Cattleman Says Trust Is Important

“The abundance of relatively cheap ethanol by-products has totally changed the game, not only for finishing cattle but for backgrounding

Wes Ishmael

October 6, 2010

8 Min Read
Cattleman Says Trust Is Important

“It’s revolutionary,” says Rich Porter, of Porter Cattle Co., Reading, KS.

“The abundance of relatively cheap ethanol by-products has totally changed the game, not only for finishing cattle but for backgrounding.

Consider how Porter is using wet distillers grain (WDG) to supplement stockers on late-season native pasture, after early-season double-stocking.

“Using WDG as a supplement on late-season grass is essentially like using range cubes,” Porter explains. “The nutrition is similar to the Oklahoma Super Gold program but is dramatically more cost-effective.”

In both cases, a supplement high in protein, fed in low daily volumes, enables cattle to maintain or increase forage intake.

The way Porter employs WDG as a range supplement is by moving cattle from five native pastures into one at the end of July. “We’re able to utilize a resource that would be burned otherwise, while giving most of our pastures the opportunity to rest,” Porter says. “We’re trying to marry the best of both worlds, between a conventional cattle-feeding system and grazing cattle on a section of grass.

“Our system for calves is both the tight pen and grass trap. Once the feed bunks are empty, we move them back out to the grass traps where it’s drier and they’re more spread out, which helps reduce the spread of disease,” Porter says.

For the first 45 days, cattle are in 16 potload-size pens that open into grass traps of 10-15 acres. After that cattle move to six larger pens opening into 65-acre grass traps, or they move to native-grass pastures of 160-640 acres where they’re supplemented with distillers grain on the ground.

Until three years ago, calves arriving here received a dry starter pellet and long-stemmed hay for the first 30 days. Now, Porter explains, “we feed a distillers-based ration. On an as-fed basis, cattle receive a ration that is about half WDG, one-quarter long-stemmed hay and one-quarter corn.”

Along with significant cost savings, he explains the ration is more palatable to the cattle. There are also fewer digestive problems as calves make the transition to growing, then finishing, rations. You see, Porter also feeds out all the calves he stockers, in his own lots at home.

Just as significant as the change in ration for newly received calves is the health savings that Porter achieves by how he feeds the calves.

“If you would have told me three years ago that I’d be limit-feeding calves, I’d have said you were crazy,” Porter says. In basic terms, calves are fed the amount they can eat in three hours.

“We hold calves to consuming no more than 2.2% of their body weight for the first 30 days,” explains Robin Green, who has worked at Porter Cattle Co. for 16 years. “It keeps them hungry and aggressive. If something isn’t feeling good, they’ll stand out. It makes our job pulling cattle easier and our health costs are way down.”

What Green is referring to is “slick-bunk management.” More feed needs to be delivered if cattle clean the bunks too soon. Conversely, if there’s still feed in the bunk – after three hours in this case – less feed is called for.

Jeff Hale, head cowboy, explains: “With the kind of cattle we get, you start pulling based on appearance and you pull pretty deep.” Before limit-feeding, they’d pull cattle acting listless that weren’t sick, just over-full. Now they only pull the few not at the bunk eating.

Paying for use, not appearance

Keep in mind these are admittedly plain cattle. Porter buys only steers, the cuts and outs that don’t fit loads. His aim is to buy them at prices in back of the heifer market at the same weight. Weight variation in the loads is no problem. Calves will be swapped and sorted several times during growing and finishing. Except for color or the odd missing tail, Porter says, “these cattle finish with carcass performance at least equal to the pretty ones.”

He applies the same philosophy to buying tractors, feed trucks and the like. “Ugly is only skin deep,” Porter says. “One of our mainstays has been buying older, good equipment that’s still in good shape.”

Suffice it to say, a paint salesman would go hungry here. “I only buy equipment from people I totally trust,” Porter explains. “Thus, I don’t worry about how it works on arrival; I’m confident it will perform.”

Porter typically tries to buy calves at an average weight around 350 lbs. unless the pencil says otherwise. For instance, in mid-September, he was buying 450-lb. calves. that cost him $1.10 delivered.

Calves arrive year-round (about 8,000 head/year), except for the fourth quarter. Porter says it took him 17 years of records to admit that more than statistical anomalies were behind the fact that his worst months for cattle health every year came in the fourth quarter, especially November. By curtailing procurement then, all the calves will be on forage at some point in their production cycle and feeding pens won’t be overcrowded when no forage is available.

Porter has used the same two buyers for more than two decades – one in Georgia, the other in Kentucky. “I’ll give the buyers price guidance on what we’d like to pay at a certain weight, then if they need to move above or below that level, that’s their call,” Porter says.

Porter uses stocker-based software that enables him to track calf morbidity and mortality by sale barn, using the calf’s back tag, correlated to the ID number the calf is assigned once it arrives at Porter’s operation.

Though you can uncover sale barns running a higher percentage of trader cattle, Porter says there’s been less dramatic difference between markets than expected.
Calves receive the first round of vaccinations before being shipped to Porter. Aside from trying to get a head start on managing the bugs, Porter says it means he and his crew have the leeway to wait until Monday to process calves that arrive Saturday.

“Our employees are very skilled and high quality,” Porter emphasizes. “It’s incumbent on me to treat them right; one way I can do that is with a routine work week so they can make plans with their families.” He and his crew get every other weekend off; the weekend they’re on duty, they leave at noon both days.

Besides a long-standing emphasis on low-stress cattle handling, employees are the reason Porter installed two of the innovative Turret Gate™ systems three years ago.

The Turret Gate is a hydraulic gate system that virtually eliminates the need for anyone to be inside an alley, pen or tub to move cattle to and into the processing chute. Porter reckons the system has reduced exposure to people getting injured during processing by more than 90%. He adds that the system frees up labor resources and makes for less stress on the cattle.

He takes relationships with customers and suppliers just as seriously.

Win-win or don’t play

East-central Kansas is seldom considered a cattle-feeding Mecca, what with its share of humidity, moisture and mud. Until three years ago, though, Porter had a glaring comparative advantage: Tyson had a packing plant in his county seat, which is Emporia, KS.

It didn’t start out as an advantage. In the beginning, Tyson (then IBP) figured since he was so close, they needed to discount his cattle to put them on par with those that had to be freighted hundreds of miles. Fast forward: Rich sold Tyson a pen of cattle that ended up with a ghastly percentage of dark cutters. The packer buyer complained. Porter responded in a remarkable way; he wanted to know how much those dark cutters cost the packer and he immediately wrote them a check for the loss.

Imagine that. Porter has never understood the time-honored, zero-sum game of one sector profiting because another sector loses.

That check and the attitude behind it begat a cycle of trust that continues to benefit both parties.

“I’m more concerned than the packer is about wanting to know how my cattle perform for them,” Porter explains. “I value the trust the packer has in me and I’ll bend over backwards to maintain that trust.”

When the Emporia plant closed and Porter lost his geographic advantage, he considered selling his cattle at feeder weights. Keeping in mind their variation, buyers would discount the feeders more than Porter was willing to accept.

Plus, Porter couldn’t stomach the transaction cost. “I couldn’t come up with a way to market cattle that didn’t have a significant transaction cost, a minimum of about $20/head,” he says.

Hang around Porter long and the subject of transaction costs will come up more than once. It’s part of the enlarged pie available from what he terms “informal strategic alliances.”

These days Porter sells all his cattle to Tyson because he says nothing else can compete with the benefits of the relationship he’s developed with the packer. One of those benefits, according to Porter, is an additional $20/head in saved transaction costs that he and the packer share.

“Sure, the packer gets at least half of it, but I’m happy for them because I’m coming out ahead, too,” Porter says.

It’s an example of an informal strategic alliance. It’s based on trust, the knowledge by both parties involved that one can quit the other one whenever they choose, and the notion that the only reason to work together is if both sides come out ahead.
In Porter’s world, compromise is not a sign of negotiating weakness, it’s the gateway to increased revenue.

“An informal strategic alliance is where both sides want more than 100% of the original pie themselves (think here of the saved transaction cost cited above), and they achieve it by seeing that the other side gets more, too,” he says.

The concept isn’t new. As far back as the Bible, folks have learned the wisdom of treating others how they’d like to be treated. For that matter, Porter says these kind of informal alliances are so common that they often go unrecognized. What’s uncommon is recognizing them for the asset they are and trying to establish more of them.

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