Narrowing margins are challenging enough when you own stocker cattle; they're a killer when folks are paying you to start theirs.
"The biggest challenge these days is overcoming increasing operating costs without being able to increase our fees to clients," explains Brock Karges of Wanette, OK, who owns and operates Triple Heart Ranch with his wife, Shelia.
"It's not just the fuel tank, it's everything tied to the fuel tank. Increasing costs and decreasing margins are a huge factor in a customer-driven business," continues Brock. "As margins get smaller and smaller, and customers can't pay you more for your service, you have to run more and more cattle." This is also true when you own the cattle, but it's magnified when you don't.
That's why the Kargeses decided they'd better start running some of their own cattle this year along with their customers. Not only was the decision a departure from Brock's fiscally conservative leanings, it represented a shift in philosophy about risk.
When the Kargeses began their backgrounding/preconditioning operation in 1998 they decided to own the land, but let their customers stand the risk on the cattle side. Keep in mind, neither Brock nor Shelia come from stocker families back home. They learned the business by working for others for seven years before embarking on their own, from scratch. These days the Kargeses put about 20,000 head through their backgrounding/preconditioning system, besides grazing 7,000 to 9,000 head on summer grass each year.
In both cases, they explain, "Our primary goal is to generate as many dollars per head for our customers and us while the calves are under our control." Since so many things happen or don't happen to calves before arriving here, that's obviously easy to say but tough to do.
"Your problems come by the truckload," Brock says. "You have no control over what the cattle are, what the weather is when they're marketed and trucked here, and no control over what happened to them before they were marketed. Those are the three clouds looming over you, although you're accountable for the performance, death loss, chronics, sickness and health costs related to those things."
That's why Brock and Shelia created another business five years ago called Grass Roots Beef (GRB). Briefly, trained regional GRB reps provide the manpower, equipment, expertise and products to vaccinate calves before they leave the ranch. Whether GRB members or not -- membership is free -- deciding to wean and get another round of shots into the calves is their choice. But to receive Grass Roots services and benefits -- including reduced-cost feed, minerals, pharmaceuticals and pasture chemicals -- members must agree to let GRB put at least one round of vaccinations into them. These calves are then eligible to sell in approved GRB sales -- premium time slots at regular auction sales; GRB reps are on hand to explain the health and performance documentation on the calves, and the Kargeses have alerted a growing network of buyers GRB calves will be available at the sale.
"Our goal is to help put preconditioned calves into the marketplace so wherever they end up, they have an opportunity to make a profit on the market side because we're taking risk out of the health side," Brock says.
This focus on health is also behind the Kargeses' emphasis on calf nutrition and patience.
"We've learned through experience that good nutrition is the most important aspect of a preconditioning operation. Nutrition has a direct impact on the effectiveness of vaccines, reducing sickness, chronics and deads," Shelia says. "Getting a calf started on feed quickly is better than any antibiotic or vaccine. If the calf has a proper plane of nutrition, his system will respond to vaccines and antibiotics."
Brock emphasizes, "It may take two hours to gets new calves settled on the feed bunk that first day, but it's the most valuable time we spend."
Moreover, they say nutrition is all about the specifics. Though it ran counter to Brock's least-cost philosophy of feeding commodities, he and Shelia discovered several years ago they, and their customers, were money ahead by feeding a total mixed ration.
"It changed everything. Sickness and death loss is so much less and the performance is there," Brock says.
As for the patience part of the equation, none of the calves arriving at Triple Heart are touched for the first 12-24 hours, but have access to hay, mineral and water. After the calves are processed, Brock and Shelia won't jump the gun pulling and treating calves, either.
"It's proven to me over and over again that the calf just needs time. I'm adamant that as an industry we over-doctor cattle," Shelia says.
Rather than a belief based on conjecture, this notion, like everything else at Triple Heart, is backed by extensive recordkeeping and documentation, which was also born out of Brock and Shelia's frustration with trying to control the unknowns.
When they first started, Shelia explains they received some drought-stressed, flyweight calves that needed lots of doctoring, which they did. When all was said and done though, the calves' owner accused them of not administering all the antibiotics they charged for. So, the Kargeses started documenting everything.
Literally starting with Big Chief tablets, Shelia set about recording every aspect of the calf's time at Triple Heart. With the benefit of computer programs, these days new Triple Heart customers receive a weekly calf health report; existing customers receive a monthly report with their invoice.
"Customers can deal with information, good or bad; it's the surprises they can't handle," Brock says.
Incidentally, the report on any mortality includes the results of a necropsy Shelia performs herself. "It really opens your eyes and the eyes of your customers to what's going on," she says.
For all the evolution, the Triple Heart focus remains the same as when the program started: "We love seeing calves come here, get healthy and conditioned, then move on to the next phase of the business," Shelia says. "You just have to continue to evolve and look for ways to improve."
The National Stocker Award (NSA) competition was divided into three categories: Backgrounding/drylot stocker (feed-based); Fall/winter stockering (forage-based); and Summer stockering (forage-based). A single winner was chosen in each category, and the overall NSA winner was selected from these finalists.
Triple Heart of Wanette, OK, was named winner of the backgrounding/drylot category. Doug Rogers of Collins, MS was named winner of the fall/winter category. Each operation received a $2,500 cash prize from NSA sponsor, Elanco Animal Health. Overall NSA winner, Hughes Cattle Company of Bartlesville, OK (winner of the summer stockering category) received a $10,000 cash prize.
Profiles of each winner appear in the October issue of BEEF magazine, available online at www.beef-mag.com.