I See Signs Net Profit Is Getting More Popular

Beefs and Beliefs

After 30 years in the industry I am excited that beef producers are finally talking a little more about what makes a profit.

Published on: August 8, 2013
 

Times in the beef industry they are a'changin’.

This thought really came home to me after I spent the first part of last week in a “regenerative ranching” seminar with Zimbabwe native Johann Zietsman and with our newest blogger, Jim Elizondo.

Their curriculum is outstanding and I was incredulous the two men could pack as much learning into three days as they did.

In fact, to help make my point about how much things have changed in the last 20 years, I’ll first share a bit more on what Elizondo and Zietsman are teaching. Their course revolves around how to use controlled grazing, including the right blend of ultra-high-density grazing, plus minor but profitable amounts of supplementation, plus the right type of cattle – few of which exist right now but which can be sought out and selected.

By these methods of managing our ranches and rangelands, which are degraded after 100-300 years of continuous grazing, they can be made dramatically more productive. Therein lies the regenerative part. When good grazing is matched with management changes to a more productive type of cattle, together with switching the production cycle of those cattle to match forage flow and local environment, the two men showed how profit also goes up dramatically.

Net profit is as the priority is still the missing link on the majority of operations, particularly smaller operations. If you would argue that point just go to the local coffee shops and your co-op and join in the gossip. It’s always about production. Always. How many bales of hay. How much the calves weighed. How many bushels of grain.

That’s 50-year-old thinking! For the brief time when we lived cheaply and were mining the organic matter from the soils of this continent we could use that logic because production mostly did equal profit.

It doesn’t any more. Profit today in all agriculture must be calculated. It is the difference between what you spend and the money you take in.

Despite my tirade on this topic, two things have begun to amaze me the last few days as I pondered the regenerative ranching course and all my road trips this summer.

  1. The increased willingness of beef producers to question their own and others past management methods.
  2. The growing willingness to seek profit rather than production.

Part of my point is made by the quality and knowledge level of the folks at the Regenerative Ranching seminar last week. I realize they are not representative of the bulk of forage managers in the country but Elizondo and Zietsman began where just a few years ago most courses would have needed to begin -- and people understood anyway.

Many more people practice some type of rotation in their grazing today, although estimates vary wildly on what those numbers might be and a long drive through the country tells you grazing management is still sadly lacking. Yet change is happening.

The best-managed ranches produce profits of 10% or more return on investment. They focus on profit and keep good records.

And, very interestingly, the few men who espouse and breed those truly medium-framed, thicker cattle we threw away back in the 1960s and 1970s are telling me their bull business is growing. On top of that, brave university souls like Dave Lalman at Oklahoma State University are making a splash nationally with talks about how big frame size, extreme milk production and selection for muscling without selection for efficiency are seriously hurting reproduction and therefore hurting the bottom line.

All this has made sense to me for many years and so I find the signs encouraging, at the least.

I'll keep focusing on net profit and the producers who seek it out. You keep reading this column and I'll help you find them.