By Janet McNally, Hinckley, Minnesota — Seventeen years ago, Kelley O’Neil handed me a tattered magazine clipping from the April 1990 issue of Beef Today. Headlined “Stop Farming Your Ranch,” the article was festooned with handwritten comments, circled paragraphs, and underlined sentences. Kelley, a beef and sheep producer near Rushford, Minnesota, had long been a source of valuable ideas and philosophies.
I was definitely receptive to change in 1990. The lamb market was riding a roller coaster, ranging from $1.00/lb. to below 50 cents over a 10-year period. I had been pushing production continually higher, using all the latest practices promoted at the time. These usually entailed ever greater purchased inputs, such as more feed, higher-performing rations, antibiotics, and more labor. This was the era of “clip, dip and strip,” where we did everything possible to save every lamb and make it grow as fast as possible.
I was just beginning to realize that each additional lamb saved was essentially being purchased with added inputs. My analysis showed how all the income from a $65 lamb was going to the feed mill, veterinary service, lumberyard, and vendors of equipment and machinery, with nothing left over for my year of hard work. I was supporting my sheep business with what my husband called my “real job.” The magazine article explained how Gregg Simmonds, manager of Deseret Land and Livestock, a high mountain Utah ranch owned by the Morman church, was told, “Don’t come to us for any more capital. Get rid of land, people, machinery, cattle — whatever it takes. But do not come to us for money.” The Deseret ranch was paying $100,000 in annual interest charges, with a cost 90 cents per pound of beef weaned. It was time for something radical.
I was in a similar position. My town job was about to end. The source of capital for expanding my farm to a full-time venture was going to have to come from within the farm, as was family living. The principles Gregg Simmonds laid out in the article became my new philosophy.
Simmonds said he needed to “break with fossil fuel dependency” while making the ranch less “capital intensive.” The first thing he did was to adopt a new financial model for the ranch. The model was very simple: Net revenue = price of beef x production of beef – cost.
He noted that most producers can do little about price, and that we also seem to place too much importance on individual animal performance. Simmonds said income is dictated by the total carrying capacity of the ranch, not the rate of gain on individual animals. But of all the elements of the model, cost is the one we have the most control over, so cost control is where he focused his attention. Simmonds assessed his greatest costs: Hay led the list, followed by depreciation, overhead, and bull costs.
I was in a similar situation. In 1990, hay and purchased grain led my list, followed by depreciation and predator control (dogs). In my case, depreciation as a percentage of total income was high due to too few animals to support such purchases as a farm truck, equipment, and a continuous construction program to accommodate the flock expansion.
To reduce his dependence on hay, Simmonds moved calving from March 1 to April 1, and weaning from November to September. The cows were in synch with the natural forage growth curve, as they lactated and bred back during the early summer flush. Calving rates increased, and the calving interval was shortened. By moving weaning up, the cow had time to regain body weight before winter weather set in. Greg commented that “when a cow doesn’t need to go immediately to a stack pile or feed row to survive, she learns to become a winter forager.”
I was already lambing on pasture in May, and was just learning how to graze in the winter, so my hay costs were at a relatively low $26 per ewe. But I had not yet understood the importance of regaining ewe body condition before winter, or mastered lamb finishing on pasture. I was buying grain to put body condition on ewes prior to breeding and to get lambs into marketable condition. While rising hay costs have prevented me from cutting hay costs further ($36 per ewe in 2006), I did eliminate the $56 per ewe I spent on grain — a number based on $2/bushel corn!
After tackling costs, Simmonds redefined the production goals in the ranch income formula. In order of importance, the new goals were carrying capacity, fertility, longevity, and growth rate. Note that carrying capacity (total beef production of the ranch) and reproduction are more important than growth. Yet Deseret made impressive improvements in growth rate despite de-emphasizing this trait: the ranch birth-to-weaning growth rate improved from 1.55 lb. to 1.9 lb./day. Total beef production and fertility improved with no effort other than putting cows in synch with the growing season, and implementing rotational grazing.
Longevity is something few livestock producers address, but it has a large impact on our bottom line. Breeding animals that can produce longer mean more replacements can be sold rather than retained, thus increasing income. In my flock, udder problems and tooth loss are the two principle problems that affect longevity. I have yet to find an easy and objective way to evaluate these problems in large numbers, so longevity remains in need of improvement.
Deseret was able to increase annual beef production from 822,000 to 1.2 million pounds while reducing hay feeding and adding and expanding several wildlife ventures, including elk and buffalo.
By changing my focus from individual performance to harvesting forages with sheep, I have increased ewe numbers from 60 to 230 (and counting) without increasing depreciation or labor inputs. For a while our lamb growth rate declined, primarily due to not quite having a grasp of how to manage forage quality. But over time, as my grazing skills improved and the flock became better adapted to grazing, I’ve been able to achieve pre-weaning growth rates that rival what I achieved on heavy grain rations, but without the cost.
I learned to relax about post-weaning growth rates. While gains are important, the net income lies between pounds of lamb sold and the cost to get there. More importantly, I am selling more pounds of lamb simply by managing more sheep. I have dropped feedlot finishing, and now sell straight off pasture at lighter weights. Yet I increased the total pounds of lamb sold by increasing the carrying capacity of my farm. At the Deseret ranch, improved grazing management boosted productivity further by improving the carrying capacity, and I have been able to do the same thing.
All told, through these changes I have been able to cut nearly $70 per ewe from my feed bill (based on today’s costs), and tripled the number of ewes I can manage without increasing labor and depreciation.
The Beef Today article was written when gas was $1.16 per gallon, or $1.75 in today’s dollars. Corn prices were barely half of today’s levels, and construction, equipment and labor costs are all much higher than they were 17 years ago. So the points made by Gregg Simmonds are more important than ever, and provide a continuing challenge to those of us attempting to make a living from our livestock operations. For us, $4/gallon gas and $4 corn will not go unnoticed. But their impact is minimized when grazing and cost control are the focus.
Janet McNally grazes sheep near Hinckley, Minnesota.