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Did you know that doing the right thing and doing things right is the essence of sustainability? Here’s the business case for ranch-level sustainability.
March 10, 2016
Although the beef value chain is broad and highly segmented, there is a segment within the beef supply chain that has the greatest impact on the sustainability of the entire value chain, and it is at the ranch. That is where management decisions have broad effect on the environment, and moderate-sized stakeholders can have oversized influence.
For these reasons, we can expect, as work on sustainability continues, an increasing focus will be directed toward the ranching sector. That’s why an understanding of how sustainability relates to key areas of production is important.
Luckily there is a strong business case for sustainability at the ranch level, and production areas that aren’t typically associated with sustainability are actually key areas which play a key role toward increasing ranch-level sustainability. Here are the three key areas to pay attention to:
Reproduction efficiency, or the ability of each cow to wean a marketable calf every year, is a vital element of sustainability. Sustainability, in its simplest definition, is “doing more with less.” Optimizing the number of calves produced over the lifetime of a cow is critical to increasing the sustainability (and profitability) of a ranch.
From an economic point of view, the primary marketable commodity a ranch has to sell is a calf. Expending resources on a cow that fails to generate revenue in the form of a marketable calf is, by definition, inefficient. Increasing a herd’s weaning rate in a sustainable manner (i.e. that doesn’t harm the environment or create negative financial ramifications, etc.), is one of the most foundational considerations toward “producing more with less.”
500 head cowherd
80% weaning rate = 400 calves
Average weaning weight 475 pounds
Average market price $1.90 per pound
= $361,000 revenue
Now consider these changes:
Increasing weaning rate 5% and decrease weaning weight 5%: Weaning rate 85%, average weaning weight 450 pounds, average price $2.00 peer pound (higher price because of slide for lighter calves) Result: $382,500 revenue, an increase of $21,500 or 6% (425 calves X 450 pounds per calf X $2.00). Conclusion: A higher weaning rate pays, even if calf weights are lower.
Increase weaning rate to 90% and hold weaning weight at 475 pounds. Result: $406,125 revenue (450 calves X 475 pounds X $1.90 per pound), an increase of $45,125 or 12.5% over baseline. Conclusion: Increasing weaning rate has a significant impact on profitability and therefore sustainability.
Hold weaning rate at 80% and increase weaning weight 10% to 523 pounds. Result: $376,560 revenue (400 calves X 523 pounds X $1.80 peer pound), an increase of $15,560 or 4.3% over baseline, but a $29,565 decrease from example B. Conclusion: Increasing weaning rate has a far greater impact on profitability and sustainability ($29,565 in this example) then does increasing weaning weight.
What does this mean? If you want to increase profitability and sustainability, work on getting more cows to wean a calf before you expend resources on increasing weaning weights. Weaning more calves pays, significantly, even if weaning more calves meanings slightly lower weaning weights. Weaning more calves from the same number of cows is key to ranch sustainability because it means a ranch is producing more with the same units of production.
How to achieve results: Exactly how to increase weaning rate is highly ranch specific, however, one aspect of achieving higher weaning rates is universal—to wean more calves, you first have to get more cows pregnant.
To do that, more cows have to be cycling at the start of the calving season. And to do that, cows have to have a long enough postpartum internal (length between calving and start of the breeding season) which requires a calf to be born early in the calving season, and have a rising plane of nutrition (commonly referred to as ‘flush’) and an adequate body condition score (BCS) at the start of the breeding season.
A cost-effective and sustainable way to do this is to calve on green grass, i.e. after grass has undergone spring green-up, when grass availability and nutritional levels are high. Interestingly, this also is a key factor affecting the next area, which is grazing management, especially as it relates to winter feed cots.
Maintaining soil health and capturing and utilizing sunlight and moisture, key factors in growing grass, is at the core of how a ranch creates value. The process of grazing, and the microbes in the rumen to convert roughage to energy is the process that makes ranching a sustainable enterprise. This is an amazing cycle that is dependent upon several key factors; chief among them are the availability of moisture and adequate soil health to support plant growth.
Available moisture is difficult to control except through irrigation, however, the amount of effective moisture (moisture that is usable by plants), is highly manageable through influencing soil health, which is affected by grazing management.
Effective planned grazing maximizes soil health by providing plants adequate time to fully recover following grazing, which in turn drives greater nutrient cycling into the soil which supports soil microbe population and soil moisture through greater water infiltration.
Related to that is the ability of a ranch to sustainably (year after year) lengthen the grazing season to minimize the amount of mechanically harvested feed (hay, etc.) fed. Winter feed cost is usually the highest cost of a ranching operations. Anything that lowers winter feed costs without harming the environment or the long-term productivity of the land is a key factor toward increasing sustainability of a ranch.
500 head cowherd
$150 per ton hay (fully loaded, i.e. includes the cost to purchase or harvest, deliver to ranch & feed)
3% body weight Intake (consumption) per day per cow
0.03 X 1,400 pound cow body weight = 42 pounds per head per day
42 pounds X 30 days = 1,260 pounds per month per head (or 0.63 tons) X $150 per ton hay = $94.50 per cow per month X 500 cows = $47,250/month.
That’s equivalent to using up to 13% of an operation’s annual gross revenue per month! That’s a high burn rate in any business, and in a low margin business like ranching it is especially costly.
Clearly, feeding hay has a negative impact on ranch profitability. What is less understood is that feeding hay has a negative impact on sustainability, not only because of its impact on profitability, an important sustainability factor, but because of its residual effect as a result of a lower level of grazing management, and overall ranch management.
To minimize hay feeding requires a smart ranch management, which leads to improvements not only in grazing but other areas of an operation, and leads to a general approach to management which naturally is more holistic and sustainable.
Improving grazing management to graze more days per year (feed less mechanically harvested feed), and/or finding alternative forages for the cowherd to graze (e.g. cornstalks, cover crops, etc.) will have a tremendous influence on profitability and therefore sustainability.
How to achieve results: Match the cattle production cycle (calving date) to forage availability by calving after spring green-up. This allows the cow to supply more of her nutritional needs through grazing throughout the year, and it also lowers costs and allows more grazing flexibility.
All improvements in sustainability (financial, environmental, etc.) ultimately are a result of management. An adaptive approach to management which implements systems thinking that is holistic in its consideration (considers management decisions impacts on profit, environment and personal, family, employee and community welfare), and is able to adjust as circumstances dedicate (e.g. changing forage availability, etc.) is a critical prerequisite to sustainable improvement. Continuous learning and adapting is an important prerequisite to “doing more with less” while balancing financial, social and environment needs (i.e. sustainability).
How to achieve results: There are many training and workshop opportunities that teach elements of adaptive management. And more universities are offering sustainable ranching curriculums and Extension training. Additionally, there are a number of good consultants who can help a ranch think through and move toward a more adaptive approach to management. All these are good resources, however, to take advantage of opportunities and apply an adaptive, continuous improvement approach to ranching requires an internal desire to contribute to healthy people, planet, and profits.
Ranching is a matter of managing a complex, ever-changing system that includes biological, financial, and human dimensions. An exclusive focus on any one of those areas at the expense of the others, or a failure to consider any of these areas, will lead to unintended consequences and a trend away from sustainability.
Fortunately, there is a business case for increasing sustainability at the ranch level. By evaluating key areas of production, such as weaning rate and winter feed costs, a ranch can increase profitability and sustainability simultaneously.
Bryan Weech is a consultant and adviser on sustainable agricultural projects. Contact him at [email protected].
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