There are signs that Florida pasture values may have finally stabilized, after a sharp 29% fall from the housing-development-fueled 2008 peak of $5,930/acre, to $4,200/acre today. Most speculators have either sold, or have been wrung out of the market via foreclosure and forced auctions.
One person who has piqued interest in Florida ag land is Frank Stronach, an 81-year-old, Austrian-Canadian businessman who founded auto-parts giant Magna International. Stronach sold his controlling stake in Magna in 2010 for nearly $1 billion, and has now set his sights on building a vertically integrated beef production venture on a scale akin to the late Colorado beef baron Kenny Monfort.
Where Monfort changed the beef industry by combining several operations — beef feedlots, slaughter, meatpacking, sales and distribution — Stronach is taking the cattle business back to its rangeland roots, and aims to tap into growing demand for grass-fed beef.
Adena Meats is born
Since 2010, he has invested an estimated $200 million to acquire 86,356 acres of planted pine and pasture in central Florida’s Levy, Marion, Taylor and Putnam counties, and build a meat processing plant to produce organic, grass-fed beef. Stronach plans to spend another $60 million to develop the pinelands into pasture.
The venture, known as Adena Meats, is now running 1,850 Brangus cows (up from 325 in 2007), and nearly 700 2-year-olds and 1,000 yearlings, on 6,500 acres of pasture, says Rick Moyer, cattle manager and a Volusia County native who spent four years at St. Cloud, FL-based Deseret Ranches, and joined Adena Springs Ranch in 2003. Moyer hopes to be running 15,000 mama cows on 50,000-60,000 acres in six years. That growth will come as much as possible by retaining the ranch’s heifer calves.
If realized, Adena Meats will vault to among the top three cow-calf producers in Florida, after Deseret Ranches (44,000 cows) and the Seminole Tribal Cattle Program (17,000 cows).
Key to the venture’s success will be its ability to ensure a year-round supply of high-quality forage. Stronach aims to construct 34, 134-acre, pivot-irrigated pastures for the finishing-fattening cycle. The pastures will be planted with forage crops matched to the growing season and cattle production cycles.
Mark Roberts, Adena Meats ranch manager, figures this will require 4,556 acres of irrigated pasture. But the ranch’s irrigation water-pumping permit has been delayed nearly two years over concern that the ranch development threatens the Floridan Aquifer and nearby Silver Springs.
In December 2011, Adena Springs Ranch requested an allocation of more than 13 million gals. of water/day for its cattle grazing operation. It has since chopped its request to 5.3 million gals., following local opposition. In the interim, Stronach purchased two sod farms and is using the land’s existing water permit to grow 650 acres of irrigated pasture. Roberts says he hopes to resolve the water permit request by spring 2014.
Adena Meats figures its grass-fed cattle will take 22-24 months to reach a slaughter weight of 1,100-1,200 lbs., vs. 16 months for conventional grain-based feedlots.
In November, the venture will conduct test runs of its new 61,000-sq.-ft. processing plant near Fort McCoy in Marion County. The plant is designed to slaughter 150 head two days/week, and process carcasses into cuts the remaining three days.
Stronach initially plans to market his grass-fed beef at a new Miami restaurant slated to open in February. The eatery will be paired with a custom butcher shop that features Adena-raised, grass-fed beef; free-range chicken; and produce. Assuming the Miami restaurant and retail-store concept is successful, additional locations will follow.
“Someone new stepping into the game, especially on a large scale, helps send a message that Florida is indeed a good and viable place to continue to cattle ranch,” says Dusty Holley, director of field services at the Florida Cattlemen’s Association.
Florida ranks 12th nationally in beef cattle production, with about 908,000 cows. Last year, 860,000 calves were born in the state — and nearly all were shipped to the Texas Panhandle, Oklahoma and Kansas for backgrounding and finishing.
Holley says that drought in the Southern Plains has prompted other herd expansion efforts in Florida. He expects the 2012 Census of Agriculture to show a 20,000- to 60,000-head jump in Florida cattle numbers when the results are released in early 2014.
Pineland to pasture
Florida's mild climate, together with its 50+ in. of annual rainfall, offers nearly year-round grazing – more so than in any other state except Hawaii.
One of the biggest challenges in launching Adena Meats’ grass-fed beef venture is developing most of its nearly 70,000 acres of pineland holdings into productive pasture. It costs $1,000/acre to convert pineland to pasture, says Mark Roberts, ranch manager. That represents another $60 million in development expense on top of the venture’s $148 million land acquisition cost.
Rick Moyer, Adena Springs’ cattle manager, declined to share his cost-per-pound of gain target. “We are still building and moving stuff around and planting where ever we can,” he says. “So we don't really know where our cost of gain is at this point.” Moyer is targeting a conservative stocking rate of 4 acres/cow-calf unit.
Converting the ranch’s stands of loblolly and slash pine to pasture is a 2-3-year process. If the land has standing pine, the timber is harvested and left idle for six months. Then field debris is chopped and left for another 6-12 months before being chopped again. Next, the stumps are pushed up with bulldozers and left to dry for two months before being raked up and burned.
Once cleared, work crew disk the field twice and plow down 1.5 tons of lime/acre, and then disk in a second 1.5-ton lime application; level the field with a land plane and the field is ready for planting. New pastures should reach full production two years after planting.
Though Florida’s Flatwoods soils can hold a lot of moisture, they are also highly acidic, so Adena Meats must sample pasture soils every year. Brood cows will be pastured primarily on bahiagrass, a perennial warm-season grass. Weaned calves will be moved to higher-protein “finishing” pastures seeded with a mix of clovers and annuals such as rye, oats, wheat, and ryegrass for winter grazing, and Alice Clover, millet, sorghum and bermudagrass in the summer.
Michael Fritz is editor and publisher of Farmland Investor Letter. Reach him at [email protected] or visit www.farmlandinvestorcenter.com.
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