Month: August 2018

Top 5 Considerations When Buying a Cattle Ranch in the Intermountain West

August 10, 2018
By Mallory Boyce

When it comes to cattle ranches for sale in the Intermountain West, ranch buyers have different considerations than ranchers residing on the plains. At the end of the day, every rancher’s goal is economic viability and sustainability. So what goes into making a ranch “pencil”?

We sat down with the following ranch brokers to discuss the top factors to consider in buying a working ranch in the Rocky Mountain region.

Robb Nelson, a long-time rancher, hunter, attorney, and currently serving on the Federal Lands and State Lands Steering Committees for the Colorado Cattlemen’s Association,
Jared Souza, a life-long cattle operator and outfitter, and formerly the assistant ranch manager of a large ranch in southeastern Wyoming,
Duffy Brown, the Wildlife and Range Manager for the Flying H Ranch in Big Horn, Wyoming for the past 22 years,
And Ken Mirr, a former public lands attorney, board member on Western Landowners Alliance and Colorado Cattlemen’s Agricultural Land Trust, and founder of Mirr Ranch Group.

1. Operational Plans
All of our ranch brokers say the first questions they ask when working with a new cattle ranch buyer pertains to the rancher’s plans for the working property.

Type of Ownership
Most cattle ranch buyers will be either owner operators or an absentee owner.

If they are an owner operator, they are living on the ranch most of the time. In these situations the residence may take on greater importance.
Absentee owners may not be involved with the day to day operations, and typically either hire a ranch manager to run the entire operation, or lease the ground to a neighbor or operator in the area.
Type of Operation
Most independent cattle ranches in the intermountain West are either cow-calf or yearling operations.

Yearling operations, like Antelope Springs Ranch, are normally seasonal and have fairly short term grazing terms. Weight gain and herd health are the biggest concerns. Once the operators are finished for the season, the cattle are sold and all the yearlings are replaced with new cattle the following cycle. The Cottonwood can be operated as either yearling or cow-calf.
Cow-Calf ops are year-round, long-term operations like the Continental Divide Ranch, where a percentage of the calf crop is terminal and the remaining cattle are kept as part of the herd. Longevity of the cows and weaning weights of the calves are the most important aspects. These type of operations typically need greater working facilities, infrastructure, and water resources.

Carrying capacity
There are two methods of determining carrying capacity, which plays into how much land you will need between deeded and leased ground.

Stocking Rate is traditionally the number of acres per cow. This number is typically determined by the owner of the deeded ground.
Animal Units Per Month (AUM) is based on the amount of forage per month per animal unit. This calculation is typically found in public land leases and is determined by the governing authority like the National Forest Service (NFS), Bureau of Land Management (BLM), or the state.
Operational Strategy
The climate and feed availability or forage base assist in determining how to manage the cattle herd during the winter months.

Summer grazing operations typically need to move their cattle in the winter to another place on the plains or in feedlots close to town.
Year-round operations, like the Nunn Ranch and Double R Ranch, have the feed to sustain livestock year-round. The cows will graze during growing months and then feed on available feed like cornstocks or supplemented hay during the colder months. The amount of feed that is sublememeted during the winters months is highly dependent on climate and snowpack in the area.
While year-round operations usually have more temperate climates, in the West, we do have “hard-core ranchers” who will operate year-round in cold winter conditions. Management plans can help protect the health of the herd in these situations, such as feeding more frequently and ensuring access to water.

2. The Ecology
The ecological conditions of the ranch are also important considerations. Private cattle ranches represent some of the most biologically diverse landscapes in the West and impact wildlife habitat. Taking care of the land is significant to the underlying value of the land for generations to come and this must be balanced with operational considerations. Original homesteaders and early ranching families saw this and began utilizing techniques such as “take half, and leave half” which led to rotational grazing.

Those concepts evolved as we learned more, and today modern ranching is all about the long-term sustainability of the land. Ranchers are concerned not only about the health of the livestock, but also the health of the soil, grasses, ecosystems, habitat, and wildlife, and make management decisions that protect the health of all of these elements.

Many western states are blessed to have healthy populations of wildlife, including upland birds, big-game, and nongame species, and many of today’s buyers seek a balance of wildlife and recreational opportunities, along with a sustainable agricultural operation. Fortunately, both of these facets can be realized.

Well planned and executed grazing management can not only benefit livestock performance and gains, but also improve wildlife habitat and ability to attract and hold wildlife.

Proper livestock grazing can actually be used as a tool to improve rangeland health and production, including plant vigor, plant bio-diversity and palatability, which in turn also improves habitat for wildlife.

A holistic approach also goes right to the bottom line, making the ranch more likely to be economically prosperous. A good example of a sustainable ranch management is The Cottonwood near Daniel, Wyoming or Cinch Buckle Ranch in Broadus, Montana.

3. Water Resources
All of our brokers agreed that water resources are critical in a viable operation. Not only are water rights for irrigation and riparian areas key, but wells, tanks and underground piping for livestock watering need to be in place.

Quality of the water resources also play an important role in herd health. Western states rarely ever have an abundance of water, and more importantly, water dispersion throughout the ranch is water that is healthy for the cattle to drink.

A well-watered ranch by definition is where cattle don’t have to travel great distances to get to water. The travel is stressful on the cattle, and has a direct impact on carcass weight and grades. See Porcupine Ridge Ranch for a look at incredible water resources.

4. Infrastructure & Working Facilities
To experienced ranchers, basic infrastructure in good condition is essential no matter the operation. Depending on the type of operation and operational strategy of the ranch, working facilities could be just as crucial.

Basic infrastructure: This pertains to fencing, cross-fencing, piping, water tanks, gates, and cattle guards. If you have hundreds of miles of fencing in poor condition and it all needs to be replaced, this could cost a rancher millions of dollars.
Working Facilities: Year-round cow-calf operations especially are in need of turnkey working cattle ranches for sale with facilities in good repair such as corrals, chutes, scales, medical facilities, etc.

5. Public Land Leases
Perhaps one of the most unique attributes about the West is the abundance of public lands. In ranching, the use of public land grazing permits can be crucial in making the operation pencil. Grazing permits are essentially leases with the National Forest Service (NFS), Bureau of Land Management (BLM), or other federal land agencies and also include state land boards in the various western states.

Recently, Mirr Ranch Group authored an article for the Rocky Mountain edition of The Land Report explaining public lands’ role in ranching. As an example we discussed the sale of the Sandy Ranch which we listed and sold.

A historic ranch in Utah right next to Capitol Reef National Park, the Sandy Ranch is a high desert outfit that runs about 1,000 head on 6,970 deeded acres. A cow-calf pair per every seven acres in the middle of the desert? This is where public lands takes a role. Sandy Ranch leases a total of 242,000 from the BLM and NFS, and suddenly the math makes more sense!

Public land leases have the advantage of being very affordable and in return, can reduce your carrying cost per animal unit. When searching for a cattle ranch, determine how much public land is available adjoining or near the property. Adjoining public land leases not only provide affordable additional grazing lands but additional recreational opportunities as well.

Purchasing a cattle ranch involves business decisions requiring an evaluation of a number of factors with the overriding goal to find a ranch that is economically viable and ecologically sustainable.

The modern day cattle rancher has found that sustainable and holistic management plans work and can increase productivity, while maintaining the ecological and biological diversity of the land. Solid infrastructure, water resources, as well as access to available public land are all important attributes that preserve the economic prosperity of working landscapes.

Profit strategies: Increasing the cow herd

Pete Talbott  |  Updated: 10/09/2014

Back in February, I discussed the options for utilizing available forage and whether it should be used by expanding the cow herd or a different class of cattle, be it your own or custom graze.  For the purpose of this article let’s assume you have decided to increase your cow herd.  So first, the assumption is made that you did the economic, resource and personal analysis that increasing the brood cow herd is your best option.

There are a number of ways to increase the cow herd, some of which include saving heifers from your calf crop, buying young open heifers, buying bred heifers, buying young bred cows, buying pairs and, lastly, buying open cows.  My thoughts on the last option are very simple: Don’t do it.  Open cows are open for a reason: poor fertility, disease-related problems that you don’t want to introduce into your herd, nutritionally challenged that could be from the resources she was on or her body is not suited to the resources she was on during the last breeding cycle.  The one positive to purchasing open cows is that the initial price will probably be the lower investment at the time of purchase, but that could be the last lowest cost for her.  Like any scenario, there are exceptions, and a specific situation might warrant the risk in obtaining open cows but be very cautious in doing so.

The market levels today don’t make any of the options an easy decision.  Individual goals, ranch resources and operating procedures are a few of the factors that must be considered for each operation.  In addition to the above:

  1. Depending on the ranch, the older the new cow the longer it takes her to acclimate to the new environment and society of the existing herd.  I have found it takes two to three years for a cow in new country to learn the country and reach her production potential for that set of resources.  Now the easier the ranch, the faster the transition will be (i.e., desert vs. irrigated pasture).
  2. Keeping your own heifers delays a product to sell but retains your genetic base and goals (if that is important) and also gives you cattle already adapted to your environmental resource and methods of working the cattle.
  3. Do you spend a lot of time watching heifers at calving?  This could be a burden on human resources.  Calving 3-year olds could all but eliminate having to watch heifers, and I have observed that heifers calving at 30 to 36 months stay in the herd several years longer.  However, this must pass the economic analysis.
  4. Another consideration in calving heifers is when you calve in relation to the grazing season.  Heifers that calve in the dead of winter will always require more inputs than those that calve in more moderate weather and on green grass.
  5. What does it cost to develop a replacement female from a weaner to a producing cow?  Some individuals’ development costs are not much more than the costs of running a mature cow, while others will have costs twice or more than that to run a cow.
  6. Purchasing young bred or young pairs gives you a saleable product sooner.  Can you find what you want in genetics and frame size, adapted to your type of environment?
  7. What are your cash flow needs if you retain? Do you have the assets in hand to purchase, or will you have to borrow?

This is why using a cookbook approach, or industry averages, to come to a decision on your ranch is not appropriate.  You must do the hard work it takes to analyze economic impacts, resource and environmental considerations, human resource requirements and so on.  Use your financial and resource data in coming to the best decision for your business.

See the full article and more in the digital edition of the September issue of Drovers/CattleNetwork.

Cow Herd Dynamics

Age & Weight

Most producers seem to refer to cows as “the herd.”

In reality, that herd is split into several age groups that often are overlooked.

Managers usually look at averages to guide managerial applications.

For instance, the cow herd averages 5.6 years of age for North Dakota Beef Cattle Improvement Association producers involved in the North Dakota State University Extension CHAPS program.

Does this mean all the cows should be managed as 5-year-old cows? The answer obviously is no.

However, what is the target?

I could not help pulling out some data I put together a few years ago.

At that time, the average cows enrolled in the CHAPS program averaged 5.4 years of age. Interestingly, average cow age has not changed much during the last few decades.

OF COURSE, the replacement rate is projected to go up because the low number of cows in the inventory begs for more cows.

Currently, the replacement rate benchmark is 15.3 percent, but the example I had worked out was for a 20 percent replacement rate.

You have to keep in mind that not all replacement heifers breed.

So what does this all mean in terms of the distribution of the cow herd?

Assuming a typical herd of 100 cows, one would anticipate the inventory to be made up of 17 first-calf heifers, 15 second-calf heifers, 13 that are 4 years old, 11 that are 5, 10 that are 6, nine that are 7, eight that are 8, six that are 9, five that are 10, three that are 11, two that are 12 and one that is 13 or older. The distribution of age is slanted dramatically to the younger cows.

OF THE total cows, 45 would not be considered mature cows. Only six of the cows would be more than 10 years old.

Managing cows means keeping in mind the various groups of cows that are in the herd and then meeting their nutritional needs, not the nutritional needs for the average age of the cows.

What this means is the cows need to be sorted.

TO MEET each group’s needs, a separate pen for the 17 first-calf heifers should be set, then add the 10-year-old and older cows.

If the pastures were short or winter feed supplies challenging, the second-calf heifers and any thin cows (condition score 4 and under) should be added.

Essentially, the special needs group easily could be 43 cows based on age, plus a few thin cows from the mature group of cows.

Half the herd needs to be on a stepped-up plan of nutrition designed to put some weight on the cows. The other half could follow a typical maintenance, hold-your-own type of plan.

Another way to look at that example is to look at what different ages of cows weigh in the fall

In this example, those first-calf heifers (2 1/2-year-olds) are always the lightest in the fall, coming in at 1,082 pounds. The weight is taken in the fall when the cows are approximately half a year older than when they calved in the spring. The most logical time to weigh the cows is at weaning, so that is the weight that is discussed.

Now, for the weights, with the condition score in parenthesis:

-The 2-year-old weighed 1,082 pounds (4.9),

-3-year-olds 1,184 (5),

-4-year-olds 1,255 (5),

-5-year-olds 1,279 (5.1),

-6-year-olds 1,301 (5.2) and

-the 7-year-olds 1,304 (5.2).

One should note cows keep growing until they reach 7 years of age in this data set. Body condition is more constant and levels a year earlier at 6 years of age.

The important point to remember is cows are not fully grown as heifers and have seven years of growth before they start to decrease in weight.

-The 8-year-olds weighed 1,299 pounds (5.2),

-9-year-olds 1,286 (5.1),

-10-year-olds 1,265 (5),

-11-year-olds 1,267 (4.9),

-12-year-olds 1,236 (4.7),

-13-year-olds 1,232 (4.5) and

-14-year-olds 1,180 (4.3).

Cows slowly work themselves up to a peak weight when they are 7 years old and then start to lose weight until they leave the herd. The 14-year-old cows weigh the same as the 3-year-old cows in the fall of the year.

Body condition is held more constant and 6-, 7- and 8-year-old cows all have similar body condition scores. However at 11-years-old, cows drop back to body condition scores more typical of 2-year-old cows.

The moral of the story is young and old cows need to be treated similarly and fed separately from the main body of cows. That is, if you want excellent performance from all ages of cows.

Understanding the dynamics of the herd is critical to proper management.

May you find all your ear tags.

Cow Costs – Depreciation

Cow Depreciation – A Hidden Cost

Cow depreciation is frequently the second largest expense to the cow-calf enterprise after feed. Depreciation is a non-cash expense that is often overlooked by cow-calf producers. Depreciation for a cow is calculated as the following.

Depreciation = (Purchase Price or Replacement Cost – Salvage Value)/Productive Years in the Herd

Purchase price is the dollar value of the bred heifer or cow when she is bought and enters the herd. For producers raising their own replacement heifers, replacement cost should include all costs starting with the costs to produce the weaned heifer calf till the time she enters the herd as a bred female.

To demonstrate how significant this expense can be, examine an example of current bred replacement heifer prices against today’s cull cow values.

(Bred Two-Year-Old Heifer = $2750) – (Average Cull Cow Value = $1500) = $1250/head, Depreciation without death loss

The average number of productive years for most cows in a herd is somewhere from 3-5 years assuming a 10 – 20% cowherd replacement rate. Using five years, depreciation is $250.00 per head per year. At four years it is $312.50 per head per year and at three years it is $416.67. If you add in death loss at 2% on an average cow herd value of $2000 then depreciation expense jumps to $290.00 per head for five years, $352.50 for four and a $456.67 for three. Cow depreciation is a significant expense!

Aggressively identifying ways to reduce depreciation expense should be a goal for cow-calf producers. Depreciation can be reduced one of three ways.

1. Reduce replacement heifer development costs or the purchase price for bred heifers/cows.

2. Increase the salvage value of cows that are leaving the herd.

3. Increase the number of years a cow is productive in the herd.

Let’s take a look at each segment of the cow depreciation equation.

PURCHASE PRICE OR REPLACEMENT COST

Cow-calf producers who purchase bred replacement females need to evaluate the cost of those females against expected productivity and revenue that will be generated from them. When most cow-calf producers think of buying bred replacements, they probably are thinking of purchasing bred heifers. However, it may be that purchasing a different age group of cows would be more profitable and provide greater management flexibility.

Those cow-calf producers who raise and develop their own replacement heifers should enterprise replacement heifers separately from the cowherd to identify all of the costs involved. A producer should know their costs to produce a weaned heifer calf. At weaning the producer should on paper “sell” the weaned replacement heifers to the replacement heifer development enterprise at market value. The replacement heifer enterprise “buys” the weaned heifers and then develops the heifers into bred heifers that can be “sold” back to the cow-calf enterprise. Once the bred heifers are ready to enter the herd, the cow-calf enterprise then “buys” these bred heifers at market value.

While all of these transactions only occur on paper, and may seem unnecessary, it brings clarity to where expenses and revenue are being generated in the operations and which enterprises are profitable. Keeping track of all expenses, including a heifer’s market value at weaning, that go into developing a bred replacement heifer is important to be able to identify opportunities to optimize development costs. For more information on developing replacement heifers see the UNL NebGuide “Reducing Replacement Heifer Development Costs Using a Systems Approach” at http://go.unl.edu/8m5d.

SALVAGE VALUE

In the depreciation equation, increasing the “salvage” value of cows leaving the herd often provides the greatest opportunity to reduce depreciation. Frequently cow-calf producers pregnancy test spring calving cows and cull non-pregnant cows in the fall of the year. Other cows are frequently culled at this time as well for a plethora of reasons including age, attitude, udders, structure, lumps, bumps, etc. This time of the year is also historically when annual cull cow values tend to be lowest for the year.

The following are two examples of the ways that value can be added to cows leaving the herd increasing their worth and thus reducing depreciation expense.

1. Have a long breeding season and a short calving season. The use of pregnancy diagnosis tools such as palpation and ultrasound can identify how far along a cow is in her pregnancy. Those cows that will calve later than the desired time period can be sold as bred cows. In today’s market environment bred cows usually bring a significant premium to non-pregnant cows.

2. Capture additional value from non-pregnant cows by adding weight and selling into a historically seasonally better market than the fall. The value of weight gain today for a cull cow can be quite amazing at current prices. This is especially true if you can move a cow from a “Lean” classification into a “Boner/Breaker” classification in a market where prices are increasing.

PRODUCTIVE YEARS IN THE HERD

Evaluate ways to cost effectively reduce cowherd turnover. The first reason cows are usually removed from the herd is because they are not pregnant. Young cows, especially those that are two or three years of age are often the most vulnerable. Older cows toward the end of their productive life can be vulnerable as well. There are several tools such as hybrid vigor, genetics that fit resources, health programs, development systems and strategic feeding/supplementation that can be used to cost effectively reduce cowherd turnover.

Cow depreciation is a significant expense. Cow-calf producers who aggressively manage to cost effectively reduce this expense will see an increase in their profit.

By Aaron Berger, UNL Extension Educator

Goals, Strategy and Tactics for Change

The Goal: Who are you trying to change? What observable actions will let you know you’ve succeeded?

The Strategy: What are the emotions you can amplify, the connections you can make that will cause someone to do something they’ve hesitated to do in the past (change)? The strategy isn’t the point, it’s the lever that helps you cause the change you seek.

The Tactics: What are the actions you take that cause the strategy to work? What are the events and interactions that, when taken together, comprise your strategy?

An example: Our goal is to change good donors to our cause into really generous donors. Our strategy is to establish a standard for big gifts, to make it something that our good donors aspire to because it feels normal for someone like them. And today’s tactic is hosting an industry dinner that will pair some of our best donors with those that might be open to moving up.

If you merely ask someone to help you with a tactic in isolation, it’s likely you won’t get the support you need. But if you can find out if you share a goal with someone, then can explain how your strategy can make it likely that you’ll achieve that goal, working together on a tactic that supports that strategy is an obvious thing to do.

And it certainly opens the door to a useful conversation about whether your goal is useful, your strategy is appropriate and your tactic is coherent and likely to cause the change you seek.

A tactic might feel fun, or the next thing to do, or a lot like what your competition is doing. But a tactic by itself is nothing much worth doing. If it supports a strategy, a longer-term plan that builds on itself and generates leverage, that’s far more powerful. But a strategy without a goal is wasted.