Cattle grazing

3 grazing ratios you should obsess over to be profitable

Profitability in the cattle business is possible. Here are three ratios that will add cash to your bottom line.

In a recent short video conversation led by my good friend Allen Williams about AMP (adaptive multi-paddock) grazing, Allen asked me what effects AMP grazing would have on livestock economics. Good question—and it deserves a good answer. Any grazing, whether good or poor, has an effect on the soil—either positive or negative. There are no neutrals.

Grazing fits into a total management scheme or system. To be effective, we must manage holistically or, as some people say, use a systems approach. In my articles, I have referred to “Five Essentials for Successful Ranch Management.”

The first “essential” is that our approach to management must be both integrative and holistic. The problem most of us face in trying to use a systems approach is that we fail to do enough integration of facts, ideas, principles, possible methods, etc. to enable good understanding of the problems or opportunities we are trying to address.

This article is an attempt to help readers understand some of the relationships between how we graze and the potential economic results. Grazing can have a dramatic and profound effect on three key ratios. Now remember that this is a systems or holistic approach. There are other items to manage that also affect these ratios—not just grazing.

∗ Acres per cow is a measure of ranch stocking rate. You can reduce acres per cow in two ways—reduce the size and milking ability of the cows, which reduces the nutrient requirements, or increase the productivity of the land. Both are economically important and effective, but grazing to improve the soil has tremendous power.

  • Some first attempts at better grazing don’t have enough paddocks and don’t allow adequate recovery times between grazes. This may result in no improvement or even negative effects.
  • Other attempts using a good number of paddocks and especially adequate recovery times begin to yield positive results. As the intensity (number of paddocks and stock density) increases, the increase in forage productivity accelerates. Then you begin to see what Allen Williams describes as “compounding and cascading effects.” One positive effect builds on itself and leads to other positive effects.
  • It’s difficult to explain in a few words; but, as the stock density increases because of more and smaller paddocks, more litter is laid on the soil surface, grazing is more uniform, grazing efficiency improves, manure and urine are more evenly distributed and adequate recovery time can be accommodated. These changes lead to improvement in ecosystem functions.
    • Rainfall and snowmelt infiltration rates are improved and water holding capacity of the soil is improved, leading to increased plant growth through a greater portion of the year.
    • Nutrient cycling improves because more plant material is returned to the soil either as manure or trampled plant material. This feeds soil microbes which in turn feed plants and also further improves soil moisture-holding capacity.
    • Then photosynthesis becomes more efficient because of more green leaves during a greater portion of the year which further improves the water and mineral cycles.
    • While all this is going on, you start to notice greater diversity in the plant, insect, bird, small animal and game animal community. Diversity in the plant community produces different types and depths of rooting which encourages greater diversity in soil microbes and accesses water and minerals from deeper in the soil. This diversity also attracts a greater variety of insects.
    • All of this variety results in symbiotic relationships between plants which makes the whole more productive. The variety of soil microbes, insects and birds provides plants and animals protection from predators (usually insects rather than coyotes or wolves) and disease.

 

This is just a beginning of what happens in the soil that causes great changes and improvement in the soil and plant productivity. I hope it gives you an idea of the complexity of interconnectedness that exists between many parts of the biological system that drives land and pasture productivity.

Think of it this way—if you could spend $50-100 per acre on fence and water development and double your stocking rate (cut acres per cow in half), you essentially would have purchased another ranch for $50 to $100 per acre. You don’t pay any more property tax, shouldn’t have to add employees, vehicles, saddle horses, tools or equipment. This is economic power.

Cows per person or labor hours per cow for small ranches with less than one full time person or for ranches that have several enterprises to spread time across, is another key driver of profitability. Most graziers using adaptive multi-paddock grazing put as many cattle in one herd as possible rather than having them scattered across several pastures with continuous or season-long grazing.

Fewer herds simply make it easier to check cattle and make sure they are healthy, have water and are where they belong. Over time, good grazing will produce a healthier feed source that will reduce pests and improve the overall health of the animals.

I know a good number of successful graziers with excellent animal performance that use no pesticides and seldom doctor an animal. Good grazing coupled with good herd and pasture organization will enable a significant reduction in labor requirement. I know several ranchers who have doubled carrying capacity through better grazing and have not added labor except a few times each year to work cattle. A few hire contractors to develop water, but most build their own fence, mostly simple electric fence.

∗ Fed feed vs. grazed feed should meet the test of logic. Any time you put a machine between the mouth of a cow and her feed source, it costs more.

Cows have legs and a mouth and can feed themselves for much or all of the year. I won’t say that feeding cows is never cost-justified because sometimes it is--however, not nearly as often as some ranchers do it. 

AMP grazing makes more grazable feed available and for a greater portion of the year. Because of more plant diversity, improved soil moisture holding capability and better soil health, feed quality is better and for more of the year.

I occasionally get in arguments with some very smart people who contend that you can dry-lot cows cheaper than you can graze them.  If that is true, someone else in the system is losing money. Most “cheap” feedstuffs such as baled straws and stalks have a fertility and soil health benefit back on the ground from which they came. By-products that occur at the processing level such as almond hulls, citrus pulp and distillers grains can be very good feed, but further processing and/or transportation can make them cost prohibitive in many situations.

For any dry-lot feeding there are always the machine and labor costs to haul, process, mix and then to remove and properly dispose of or use manure. If pasture lease costs have become so high in your area that a dry-lot is cheaper, most of the people paying those leases will have very poor gross margins unless they are leasing by the acre and can greatly increase carrying capacity with good grazing. Good grazing simply makes it possible to graze more and feed less which almost always saves money.

My understanding of ranch economics and finance tells me that to be most profitable on a continuing basis, you should reduce overheads as much as possible, market well, use direct inputs (mostly feed and vet costs) very wisely and then focus on (almost become obsessive about) these three ratios.

Teichert, a consultant on strategic planning for ranches, retired in 2010 as vice president and general manager of AgReserves, Inc. He resides in Orem, Utah. Contact him at [email protected]

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