Workshop Teaches Ranchers How To Become More Profitable
Workshop Teaches Ranchers How To Become More Profitable
Story by Alexa Singh, NRCS Student Intern
A self-sustaining, profitable ranch is the goal for many Texas ranchers. However, obstacles such as high input costs, weather and volatile economic markets can keep the dream from becoming a reality.
More than 160 attendees learned from the experts how to turn ranching into a more sustainable and profitable operation at a recent ranch management workshop held in Beeville.
ï¿½The agriculture industry is changing and the ranching community is not immune to this change. It is increasingly more difficult to be profitable and sustainable in ranching when inputs and costs have dramatically increased, while returns have remained relatively constant,ï¿½ said Tim Reinke, USDA-Natural Resources Conservation Service (NRCS) range management specialist and Coastal Prairies Grazingland Conservation Initiative (GLCI) coordinator. ï¿½The importance of this workshop was to provide landowners and managers the necessary tools to become or remain profitable in the tough economic times, while profiling ranchers who are successful in doing it.ï¿½
Speakers included local ranchers Steven Lukefahr of Lukefahr Cattle Ranch in Kleberg County and Daniel Boone of San Pedro Ranch in Dimmit County. Ranching for Profit trainer, Dave Pratt of Ranch Management Consultants, also spoke at the workshop.
Lukefahr presented information that focused on helping ranchers minimize production costs, while maximizing returns. He focused on cattle bred specifically for resistance to south Texas obstacles; such as drought.
ï¿½Having the correct type of cattle is the first step to a successful, profitable ranch,ï¿½ said Lukefahr. ï¿½Cattle from Africa, India, and similar climates have been subjected to natural selection, allowing them to be more heat tolerate.ï¿½
Lukefahr favors the Senepol breed of West Africa and the Tuli breed of South Africa. He said when these are crossbred with Red Angus, the ï¿½ideal South Texas hybridï¿½ is created.
ï¿½A sound cattle breeding program ï¿½ in combination with proper grazing and forage management, even in droughts, with careful monitoring and maximum flexibility ï¿½ can generate reasonable profits in south Texas,ï¿½ said Lukefahr.
Keep the best and cull the rest was a reoccurring theme throughout the workshop. Boone manages a 24,000-acre ranch that is divided into 16 pastures where large scale rotational grazing is practiced. His livestock management philosophy is centered on utilizing efficient animals that will harvest standing grass with as few costs as possible.
Boone employs a rotational grazing system, believing that ï¿½the cattle will tell you when they want to be moved ï¿½ only they know.ï¿½ He only keeps cattle with a favorable disposition and performance. Boone said drought is not an obstacle, but an opportunity when used as a culling tool.
ï¿½The animals are culled based on how they deal with what Mother Nature provides,ï¿½ he said.
Boone advocates using cattle grazing to manipulate and enhance wildlife habitat. The combination of cattle and wildlife is a factor that has contributed to profitability on this large ranch. Rotational grazing has helped Boone keep exotic grasses in check, while allowing for efficient use of the forage produced. Plenty of grass is left in the pastures for wildlife cover and speedy drought recovery.
Pratt was the workshopï¿½s keynote speaker. He spoke about cattle ranching profitability. ï¿½Seeing is believing. Believing is seeing. You must believe that your ranch can be a profitable, self- sustaining business in order to turn it into one,ï¿½ said Pratt.
He explained that some producers focus on ranchingï¿½s lifestyle and working on a ranch, when they need to be focusing on the money and running the ranch as a business.
Pratt highlighted the difference between a collection of workable assets and a profitable business, concluding that unprofitable ranches are not truly businesses. Pratt encouraged ranchers to consider changing their management practices. ï¿½The world is not the same. It has gone through ecological, environmental, and social change. Itï¿½s time for a new challenge. The old ï¿½rulesï¿½ will not work anymore.ï¿½
Pratt addressed the current drought situation with an ultimatum. ï¿½Crisis is a threat or an opportunityï¿½you cannot wait for a crisis to make a change or else you will lose the opportunity.ï¿½
He encouraged producers to turn their ranch into a profitable business by preparing for a change, instead of when they are forced to make a change.
Pratt also discussed obstacles to profitability, including overheads (land and labor) and direct costs (feed, herd health, transport, marketing), as well as economic and financial motivations.
ï¿½The only three ways to increase profit is to reduce or cut overhead and direct costs, increase turnover and increase the gross margin,ï¿½ said Pratt.
In turnover, Pratt referred to buying and selling livestock at opportune times in order to optimize profitability. For example, selling calves and buying replacements where they can be bought cheaper as opposed to being produced on the ranch.
Since most ranchersï¿½ fixed assets are tied up in land, Pratt gave examples of how ranchers can capitalize their land, while still ranching and living on the property. Opportunities include wind energy, hunting leases, a working cowboy ranch, and even selling the rights to create and manage a recreational business on the land.
Pratt said only 30 percent of ranch owners are successful in passing their ranch intact to the next generation.
ï¿½Until cattle ranchers can accept and make the needed changes to work smarter and not harder, they will not realize the reality of their dream of a self-sustaining profitable ranch,ï¿½ concluded Pratt.
Dr. Poncho Hubert, who ranches in Riviera, was a workshop attendee. He said the workshop increased his awareness about business possibilities in ranching, along with the realities of ranching.
ï¿½After attending the seminar, I become more aware of the business possibilities with ranching, coupled with the reality of ranching. This program was able to help me identify, quantify, and prioritize risks associated with ranching and develop options on how to deal with them,ï¿½ said Hubert. ï¿½A few of the specific points include the livestock philosophy of finding opportunities to enhance the value of your animal, e.g. grass fed beef, taking advantage of opportunities unique to your locale, and integrating todayï¿½s technology in marketing.ï¿½
For more information on dealing with drought and ranch profitability, visit Prattï¿½s website at www.ranchmanagement.com or for more information on technical and financial assistance for drought conservation planning, visit your local USDA-NRCS office or www.tx.nrcs.usda.gov.
Dave Pratt tells ranchers that they need to plan ahead for drought. It won't be the drought that determines whether they make or lose money, rather how they position their business in relation to the drought risk and the decisions they make once the drought hits. In drought, the negative effects of poor management are increased while the positive effects of good management are intensified. An effective drought management plan has to address land, livestock, money and people.
Steven Lukefahr of Lukefahr Ranch discusses how cattle production on small ranches can be profitable when you incorporate cattle that have genetics for dry hot conditions that manychallenge ranchers in south Texas as well as optimize the land management.
Dave Pratt used a stuff Longhorn to illustrate many of his presentation points and add humor to his Ranching for Profit session.