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Know Your Strengths

When Shawn Mercer took over management of his grandparents' farming and cattle operation 15 years ago, he'd have given his eye teeth for a blueprint he could apply to the cattle business in general, and the stocker business specifically. After his grandfather died, Mercer and wife Katie struggled to figure out how to make the farm pay its way for another generation. The operation outside Richton,

When Shawn Mercer took over management of his grandparents' farming and cattle operation 15 years ago, he'd have given his eye teeth for a blueprint he could apply to the cattle business in general, and the stocker business specifically. After his grandfather died, Mercer and wife Katie struggled to figure out how to make the farm pay its way for another generation.

The operation outside Richton, MS — just a stone's throw from the southwest corner of Alabama — had traditionally been a cow-calf operation. But, Mercer remembers, “It didn't take us long to realize cows wouldn't produce enough return on investment to ultimately buy the farm from family members.”

A tempting alternative adopted by plenty of neighbors in those days was enrolling marginal ground in the Conservation Reserve Program (CRP) and planting pine trees. Besides the CRP payments, with little to no labor requirement, additional income could be derived down the road from the periodic thinning of trees required to maintain a healthy stand.

“But pine trees are a commodity, too,” Mercer says. Besides, his grandmother wanted to see cattle still running on the place. That's why they chose the stocker business.

“With stocker calves we have the chance to market them twice a year or more, depending on how we roll them,” Mercer explains. “Stockers were the best option for our time, grass and labor resources.”

Size has advantages

Understand that labor is a primary limiting resource here. Mercer wasn't depending on the farm for a full-time living then, nor does he today. It's strictly a family affair, except for occasional day help. No single person devotes all their time to the operation, which is a calculated choice.

“We look at maximizing profit per head rather than the number of head,” Mercer says in explaining the decision to maintain their operation at a size defined by thousands of head annually, rather than the tens of thousands run by operations that rely on the stocker business alone. “We can keep our costs and overhead low and turn more profit per animal rather than simply run more numbers.”

Ironically, to some at least, the Mercers achieve this with a class of cattle commonly perceived as the most labor-intense — bawling flyweights straight off their mamas, with a fair bit of commingling and travel stress before they ever set foot on the place.

“Traditionally, we like to take a 250-lb. calf, precondition it through winter on ryegrass, put about 500 lbs. on it and sell it as a seven- or eight-weight,” he says.

“I know some people dislike small calves, but we don't see a lot of difference between one weighing 250 lbs. and one weighing 450 lbs. But we know about taking care of lightweight calves.”

The Mercers focus on minimizing overhead through both management and leverage.

Mercer decided a long time ago that the fewer moving parts — equipment and processes — he owned, the better. They contract with others to bale hay, apply fertilizer and that sort of thing.

“I could probably save another 20% buying straight commodities and mixing them, but it would take more equipment,” Mercer says. The highest net return for his operation comes in the middle ground, saving 40% on bulk feed rather than sacked, but foregoing the additional savings that require more equipment.

That low-overhead management extends to the moving parts that are people, too.

“With a stocker operation, I think we have an even more difficult time finding good labor due to the required husbandry skills needed to treat our type of extremely high-risk cattle,” he says. Besides, it's not like qualified sorts are crowding the farm gate looking for work.

As for inherent leverage, think in terms of forage and the cattle themselves.

Mercer Cattle, LLC was named this year's National Stocker Award winner after first earning top honors in the fall-winter stocker division. Ryegrass for 150± days in the fall and winter is their bread and butter, but rotational grazing and native grasses — Bahia grass, common Bermuda grass and wild millet — offer additional flexibility and opportunity.

“All costs associated with winter grazing have increased, so we're looking at trying to utilize more native grasses, trying to get more in synch with Mother Nature. Not only are we trying to run cattle, but we want to make this place better than when we took it over, just like our parents and grandparents did.”

The Mercers use rotational grazing via extensive hot-wire cross fencing to milk all the beef production they can from their acres in a sustainable manner. As such, they've been known to cull calves with lousy dispositions that make frequent movements from pasture to pasture tougher.

Exploiting available forage also means running some open heifers and cows during the summer to sell as bred females in the fall.

Managing risk

Of course, lightweight cattle provide their own unique leverage and risk management.

“We have control of the market one time, when we put out the orders for the calves; after that, we're a price taker,” Mercer says. In between, he believes management can best dilute the inherent risk.

“It's a sinking feeling when you get a margin call… Rather than managing risk on the board, would we not have done better buying calves back of the market and concentrating on doing what we're good at?”

What the Mercers are most adept at is buying lightweight calves no heavier than 250 lbs., from no further than 120 miles away, and then sorting out their health, adding weight and sorting up marketable groups of feeder cattle. This starts and ends with the indivisible tandem of health and nutrition.

“We're buying these calves one head at a time. Some are delivered to the auction 24 hours before the sale,” explains Mercer. So the calves have plenty of time to mix and get run down. That's why Mercer waits a couple of days after arrival before initial processing.

“With flyweights, you teach them how to eat and drink and then give them some time. All the medicine in the world won't help if the calf won't eat,” he explains. “They're babies. Even with metaphylaxis in the fall, we'll wind up with 15% morbidity, but usually that 15% will respond.”

All of that in mind, the Mercers leave bulls intact until they weigh 350-400 lbs. Because the calves they buy are so young, about 95% of the male calves are intact.

“Then when it's a straight calf, we can dehorn, re-worm, castrate and all of the rest… These high-risk, 250-lb. calves can only take so much. We think taking them back through the chute an extra time later on is less stressful than trying to do everything at one time,” he says.

Incidentally, he uses the Newberry knife and technique. Compared to traditional knife cutting, Mercer says it saves stress and performance, besides being more effective.

Typically, calves arrive Wednesday and Thursday. “We process new calves early Saturday and try to feed them beforehand because a lot of times they won't go to the bunk the rest of the day,” Mercer says.

Of course, part of managing health on stocker calves, especially such high-risk ones, boils down to understanding your limitations.

“We don't like to bring in more than 50 head at one time because of our setup,” Mercer says. “My theory is that one more head than you can take care of can become a runaway train. When you double numbers in the stocker business, you can easily quadruple your problems.”

Calves start out on a commercial preconditioning ration (12% crude protein) for 7-10 days. “It's the most cost-effective way for us to deliver that level of protein,” he says.

Cattle continue on a lower-protein ration in grass traps for another 14-21 days. “That's the time of year we're trying to grow frame,” Mercer explains. Then they move to pasture.

“We use feed as a supplement only. We want them to do everything on the grass we grow,” he says. “We'd still like to see more value delivered from our summer grass using stockers, and try to cut some expenses out of our winter-grazing period, but there's still no substitute for ryegrass in our region for putting weight on cattle so efficiently.”

Putting it together

Though there are days Mercer still wishes for a cookie-cutter blueprint for effective management, he's resigned to the fact that, “Every load of cattle is different and must be managed and sold with this in mind.”

The same goes for marketing. “Ideally, we'd like to sell every calf, but sometimes we think the cattle are worth more than we can get. Then we'll feed them, but we don't like to. We'd rather just do what we know we're good at,” Mercer says. They'll market cattle a number of ways, and rely on relationships and the reputation they've developed with feedlots, order buyers and sale barns.

“It's not any one thing; we've just evolved to the point where we can make a profit on most of the calves,” he says. “$100/head and a 15-20% return on investment is what we shoot for. It doesn't always work like that, but that's what you want to shoot for to stay in it for the long haul.

“We think we do a good job with the size of calf we take on to graze. We watch the pennies, and the dollars take care of themselves. For us, it's about doing a few things well and knowing what they are, as well as knowing what we don't do well, and what we don't want to do,” Mercer says.