by selling land. Its a difficult thing for most people or families to do, but if you are starting from scratch you are going to have to do some of these difficult things to generate cash to get out of debt.
June 28, 2020 at 7:15 am, Davene Finkbeiner said:
I started from scratch 10 years ago with leased land and share cattle. I agree about selling land. Bought pasture based on its resale value and now have it listed for double the price I paid for it. When cattle prices were at there peak I did not buy more cattle I took share cattle instead and put cash into rental houses.Now they are producing a income of 1200 per month.Biggest problem in our area is I am surrounded by inheritance ranching operations who spend a lot of time trying to derail the start from scratch operations. They are especially hard on young people just getting started.I am looking for a good support group for my 2 Kids just coming into the cattle business.