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Never underestimate the power of the pasture

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Watch each Friday for Doug Ferguson's Market Intel blog on Beef Producer and BEEF magazine.
In the inventory triangle of cattle, feed is a key part of the foundation. What are you doing to maximize the grass you have?

It’s just grass. That sums up the attitude most people have. They fail to see the value in grass. I wonder if it's because they see grass as a problem that must be dealt with. What I mean by that is they have to mow the lawn or roadsides. So from that viewpoint grass would actually cost money rather than make money. Or maybe people don’t respect grass because some of the people who are trying to earn a living off the crop don’t respect it.

Your second greatest advantage in the cattle business is knowing how to manage the inventory triangle of cattle, money, and feed. Remember feed and money are on the bottom of the triangle because they are the foundation of our business, and cattle go on top implying they are the least essential. This should not come across as an implied hint, I think it is very direct, we are grass farmers.

If we are grass farmers, then we should probably be good at it. Most of us think we are inherently great at it, I used to be one, but we are not. Like I wrote recently we must do the best we can until we know better, then we must do better.

Boosting pasture value

Here’s an example. A friend of mine practices holistic management and his neighbors do not. This area has been terribly dry for some time. They did catch some good moisture this winter and spring. My friend has abundant grass growing on his place while the neighbors are panic buying hay.

This is what’s happening there. Grass is a solar panel capturing free energy from the sun. With better grazing management we can improve pastures (both grass and soil) which will give us a better solar panel. At better solar panel enables us to be better used sunlight salesmen. That is what my friend is doing. He sold some of his cattle that were overvalued and replaced with undervalued stock. Some of his replacement buys were thin cows. Now these cows are grazing on a buffet and are grass popping. Grazing management allowed him to profit from trading stock and will allow him to profit again in the future by upgrading the thin cows. He will capture the value of his feed resource.

A great one liner about marketing and grass management is to “Love your grass and hate your cattle”. All hating your cattle means is being willing to sell them. Marketing skill and inventory management can alleviate the burden of drought. Most ranchers love their cattle, and this is why they refuse to sell them during a drought. This causes severe damage to the pasture and that in turn will require more time for the ranch to recover. We must save the pasture by destocking in a timely manner. As evidenced by my friend the pasture will recover quicker when it does rain again.

I like to compare a ranch to a hardware store. A good hardware store has a robust inventory consisting of tools, nails, electrical, and plumbing. They do not deplete their inventory by selling everything out to the bare walls. This is what ranchers do when they graze every blade of grass depleting the pasture to zero. This is ignoring one of mother nature’s rules: it takes grass to grow grass.

My friend mentioned that people in his area are panic buying hay and that seems to be happening everywhere. It is common sense that we cannot feed our way out of a drought, yet people always try it. They take money, which is part of the inventory base and try to replace the other half of the inventory base which is feed. When we run out of one or the other the triangle will collapse which can be the end of being in business.

Judge the true cost of cattle feed

Here is a comparison to illustrate. If we take the current hay price and assume a cow will be eating nothing but that hay, and compare it to the price of five weight calves (for reference this is west of the Mississippi River) the cow and calf can eat for roughly eight months until the feed bill outweighs the value of the calf. This assumes the pair doesn’t waste any hay

This may sound unrealistic. Thing is, last year I read a statistic that the average cow consumes six to nine bales of hay per year so really the example in the previous paragraph is normal. This practice means we are always depleting the base of the triangle, of feed and money.

I will admit I have struggled with the thought of what the value of grass is for several years. I wanted to be able to assign a monetary value. During the phone conversation my friend said something that made me give up on that idea and accept what I already knew. He told me he was helping at a branding on a neighboring ranch and they are still feeling the burden of drought. We all know that feeling and it is stressful and no fun. He made the comment to me that if they would just change their grazing management ranching could be profitable and fun and secure a good future for that rancher’s kids. There it is, the true value of grass

A year ago I wrote about the value of grass and how people abuse their pastures. I received a handful of emails that gave me feedback from that post. They were all from bankers and they all touched on the same thing. They expressed how frustrating it is to them to help someone get financing to buy a pasture only to drive by that pasture a few years later and see it depleted and abused. It is mind boggling to them that people don’t take better care of something that costs that much. With better grazing management we can double the carrying capacity. This is like buying two ranches for the price of one.

Another point of interest I read this week was on the topic of cedar trees. This article stated that a density of 200 trees per acre reduces forage production by one third due to moisture use and shading. Here is what that means to me personally. I spend several hours per week during the summer cutting trees. By deflecting this decrease in forage production and what that translates to as far as carrying capacity, grazing days, and value of gain this is some of the more valuable time I put in.

This week Ranching for Profit had a great article on sell/buy marketing in this week’s Profit Tips blog: Sell/Buy Lessons

Market update

Looking at the markets this week one thing that gets me excited is the Value of Gain on heifers. Their VOG is higher this week with some auctions having a VOG of over $1 through the spectrum. It has been quite some time since we’ve seen that. This is set up by heifers having a much tighter slide, making it much easier to make profitable trades with heifers. The best VOG once again lies with flyweight cattle. Another thing to note is the roll back from steers to heifers making the girls a more attractive buy.

Geographical spreads are strongly noted right now. A few hours ride on a truck can save a buyer thousands of dollars on a buy back. When I say that I am talking about piecing a load together as load lots caught a premium again this week.

The fat to feeder relationship has most feeder cattle overvalued. There were a few auctions that sold heavy weight heifers that will work as a profitable buy back against fats.

My definition of value added marketing means you must capture the added value. There were some Non-Hormone Treated Cattle cattle at auctions this week that caught a very slight premium at best. It wasn’t worth the time or money to enroll them. Unweaned cattle were 10-20 back.

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