Here at the Shovel Dot Ranch, on the eastern edge of Nebraska’s storied Sandhills, a sea of grass fosters a staggering volume of beef. Even in poor years it can, if you focus first and foremost on nurturing this unique land.
That’s what Homer and Larry Buell’s great grandparents discovered when they settled here in the 1880s, establishing what would become the Shovel Dot Ranch, south of Bassett — this year’s BEEF National Stocker Award winner.
Moreover, that’s the commitment they made to the land, an unwavering dedication passed down the line to Homer and Larry and their wives, Darla and Nickie, and on to their kids — the fifth generation — now directing day-to-day management.
Cattle have always been a mainstay — both a tool to nurture the land and the hopeful currency to carve out a sustainable living. Since the 1930s, stocker cattle and grazing yearlings have been a substantial part of the strategy.
“Everything is geared toward our yearlings and how we handle them,” Homer explains. “Our father and grandfather sold 2-year-old steers. Each generation has taken that part of the business and refined it and done it differently.”
Improving the system
For Homer and Larry, these refinements revolved around taking a more business-minded approach to managing their ranch.
“My grandfather used to say if a rancher wasn’t in debt, he was doing something wrong,” Homer explains. “My grandfather was a very good manager. What he said was right for his times but not for ours. We are in a time of low margins, and rate of returns are not high enough to overcome large amounts of debt.”
In the late 1980s and early 1990s, nosebleed-high interest rates and intensive leverage were taking plenty of agricultural operations out of business. After a couple of years of losses, Homer and Larry decided they had to figure out how to make the ranch profitable in even the most challenging economic times. This coincided with buying more ground to expand the ranch in 1986.
They’d always managed the ranch — cow herd, backgrounding enterprise and stocker operation — as a single system, but they concentrated harder on the interaction of individual enterprises within the system.
It wasn’t a matter of flipping a switch, quitting one thing and starting another. For them, it was a matter of starting to wrap arms around their ranch’s economics.
They got involved in Standardized Performance Analysis (SPA) and Holistic Resource Management. They worked with the Farm Financial Standards Council (FFSC) to test new managerial accounting methods for agriculture. They started cost accounting, using procedures developed by FFSC and Jim McGrann, the agricultural economist at Texas A&M University who pioneered SPA. They also worked with McGrann one on one.
“Without a good recordkeeping system, you really don’t know what your costs are,” Homer says. “For example, if you don’t have an effective system in place, you don’t know your unit cost of production. You don’t know what it costs to produce a pound of weaned calf, a ton of alfalfa or a bushel of corn. You don’t know what it costs to run a cow for a year. Without answers to these questions, you can’t know where and how to cut costs.”
Bottom line, they now track specific costs. They know what it costs to produce hay from their native grass and irrigated alfalfa, for instance, so they know when it’s more economically advantageous to sell or to buy. Detailed records also told them that feeding alfalfa as a winter supplemental protein source was more cost-effective than the cottonseed cake they’d used for years.
They know the accumulated cost for their calves at every stage of production. They can document winter gains and winter cost of gain. They know how their cost of gain compares to the industry.
Before, the value of their calves was established when the cattle sold as yearlings. Now, values are assigned to calves entering and exiting their winter backgrounding program, then entering and exiting the yearling portion of their operation. They’ve gone as far as tracking time and assigning it to each enterprise, along with indirect costs.
“It was a matter of really looking at our different enterprises and knowing what we were doing with each one, and then we could make decisions about how it impacted our system,” Homer explains.
That starts with the grass.
Grass is the asset
Early in their ranching careers, the brothers explain that when they were on horseback, they spent lots more time eyeballing the cattle than the grass beneath them.
“Then we began to realize how important rest was to the grass. We started watching the resource more closely and managing grass as an asset,” Larry says. “Grass is what we have to sell. The forage and the water, managing it to the best of your knowledge. About the same time, we were evaluating everything we did.”
Specifically, the Buells started a long journey of installing pipe throughout the ranch to carry water to larger bunches of cattle in smaller pastures. They’d done some two-pasture and three-pasture rotations in the 1980s. These days, there might be 13 smaller pastures (half-sections are the smallest) that groups of cattle cycle through.
“Cutting up the ranch into smaller pastures was a huge change that gives us better forage utilization,” Homer explains.
The brothers credit software developed at Texas A&M, The Grazing Manager, with helping them develop effective grazing plans. They also credit help from ranch management consultant Terry DeGroff and his management information systems.
“In the winter, we develop grazing plans for the summer and fall,” Homer explains. “As the summer progresses, the plan is changed to reflect what’s actually going on, so at any time we can tell what grass is available. The winter grazing plans are formulated in late fall.”
Over time, the Buells can compare usage and land effects by recording how cattle flowed at the end of each grazing season. Key measures they track include animal unit months (AUM) per acre.
What pays at Shovel Dot
Boiled down, the Buells target selling 9-weight English crossbred cattle through Bassett Livestock Auction in July and August.
None of that is what they’ve always done. All of it represents deliberate choices made on the basis of system information.
“We feel like 9-weight steers work best for our profitability and for the industry,” Homer explains. “When we started doing closeouts, we could see what was most profitable.” The weight, combined with market seasonality, represents the peak economic efficiency for them.
As far as the English crossbreds, Larry first explains the evolution of the Shovel Dot cow herd: Hereford, then Angus and Hereford in a two-breed rotation; then using Charolais as a terminal cross on those cows; and then straight-bred black.
Incidentally, the Buells use software from the University of Nebraska’s Great Plains Educational Center, Cow Calf 5, to keep individual production records for their cows.
“In the 1990s when we used Charolais bulls, our feed cost of gain was double for our English crossbreds,” Larry says. But, he explains, those Continental crossbreds were sold earlier in the year because of the faster gain. Consequently, the slower-gaining English crossbreds were more profitable because of market timing and being sold in the sweet spot of July and August, even though their cost of gain was higher.
Besides, this is the genetic profile most valuable to buyers in their primary market, which is Bassett Livestock Auction.“We’re in a unique market where the highest-priced feeder cattle are sold in the United States,” Homer explains.
Anyone who follows weekly auction reports for any length of time quickly understands the reality of that statement. With the quality of the cattle established by consignors over the years, the proximity to commercial feedyards and farmer-feeders with access to lower-cost feed, bids typically flow more freely there than anywhere else.
In the early years of their partnership, Larry and Homer sold a lot of calves via direct trade, but found price discovery to be problematic. Over time, they’ve experimented with everything from retained ownership to developing cattle for specific branded beef programs. “You’ve just got to keep an open mind about anything you do, and be willing to change,” Larry emphasizes.
“We decided the yearling deal is what we know and could do well, and there wasn’t any advantage to us in retained ownership,” Homer says.
Keep in mind, another reason their local auction is typically their market of choice is because of the reputation of Shovel Dot cattle. Even so, the Buells have been known to supplement sale barn advertising with their own, emphasizing that the cattle come from a certified Beef Quality Assurance program and the like.
“BQA records, management and health history is available if the buyer wants it,” Homer explains. “Our vaccination and implant programs are always communicated to the buyer at the time of sale.”
Plus, the Buells follow up with their buyers. “We always stay in contact and visit the feedlots where our cattle go to check on performance and carcass data, as well as to visit about our future breeding program,” Homer explains.
This focus on maintaining the reputation of their cattle extends to the calves the Buells buy each fall.
“Years ago, we always thought we could buy some cattle and upgrade them,” Homer explains. “We’d have all different kinds and colors in our purchased cattle.” These were 4-weights purchased in the fall and aimed for the summer market.
Through the years, it got harder to find the quality of 4-weight cattle they wanted. Plus, the quality they were buying was decidedly different from that of their own calves.
A neighboring rancher — a member of their community ranch management group that met to exchange ideas — asked them one day why they would consider buying and marketing cattle of a quality that paled in comparison to the reputation they’d established for their home-raised cattle. That sunk in.
“I thought we could be more profitable — and we switched to buying high-quality, black-hided cattle to maintain the reputation we’d built,” Homer explains. “We’re trying to deal with top-quality cattle, whether they’re our own or purchased.”
The Buells buy cattle to background in late October and early November that weigh in on the lower side of 500 pounds. Purchased cattle are backgrounded to gain less weight than home-raised calves because they tend to come off grass at slightly heavier weights. This year, purchased calves were sold as yearlings in July on Western Video.
Home-raised calves are weaned in September and October. They run on hay flats fenced with hot wire until about the first of November, gaining about a pound a day. Then, the calves head into the backgrounding program after being divvied up into three groups: heavy steers, light steers and heavy heifers, and light heifers.
Typically groups will be fed to gain 1.5 pounds to 2 pounds per day. This is a high-forage diet that includes native hay and distillers grains.
Around the first part of May, these calves go to summer grass, where they’ll gain better than 2 pounds per day. Shovel Dot’s purchased steers this year weighed 990 pounds when marketed in August. They gained 2.5 pounds per day on grass.
The home-raised cattle are managed and marketed separately from purchased cattle. Buyers know if they’re buying a load of Shovel Dot’s native cattle or calves the ranch bought and developed. The home-raised ones bring more, but the gap between them and the purchased ones is lots narrower than it used to be.
“We’ve done more with closeouts, really knowing how we wanted to market and what we want to do,” Homer says. “Earlier on, we weren’t as precise about achieving a certain amount of weight gain.”
Gearing the rest of the system to boost efficiency and returns in their yearling operation also led the Buells to change their calving season from late winter to May 1. They explain that it reduces cow costs by more efficiently matching the nutritional needs of the cows to the available forage. It also dovetails with the goals of their backgrounding and yearling enterprises.
“We can control the inputs, but we can’t control the markets,” Larry says. “It’s not an exact science. There are so many fluctuations each year.”
“We look at it as what works best in our system,” Homer says. “You also have to have a system you like.”
People drive everything
Spend even a little time with the brothers and you’ll hear how this person and that one have helped them accomplish what they have over the years. “We’ve evolved a lot based on information from lots of different people,” Larry emphasizes.
“We’ve always felt that surrounding ourselves with good people has been extremely important in whatever success we have had,” Homer explains. “First and foremost is the partnership between Larry and me and our families. But, we also have a good team around us. Whether it’s the banker, an Extension agent, hired men or veterinarians, using other people’s expertise in making management decisions has been important.”
The Buells also make a point of inviting folks to the ranch to ogle their operation through different eyes and areas of expertise. Folks like Temple Grandin, the internationally acclaimed animal behaviorist. Folks like Tom Noffsinger, DVM, a nationally recognized animal handling expert. Folks like representatives from a restaurant chain in Great Britain — that buys Nebraska corn-fed beef — who visit annually.
In every case, the Buells explain they have a chance to learn something new, while reaffirming what they’re already doing.
“You look at it through the eyes of someone different, why you do certain things and how you do them,” Larry says.
“There are a lot of good people in the industry,” Homer says. However, people also represent one of the greatest challenges to the future, the brothers believe. “Labor — that will be the biggest challenge,” Homer says. “Finding people who want to live out here.”
It’s a good 45 minutes from the Shovel Dot Ranch to Bassett, population about 600.
Although some folks spend more than a decade working at the Shovel Dot, the Buells know they must offer employees more than a paycheck, given the trend toward dual-income families and parents wanting to spend more time with kids.
“We’re a good place to learn,” Homer explains. “Part of that is sending employees somewhere every year for further education. But, it’s also through what they have a chance to learn here day to day.”
Larry and Homer are actively involved in the Rock County Community Fund, which focuses on growing business and family opportunities in Bassett. “There has to be an infrastructure where you can have a good quality of life,” Larry says. “You have to create a good community in which to live, and a good work environment.”
Incidentally, the brothers believe another key challenge facing the cattle business now and in the future is simply the perceptions held by people unfamiliar with agriculture. “We have to let people know more and more about what we do and why we do it, or be faced with bigger challenges through more regulations,” Homer says.
Hosting a reporter and photographer from the Los Angeles Times years ago at branding time — coordinated by the National Cattlemen’s Beef Association — underscored the value of opening their gate to diverse visitors. “We had confidence in ourselves that we could handle it in a way that would be good for the industry,” Larry says.
Never stop learning
All of this is why Larry and Homer made the deliberate decision years ago to be involved in the cattle industry through its trade organizations, both to learn and to give back.
“We decided early on that we wouldn’t ever be the biggest, but we wanted to try to be the best,” Larry says. “We wanted to give back, too, and that’s when Homer got involved in the cattle organizations.”
The brothers remember the day they sat down to decide which one of them would be the ranch representative in state and national cattle affairs. There were obvious pluses and minuses either way. The one who went had to be gone. The one who stayed would have more work to do. Whether it was the short straw or the long one, Homer is the one who got involved lending volunteer leadership in state and national organizations. Neither has ever regretted how they’ve gone about it.
“Homer would meet these people,” Larry explains. “I was more of a traditional type of rancher. I never would have met them if it wasn’t for Homer.”
“The contacts we have made and the knowledge we have gained by being actively involved in the Sandhills Cattle Association, the Nebraska Hereford Association, the Nebraska Cattlemen and NCBA, just to name a few, have been invaluable,” Homer says. “I believe our ranch and our outlook on things would be much different if not for our association with these organizations and the other people that are members.”
This industry view — looking beyond their ranch gate and taking responsibility — was nothing new to them. Their grandparents instilled the notion of accepting responsibility for industry involvement beyond their own business to their parents, who instilled it in them.
“Grandpa’s folks, right on down the line,” Homer explains. “He was very involved. Dad was president of the school board. He was president of the state Hereford association.”
“Grandpa Shaw was on the board of regents at the University of Nebraska,” Larry says.
Besides, such involvement is another conduit for continued learning.
“You want to challenge your mind and continue your education. You’re never too old to learn,” Larry says. “We’ve always, both of us, been open to trying new things.”
That also means maintaining an unassuming mindset.
After four decades of working so closely together, Larry grins and explains, “We kind of know what each other will say before we ask. But, we still ask.”
Sponsored by Zoetis, the winner of the National Stocker Award receive $2,000 in Zoetis products and $1,000 in covered expenses to attend the 2016 Cattle Industry Convention, to be held Jan. 27-29 in San Diego.
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