While high fuel costs are a concern and are affecting breakevens at the ranch and the feedyard alike, in most cases, it’s a matter of just bowing up and taking it. While there are always ways to get more efficient and cut fuel use, the simple fact of the matter is that it takes fuel to raise cattle.
This isn’t the first time in recent memory that gas and diesel prices have spiked, says Jay Gray. He’s general manager of Graham Land & Cattle Co., Gonzales, TX, an operation that involves, among other things, commercial cow-calf production and commercial cattle feeding.
“From a fuel perspective, it’s not like it hasn’t been fairly expensive before this,” he says. So he was running things as tight as possible already. “We’re pretty efficient, trying to be, from the get-go every day, no matter what the price of diesel is. We don’t drive around or do anything minimally more than we have to around here.”
But the cattle have to be fed and the ranch has to be run, and that takes fuel. “Those sort of things are what we do,” he says.
If diesel continues to remain high, Gray says it may cause him to buy cattle closer to the feedyard to save on transportation costs. With his location in South Texas, he sources a lot of his cattle from the Southeast. But normally, trucking is reflected in the price of feeder calves, with discounts seen in calves farther away from their destination. “For those cattle in Alabama and Mississippi, it’s going to be reflected in the price.”
Because the feedyard isn’t close to a natural gas supply to run the boilers in the feedmill, Gray uses diesel to power the steam flaker. The last time diesel approached $4/gal., Gray and his consulting nutritionist looked hard at shutting off the boilers and dry-rolling the corn.
“We got close to it when oil went to $150 there for a while,” he says. However, he didn’t pull the trigger back then and hopes he doesn’t have to now. But both feeder cattle and corn were significantly less expensive in 2008, so this time the ratios are different.
“I think the magic number is probably $4 diesel,” he says. “That will probably get people doing some things differently.”
For Trey Patterson, COO of the Padlock Ranch at Ranchester, WY, it’s also a balancing act between doing what needs to be done and trying to be more efficient about it. “We try to carpool, if you will, as much as possible. We’ve got more four-door pickups on the place than we used to, trying to get people to move together.”
The ranch has also purchased more ATV-type vehicles for routine tasks like checking water and fence, checking gates, etc. Using those, he explains, reduces the amount of time, and therefore fuel, spent doing those chores in a pickup.
Primarily, however, Patterson says they’ve become students of the oil market. “Instead of just studying corn and cattle, we’re studying energy now and we’re doing some forward contracting of fuel.” In addition, they’re moving to no-till farming where they can reduce the number of passes they make over their farm ground.
But he agrees there’s a limit to what one can do. “We certainly try to get our people to think about efficiency, number of trips and those sorts of things. But there’s a limit to how much you can reduce that.”
He says they could go back to the old days, where everyone trots a horse everywhere they need to go. “But that reduces your labor efficiency,” he says, and may mean that a ranch would have to hire additional help to get everything done. “With labor costs and health insurance and those kinds of things, it would likely more than offset the price of fuel to have fewer guys more efficient because they’re using a pickup and horse trailer.”
For more tips on increasing your fuel efficiency, check out these links:
www.ruralenergy.wisc.edu/conservation/livestock/default_livestock.aspx (from ATTRA at attra.ncat.org/energy_calculators.html)