Confession can take many forms, be it confessing to a crime, declaring sins or sharing information with reluctance. Woodrow, CO, cattle producer Mark Frasier chose to disclose his profit mindset to attendees of the 2008 BEEF Quality Summit.
- I'm not really a rancher
“I'm a grass farmer,” Frasier says. He and two brothers run the family ranch that consists of a cow-calf and stocker component, retaining ownership in some cattle they graze.
“What we're really selling is grass,” Frasier says. “Livestock is simply how we market it.” He says this concept helps him make management decisions; every decision needs to maximize revenue generated from forage.
Though he might like to increase gain or raise bigger cattle, he can't always justify those goals when he factors in the cost of the inputs necessary to make it happen.
Frasier's operation utilizes seasonal grazing due to the nutritional value of the grass. “During the growing season, our grass is much more nutritional; it has much more productive value,” he says.
But in the dormant growing season, the grass has much more economic value. Consider an example using tomatoes. In the summer, because of abundance, a tomato is worth about $1/lb. Come January, it's worth about $4/lb. “The same is true for our forage,” Frasier says. “In the dormant season, the grass has great economic value to us.”
To alleviate having to purchase forage in times of peak demand, Frasier maintains a forage bank, or reserves. It's especially important during dry years.
“It's imperative for us to maintain a forage bank we can use during the growing season and carry over into next year,” he says.
- I'm a commodity producer
“There are benefits to being a commodity producer — the greatest is liquidity,” Frasier says, pointing out that on any given day, livestock can be turned into cash instantly. Liquidity is often overlooked in a cowman's financial strategy.
Another advantage is the ease of entering and exiting the business. “If we don't like the circumstances, we don't have to play,” he says, be it environmental issues, market conditions or another factor.
Here are Frasier's rules for being a cash-minded producer.
- Provide what the market asks for
If the market asks for natural cattle, provide natural. If it's source verified, provide source verified. “That's one of the great things about this business,” Frasier says. “There are a number of differences in the livestock we produce.”
- Producer-supplier relationships are key
“Maintain good relationships with the people you work with and make sure their needs are being met,” Frasier says.
- Produce consistently
“I'd rather have an animal that produces consistently, rather than one that's necessarily superior,” he says, “because I can count on them.” Predictability helps Frasier plan. In his experience, cattle treated in a consistent manner move to the next stage of production and perform in the same manner as previous sets of cattle.
- Be flexible
“There are times it pays us to hold on to our cattle and times when we want to move those cattle along faster,” he says.
- Volatility is your friend
“When the market moves up and down, it creates opportunity,” Frasier says. He recommends commodity producers plan their production model around the seasonality of the market.
- Information is valuable, because it differentiates a product
Whether it's documenting where cattle originated, age, or how they've been handled — that information has value. “The same animal without it is worth less,” Frasier says.
- I don't always hit a home run
Legendary baseball player Ted Williams said: “Baseball is the only field where a man can succeed three times out of ten and be considered a good performer.”
What made Williams the best hitter in baseball history, Frasier says, wasn't his ability to get a hit every time, but an average that was 50 points better than that of the next guy. “There's plenty of room for excellence and improvement without being perfect,” Frasier says. “Ours is an imperfect business.”
Risk management is an area in which all cattlemen can improve, he points out. While strategies exist to deal with market risk and natural disasters, he doesn't believe all risk factors have been accounted for. Two examples are political and economic factors. Then there are family and business succession risks, and culture and demographic changes.
“I challenge you to do a risk assessment,” Frasier says. That doesn't mean there will be an answer for every situation and a way to deal with each issue. “At least you will recognize what external and internal factors can influence or threaten your business,” he says. Then, if a problem results, you have considered it and have possible strategies to mitigate any losses.
Editor's note: To watch video synopses of the full program of the 2008 BEEF Quality Summit in Colorado Springs, CO, go to: http://beefmagazine.com/beeftv/bqs08/.
Alaina Burt Mousel is based in Brookings, SD.