Category: Diversity

How to go Broke Ranching without hardly trying

A great article from Walt Davis – Written in 1999.

There have been how-to books on lots of different subjects lately and I thought that it might be nice to help those people who get up every morning and wonder “what can I do today to lose money in the ranching business?” There is bound to be a huge demand for this kind of information since regardless of weather or markets, losing money is the main topic of conversation in every coffee shop in the country. The following is a collection of thoughts that should be of use in preventing any accidental out break of profitability.

Set your breeding season so that calves, lambs, kids, etc. are born well before the onset of new growth. This ensures that the young animals will be big enough to utilize the forage when it arrives and thus will wean off heavy. You will hear some nay-sayers blather about; the expense of maintaining lactating females without green forage, trouble getting females re-bred, disease and death loss in the young and even predictions that losses to predators will be worse since there are no young rats or rabbits around at this time of year. Some of this may be so but “we have got to have heavy weaning weights, right?”

READ the entire post Here

 

 

 

 

 

 

 

 

 

 

 

Always stock your country with just a few more head than you think you can handle. If you get lucky and have a good year, you will have more to sell and you can’t carry that grass over to next year, can you? Besides the Fat Cow Feed Company has a new feed guaranteed to make stock do good on broom weeds and tree bark. No need to worry about how much grass you have, just book your feed early and read the trade magazines so you can keep up with the latest feed supplements and mineral programs. You may hear tales about people claiming to winter with no supplemental feed but you know darn well it can’t be done “here”. When you feed hay or other supplements, be sure to always feed in the same place so that you don’t stomp out all your pasture. By feeding in the same place, you can get rid of the wasted hay and built up manure in the spring by setting it on fire. You won’t have to worry about the fire getting away, there will not be any thing growing anywhere close to the feed ground. Just up hill from your stock pond is a good place for the feed ground so that the bare ground will cause more of the rain to run off and keep the pond full. Sure a little manure, urine and dirt gets in the water but the stock will still drink it.

Make all of your breeding decisions based upon “what the trade demands” rather on silly criteria such as the type cattle that performs well under your conditions or animals with traits that allow you to reduce inputs. After all who knows more about what is good for the industry, you or ConAgri? Along the same line, be sure to buy great-big, good old’ bulls that throw really heavy weaning calves. You may have to pull some calves and maybe even lose some cows and after a few years your cows may get pretty big and expensive to winter but even if they made four times as much money do you really want to have to tell people that your calves only weaned at 450 pounds?

Don’t get talked into this management intensive grazing stuff. Some people claim to be able to run more stock with better performance at less cost while improving their country but you don’t have time to do all that and besides “it won’t work here”. Stay away from these schools and seminars that claim to be able to teach you how to reduce your costs, increase production and improve both your country and your quality of life. Even if what they teach works, you have to spend so much time thinking that you won’t have time to rope more that twice a week.

Don’t get caught up in low stress livestock handling like Bud Williams teaches. So what if it will reduce sickness and death loss, improve animal performance, cut labor costs and lower your vet bills, you have to maintain an image don’t you? Do you really want your neighbors to see you walking behind a bunch of cattle? How are you going to have good horses and good dogs if they don’t get lots of work? How can you teach a young horse cow sense with a bunch of cattle that never break a walk and all stay together? Just why are you in the cattle business anyway?

Be sure and have the latest and best in hay equipment so that you can get your hay put up in a hurry. What is a few extra thousand dollars a year in interest compared to the satisfaction you get from all that shiny new iron? Plow up those old native hay meadows and plant one of the new “improved” varieties of annual hay plants. Sure this means that you will have to till and fertilize and plant every year so that costs go up and your country will erode some but you will get bigger yields. Above all don’t let one of these nuts talk you into making hay out of surplus pasture or even into getting out of the hay business by rationing out standing hay with sub divisions or even worse, temporary electric fence. This would mean that you would have to be thinking and planning all during the growing season about what forage you can expect and what your forage demand will be all during the year. If ranchers didn’t make hay all summer and feed it all winter where would they get their caps?

For sure don’t listen to listen to the “low cost production advocates”. So what if the price of beef and other commodities does tend to settle at the break-even price of the average producer so that only the low-cost producer can be profitable every year. What’s the point in being a rancher if you can’t drive a new four wheel drive, four door, dually pickup, ride really high powered horses and be known for having the most expensive and fattest purebred cattle in the county? Get to know all of the fertilizer, feed, vet supply, equipment and supplement salesmen so you can keep up with the latest technology. Steer clear of taking advice from the old timers in the business. Just because somebody has made a living ranching for forty years doesn’t mean they know the business. Most of those people don’t even use embryo transfers or GPS precision fertilizer systems.

Get those calves to market before they get too big. A 300-pound calf will bring a lot more per pound then a 500 pounder. If you want to be able to brag about “topping the market”, you better ship them early. There is a lot of talk now days about retained ownership instead of just shipping calves at weaning. Some people claim to dry winter their calf crop with just enough supplement to keep them healthy and growing normally and then make big and cheap gains on the spring flush. Even if they make three times as much net profit per calf, it is a lot of trouble to wean those calves and worry with them all winter. Don’t believe the stories about people weaning calves in the pasture with no stress, weight loss or sickness. You know darn well that won’t work. Have a real market plan. Bankers don’t like to loan money to buy when the market is down so pay attention to the market and be ready to buy when they get high. Bankers will always loan more money when the market is high, after all they are the financial experts.

Most important, know why you are in the business and what you want to accomplish. There are some soft headed nuts out there talking about how ranchers are not in the livestock business but in the business of harvesting free solar energy by converting it first to biological energy (green plants) and then into wealth in the form of meat, milk, wool, wildlife or what ever. You know what is really important and there will never be a (pick one- Angus, white face, goat, sheep, other) on this place while you are running things. Your grand daddy was a ______ breeder, your daddy was a ______ breeder and you are a ______ breeder or at least you were until the bank sold you out.

Walt Davis 1999

Education of One’s Self

“Our past shapes us, but it does not have to define us. Trust the timing of your life while focusing your thoughts and energy on what is in your control.”

To venture deeper into your inner spirit, you have to humble yourself and acknowledge what you do not know. The more questions you have about life, the more you will improve and grow. When focusing on a change I break down the goal into the most manageable action and then I build a strategy from there.

Focusing on evolving each day becomes a unique opportunity to remove the walls in our life while liberating our minds. Educate yourself every day until your last breath. To excel, you must have the courage and discipline to show up at my very best. You compete with one person and one person only, yourself. You compete to be the greatest you can be.

On our self-discovery journey, we must free ourselves from automatic judgments that arise with every experience we have. Attempt to understand other people’s perspectives. The world unveils its secrets to us very slowly. We never know anything for sure. So roll with the discoveries while being patient and open to connecting with new people who might not look and think like you.

The road towards self-mastery is a marathon, not a sprint. As we begin to acknowledge and dismantle the self-limiting and disempowering barriers in our lives, we allow for a more authentic version of who we are to emerge. Our past shapes us, but it does not have to define us. Trust the timing of your life while focusing your thoughts and energy on what is in your control. While you may not control everything life presents, you can refuse to be reduced by it.

— Coach George Raveling

Testing New Futures

Testing New Futures

Holistic Ranch Management More Than Grass

Dan Miller
By  Dan Miller , Progressive Farmer Senior Editor

“No. You missed that,” Scott Johnson says, correcting a caller. He and his wife, Jean, were traversing a part of eastern Colorado on one end of a long-distance struggle with cell service. The caller had entirely missed the point Scott made about holistic management. It is much more than grass.

The template of holistic management laid over the Johnson family’s Flying Diamond Ranch, Scott explains, is a collaboration of moving parts. It considers the harsh seasons of Colorado’s semiarid eastern plains and the sustainability of the ranch’s composite Angus herd. It is management of predatory coyotes, of spring calving and scrutiny of meat markets. Most of all, it is family — this one taking its first steps into a sixth generation with five grandchildren, four born in 11 months.

“Do you follow my way of thinking?” Scott asks. “If our ROI [return on investment] is great, but someone is maimed, we wouldn’t be real proud [of our performance]. We will give up profit for safety or harmony,” he says. “The focus is on the whole. If we’re not getting along as a family, if we’re not safe, then the rest of this really doesn’t matter,” he explains. “It’s its entirety. Its wholeness. Its balance. Not perfection. But, bottom line, [we are] profit-oriented. Business is business.”

The Flying Diamond’s clean and highly viewable website uses six words to articulate holistic management: “Ranching with family. Working with nature.”

BORN ON A CATTLE DRIVE

Flying Diamond is 112 years in the making. Charlie Collins, Scott’s great-grandfather, fell in love with the land when, as a teen in the late 1800s, he trailed cattle near the banks of Big Sandy Creek on a drive from Mexico to Montana. By 1907, Collins had moved his family from Kansas to Kit Carson, where the ranch is still headquartered today.

The ranch is dominated by a shortgrass and sand sage landscape. Thick riparian areas border the Big Sandy and Horse creeks, tributaries of the Arkansas River. Culls are based on a female’s ability to wean a calf every year beginning at age 2 and succeed in 13 inches of precipitation and temperatures running the scale from below zero to above 100ËšF.

The cattle winter on corn circles in Kansas and Nebraska. “We like to rest our pastures during the winter. It’s healthier for our grass to have the cattle off and let it rest, and get a little more growth,” Jean says. Scott adds, “Having cattle on cornstalks, our day-to-day chores slow down a little bit in the winter. We can give family a little breather.”

Flying Diamond is an operation run by a family of type A personalities, Scott allows. “We’re not real chitchatters. We socialize. We have good times. We want to maintain excellent family relations. But, we’re not sitting around drinking a lot of coffee.”

GENERATIONS MANAGE TOGETHER

Scott and Jean anchor the Flying Diamond’s fourth generation. Their four adult children represent its fifth. Ownership is based on a meritocracy. The more a family member contributes, the more they own.

Jen Livsey, married to Jay, is the oldest. She is a Princeton University undergraduate and the first female graduate from the King Ranch Institute for Ranch Management. She recently opened Eastco Group, a livestock and drought insurance business. Jen oversees the rotational-grazing plan and analyzes purchase and lease opportunities.

More Recommended for You
Will and Lauren Johnson live full-time on the ranch. A Marine Corps veteran, Will is CEO of Flying Diamond Ranches Inc.

Myles Johnson and his wife, Katie, live in Idalia, Colorado, where Myles is the K through 12 superintendent of schools. Myles is the ranch’s administrative officer, managing compliance, meetings and corporate records. Katie is a certified public accountant and manages the ranch books.

Charlie Johnson and his wife, Kaitlin, live in Kit Carson. He is chief operating officer (COO) of Flying Diamond Ranches Inc. He partners with Jen in livestock and drought insurance.

Business is organized around communications—face-to-face, weekly conference calls and a monthly executive committee meeting. Quarterly board meetings are a newer function Kirk Samuelson, Scott’s cousin, brought to the ranch. Samuelson served as COO of Fortune 500 Kiewit Corp., in Omaha, until he retired. He and Scott are cochairmen of the board for Flying Diamond. Quarterly board meetings are formal. “Ten years ago, I was the dictator,” Scott admits. “Now, no one is comfortable with that. When we talk about family harmony, that’s not to suggest there aren’t red faces and pounding on the table.”

The board meetings are to play a role in the ranch’s vitality. “You go to workshops, and you hear horror stories,” Jean says. “Families won’t talk to each other. Ranches divide. That is a threat. How do you keep a 100-year-old ranch together for the next generation?”

The board meetings have a start-stop time and a structured agenda. They often include talks by outside experts. Assignments are given before the meeting—budgets, range management, cattle movements, fertility testing and branding, selling bulls, commodity markets and new market opportunities. “There is an element of accountability brought into the operation that we didn’t have before,” Jean says. “You are held accountable. What did you say you were going to accomplish? Did you do it?”

AGREEMENT IS KEY GOAL

Flying Diamond’s meetings are collaborative. The goal is consensus. “At the end of the day, we want to come up with a compromise we can all live with. This is a new concept for us,” Scott explains.

New is a continuing education standard. Time spent in continuing education is measurable and reported quarterly toward an annual goal of 300 hours. Safety is one component. Jean is the ranch’s safety officer. She has organized horse- and cattle-handling courses. “We specifically do safety training, communicate safety and track safety by hours per year.”

Calving runs from March through May. “We try to mimic nature,” Scott says. “We calve when the deer and the antelope and the elk calve.” Cows graze on spring grasses and not supplemental feed, and the calves generally miss late-season blizzards. Predation is better managed. Calves invite coyotes in the dark of winter. Coyotes have a wider menu in the spring, when the ranch’s wildlife also is giving birth.

“Deer and antelope spend zero dollars, and their offspring have a 50 percent survival rate,” Jen told ColoradoBIZ in a February article about Flying Diamond Ranch. The goal of the ranch, she explained, is to improve the odds of survival among the calf crop but mimic nature to lower production costs.

And here, an example of holistic management: “Our guys aren’t out in blizzards. The weather is better for the calf and better for us,” Scott says.

PATH TO PRODUCTIVITY

Cattle graze only 5% of the ranch’s ground at any one time. Nearly 200 miles of single-strand electric interior fence mark paddocks typically less than 300 acres in size. Cattle graze in some paddocks no more than three days in a growing season. Stocking rates once ran 40 acres per cow/calf unit. Today, it is 30 acres per unit. “We are able to run 30% more animals. Maybe we’ll be able to get to 20 acres per cow/calf unit with more intensive grazing,” he says.

Scott traces his land-management practice to several days spent 35 years ago with Allan Savory, the guru of grazing lands holistic management. Savory’s notion was to move cattle frequently—as bison moved themselves—by way of intensive, human-directed management.

Flying Diamond has laid out 20 miles of water pipeline with the assistance of Natural Resources Conservation Service’s Environmental Quality Incentives and Conservation Stewardship programs. Seven wells pump water to 23 stock tanks. The family has an eye to tightening its grazing practices—that cattle would graze no more than 1% of the ranch’s acreage at any one time.

Few ranches are as intense, Scott says. “Everything gets more intense the more intense we get. More monitoring, quicker moves. We are not know-it-alls. But, it can be a big benefit to the resource and a big benefit financially.”

ONE GENERATION TO THE NEXT

Holistic management is one of many parts. Flying Diamond Ranch has won its share of acclaim for this approach as the recipient of the Colorado Leopold Conservation Award and regional Environmental Stewardship Award, the latter partially sponsored by the National Cattlemen’s Foundation.

Awards recognize achievement. Flying Diamond Ranch tests new futures. Its organic cuts, for example, are finding customers in San Francisco. As a member of its advisory committee, Jean learns how the College of Agricultural Sciences at Colorado State University studies water conservation, sustainability, even urban farming. But also, meatless meat.

“It sounds like science fiction to us, but maybe it’s something that’s coming,” says Jean, not setting aside opportunity perhaps born of a petri dish. The future does not discourage Flying Diamond Ranch. “We’re bullish on agriculture,” Scott says.

The Flying Diamond Ranch evolves and grows and shifts for a time beyond Scott and Jean, and perhaps beyond Jen, Will, Myles and Charles—from today to a time for five grandchildren: Collins, Sofia, Clint, Stella and Henry, growing up among the hills of Colorado’s plain.

One generation builds on another. “We think,” Scott says, “that future is pretty bright.”

Livestock handling techniques all about reward training

  • Updated 
Ed Fryer
Ed Fryer on horseback inspecting yearling heifers along a fence in the fall at a Montana ranch with typical rangeland in background.

Livestock handling is all about animal behavior, according to Ed Fryer, who has managed Castle Mountain Ranch near White Sulpher Springs, Mont., since 1998 with his wife, Bev.

Ed and Bev are now mostly retired, and their eldest son, David, now manages the ranch.

Through the years, Ed and David became well known and well respected for low-stress livestock handling techniques.

In fact, for several years, they volunteered to demonstrate their techniques as part of the Beef Quality Assurance (BQA) program in Montana.

“The goal was to demonstrate simple low-stress solutions to common livestock handling tasks,” Ed Fryer said.

That portion of the program always received undivided attention and was well received by those in attendance.

“Humans, horses, cattle – it’s all animal behavior – and we’re no different than they are,” he said.

The basis of all animal training is reward training.

“It is about incentivizing a positive response somehow. It’s as simple as giving your dog a treat for doing the right thing,” he said. “With training horses, it is a system of pressure and release. You apply subtle pressure to get a response, followed by prompt release of pressure when you get even the slightest response in the desired direction. And it’s the same with cattle.”

Part of low-stress cattle handling is having a calm approach, letting the cow do the work, and setting up situations where both the handler and the cow have a high probability of succeeding.

One important concept that Fryer always brought up when they were conducting their BQA training was that there is a cumulative effect.

“If we do a poor job of handling a particular cow, the cow is going to remember what she got away with the first time,” he said.

When ranchers handle cattle consistently, cows begin to accumulate a body of learned behavior in either a positive or negative direction.

“It is up to us to set that direction in our favor. Everybody wins by doing it right,” he said.

There are certain situations that are difficult for cattle, and ranchers can take the time to evaluate the situation and make facility or other modifications to reduce difficult challenges. In these cases, it is okay to move the target.

“All we’re trying to promote (to livestock handlers) is to use our heads, realizing sometimes slowing down one facet can speed up the whole project, and to learn to set up situations where we have a very high probability of succeeding,” he said. “We have to make sure we’re in the right spot and are able to adjust our position quickly enough.”

One example Fryer gives shows the difficulty of moving heifers into a calving shed if the heifers perceive a scary situation with the layout.

“The layout was such that we had to put all the cattle through a back door with a shadowy dark spot that they really didn’t like to go into,” he said.

The crew built a simple lane on the opposite end of the shed to eliminate the need to go through that shadow.

“All we did was switch up the approach to the shed with some very simple construction,” he said. “It didn’t take us but two afternoons and a little bit of materials to switch it 180 degrees, and now one person can quite easily get a cow into the shed with almost zero stress.”

Fryer learned a lot about cattle handling as a crew member on a remote cattle ranch.

“The most proficient crew members became mentors to the younger crew members, with coaching often very blunt and direct,” he said.

That coaching, along with exposure to more modern horsemanship methods that were becoming popular in the ’70s, helped Fryer develop many skills that proved useful to him in years to come – and not only with livestock.

Fryer gives two examples of his mentors’ “blunt direction” that helped set the course for future professional development.

The first occurred while Fryer was a teen-ager on a summer branding crew for a “tough” cowboy outfit.

Yearlings were “mixed up” in the pasture, so the cowboys held the cattle up in a corner so the boss could sort them into their respective groups.

“I was assigned as a herd holder to assist in keeping the cattle together. My horse was barely trained, just like everybody else’s horse. I got bucked off a couple of times and I started complaining to the boss about the horse,” he said. “The boss finally told me to ‘shut up and make sure I was doing my job to the best of my ability, and the horse part would take care of itself.’ It worked, and I never forgot about it.”

Another example occurred while Fryer was in his early 20s.

Fryer and another young cowboy named George were sent out from a cow camp to search for calves, along with Sam, an older cowboy approaching 60-years-old.

It was winter, bitter cold, with a foot of snow on the ground.

“We had to ride several miles into rough country and look for some calves, weaned calves that a hunter had reported seeing,” he recalled.

The cowboys found the calves and started back to camp.

“We came to this little creek about 18 inches wide, two feet deep, drifted over with snow, and the calves didn’t want to cross it,” he said.

While the creek was invisible to the eye, both the calves and the horses knew it was there.

“You can hear the water gurgling down there and it was one of those oxbow-type creeks, so we had them trapped in one of the oxbows. These calves would not cross,” he said.

Fryer and George decided they needed to make a track for the calves to follow.

“We rode our horses back and forth across (the creek) two or three times, while Sam guarded the narrow entrance and watched,” he said. “The calves were not trying to get away, so we younger fellows were thinking that we had better just rope them and drag them across. But there were too many calves and we knew we couldn’t rope them all.”

Meanwhile, Sam said to the young cowboys, “You want to smoke?”

Since we had spent some years on the same crew, he knew we didn’t smoke.

“Sam looked at us in a direct and unmistakable way and said, ‘You guys would be a hell of a lot better hands if you at least had to stop and smoke once in a while,’” he said.

Meanwhile, the sun was sinking, and Fryer and George were getting nervous.

“George and I were tightening our cinches getting ready to rope, and while all this is going on, the calves are standing there watching us.” he said. “We had no choice but to sit on our horses and talk while Sam was smoking. Finally, those calves must have decided they were going to have to go somewhere, because all of a sudden, they just turned around and hopped across the creek and headed out towards where we wanted them to go all along.”

That taught Fryer a lot about low-stress cattle handling.

“We did not need to rope and drag them across. We just presented the option in a different way to get them to do what we wanted them to do,” he said. “Eventually, those calves decided, all on their own, that our horse tracks didn’t look so bad. They just followed our horses’ tracks, hopped across the little creek and away they went.”

That stuck in Fryer’s mind and he began to build on his cowboy skills.

Fryer has spent a lifetime on ranches in Montana and Wyoming, and he believes low-stress cattle handling is a way of handling cattle that leads to success for both cattle and hands.

10 Best Management Practices for Running a Profitable Ranch

Some folks purchase rural land for pleasure as much as for profit. Motivated by a dream of running a hunting operation, raising cattle or having their own place to roam, they may forget that the land can help to pay for itself.

Do first things first. Most people never accomplish their goals because they focus on what they know how to do, what they like to do, what’s easiest and what’s urgent. – Danny Klinefelter (Texas A&M University agricultural economist)

“Most people ranch or farm because they love growing things, they love animals, they love being outside, or they love being independent,” says Danny Klinefelter, an AgTexas Farm Credit board member and Texas A&M University agricultural economist. “Not as many enjoy the financial, marketing and people management sides of the business. But these days, that’s where you need to focus.”

Klinefelter offers ten best management practices that can be especially helpful for new ag operators and rural landowners.

“These are things that any producer can do, but that 95 percent of producers don’t,” says Klinefelter, who is also a farm management expert with Texas AgriLife Extension. “If you’re looking for ways to get better, this list would be a good place to start.”

 

1. Match costs with revenues. (Book)

Too many producers treat costs and earnings separately. Focus on managing the margin between costs and revenue by looking a few months ahead. Cattle producers, for instance, can lock in the price of future inputs such as feed, and then use the cattle futures market to protect their selling risk.

“Too often, farmers and ranchers wait to get a better deal,” Klinefelter says. “If you lock in a profit, it’s hard to go broke.”

2. Play “What if?” . (Website)

Don’t limit yourself to considering most-likely outcomes. Plan for the worst. Start with the four Ds—what if someone dies or becomes disabled, what if there’s a divorce, or what if a key player departs?

Klinefelter uses insurance to illustrate the need for contingency planning. If you take off a hay crop every year for extra income, you might be able to ride out a drought. But if you produce hay and cattle in a drought-prone region, you may want to consider weighing the cost of Pasture, Rangeland and Forage Insurance against the cost of  purchasing hay for feed.

“You might hate to pay the premium, but look at what could go wrong and ask yourself if you can afford it,” Klinefelter says.

3. Stay on top of your business. (Book)

“Successful managers monitor and analyze their performance,” Klinefelter says. “They’re more likely to spot problems and opportunities before it’s too late. Business problems are like cancer—they eat away at profits. But if you spot them early, they’re often treatable.”

For example, many ag operators take last year’s cash-flow budget and adjust it for next year.

“Usually, lenders won’t settle for this,” Klinefelter says. “They know that ranchers and farmers consistently overestimate projected earnings.”

Each month, check projections against current cash flow. If this month proves worse than projected, you may need to adjust your expenditures.

4. Establish priorities—the 80:20 rule. (Book)

The 80:20 rule says that 80 percent of what we accomplish is produced by 20 percent of what we do.

“Do first things first,” Klinefelter says. “Most people never accomplish their goals because they focus on what they know how to do, what they like to do, what’s easiest and what’s urgent.”

For example, if you operate a hunting ranch and prefer the hands-on work of building feeders and maintaining deer blinds over marketing, it might pay to hire a marketing professional to promote the business.

profitable ranch advice

5. Conduct autopsies.

Evaluate key decisions to avoid repeating mistakes. What went well and what went poorly? What did you overlook, and which assumptions led you wrong? What did you learn?

Consider the rancher who raises purebred cattle for potential embryo and breeding stock sales. If that business model is too labor- or input-intensive, it may be time to switch to a more traditional cow-calf business model.

6. Do little things better—the 5 percent rule.

“Studies show that the most sustained success comes from doing 20 things 5 percent better, rather than doing one thing 100 percent better,” Klinefelter says. “Also, the most profitable producers tend to be only about 5 percent better than average farmers in terms of costs, production or marketing.”

He uses wheat to illustrate how little things add up. Assume the seasonal average wheat price was $7 a bushel. Others waited for prices to hit $8, but that never happened. You locked in a sure thing by forward-contracting for $7.35, just 5 percent higher than the average price.

7. Benchmark your performance.

“Most producers have no clue how they stack up against their competition,” Klinefelter says. “They think they’re average or a little above—but it’s not possible for everyone to be average or above. How do you stack up against the top 25 percent?”

Consider, for instance, that you raise cattle, and your calves have a lower average birthrate than those on similar operations. Find out how others have improved survival rates in their herds.

profitable-ranch-advice-cows

8. Analyze what to stop doing.

“Successful managers spend as much time analyzing what they need to stop doing as they do evaluating new opportunities,” Klinefelter says. Such analysis can lead to shedding assets, enterprises, people, land leases or unnecessary practices.

He cites the case of a family that produced milo and cotton crops that were only marginally profitable. They generated more profits buying calves and putting them on winter wheat in November, and selling them each spring.

“These brothers decided to lease their cropland to other farmers and focus on what they did best—raising cattle. It made a huge difference,” he says.

9. Use accrual-adjusted income to evaluate profitability.

“Cash-basis accounting is great for simplicity and tax management, but it’s a poor way to measure true profitability,” Klinefelter says. “Cash-basis often lags accrual-adjusted accounting by two to three years in recognizing profit downturns and upturns. By then, it’s too late to respond.”

You don’t need an accrual accounting system, however; simply prepare balance sheets that reflect the beginning and end of the period for which you’re measuring income. Include inventories, accounts receivable, prepaid expenses, accounts payable and accrued expenses.

10. Learn from the E-myth principle. (Book)

The E-Myth” a book by Michael Gerber, talks about how many people believe they can succeed as entrepreneurs, when in reality most small businesses fail. Gerber maintains that most business owners begin with a fatal assumption—that if you understand the technical side of your business, you understand how to run the entire business.

Klinefelter suggests you apply this lesson to ranching, by learning about other players that affect your operation—employees, buyers, suppliers and funding sources.

“Find the top three things that most frustrate each of these groups in dealing with a business like yours. If you can reduce those frustrations, you can become the supplier, customer, employer, borrower or tenant of choice,” he says. For example, ag lenders such as Farm Credit like to hear from customers when changes occur—don’t wait until the end of the year to contact them.

Do you manage a ranch or farm? Share your tips for running a successful business in the comments section.


This article appears in the fall 2016 issue of Texas LAND magazine and was provided by Farm Credit Bank of Texas. Visit www.landmagazines.com to read more and subscribe to future issues of both LAND magazine and Texas LAND magazine.