Strategic Planning For The Ranch

Are You Operating Your Ranch For Profit Or Convenience?

If ranching isn’t fun and profitable, it isn’t sustainable. Thus, there’s very little incentive for the next generation to carry on.

In recent articles, I’ve asked how we define ourselves – cowboys, stockmen, grass farmers, ranchers, etc. I then proposed a few ways to avoid or escape “paradigm lockdown.” Last month, I suggested a way to easily and effectively analyze different methods of structuring and operating our businesses.

My purpose was to suggest that we too often use our thinking and planning time for tasks that either don’t matter much economically, or that we are already pretty good at. I’m not sure why that is; perhaps it’s just easier to keep doing what we’re doing and try to improve little by little.

I often see decisions made for the sake of convenience, personal preference or to maintain the current operating system rather than for profitability. It seems we get so emotionally engaged in what we are doing and the way we do it, that we would almost rather lose money than to change. And, I might add, that some do continue to lose money rather than change or even look for ways to change.

Dave Pratt, in his Ranching for Profit school, emphasizes the difference between “working in the business” (WITB) and “working on the business” (WOTB). WITB deals mostly with tactics and tasks that are immediately in front of us. We’re basically planning how and when to do things we’ve already done many times with a few changes for improvement here and there.

This scenario reminds me of the story about a cowboy applying for a ranch manager job. He came to the interview touting 20 years of experience. When asked how he approached ranch planning in all its aspects, his answer indicated a very rigid and repeated approach that had apparently been a long-time habit. Upon hearing the response, the ranch owner said, “It seems to me that you haven’t had 20 years of experience but that you have had one year of experience 20 times.

Yes, WITB is important and should not be neglected. However, WOTB is the big difference maker and an integral part of successful management. Its adherents are, almost without fail, lifelong learners. They kick holes in “the box” or their paradigm – not just big enough to see out of, but big enough to climb out of as soon as they find something better.

WOTB deals with the strategic issues of “what should my ranch look like?” As you begin to “work on the business” you explore alternatives that seem new and sometimes crazy to you. This includes things like:

  • Should I continue to calve in winter when it requires significantly more facilities, feed and labor? If I change calving seasons, what else will change?
     
  • Should I continue to run cows and calves when I have to feed them 4-5 months out of the year when other ranchers (my competitors) perhaps don’t feed at all or only supplement to enhance the use of grazed feed or perhaps feed only a few days of each winter when conditions are terrible?
     
  • Can I ranch without putting up hay?
     
  • Can I ranch without all this equipment, labor and these facilities?
     
  • Should I begin to learn about management intensive grazing, planned time-controlled grazing, or mob grazing? Should my emphasis move from cows to grass and soil? After I learn a little, can I find someone doing it well within a reasonable distance of my ranch?
     
  • Should I try to capture and benefit from the advantages of crossbreeding and heterosis? If so, what should my breeding program look like – breeds, crossing system, composites, etc.?
     
  • If I’m to continue with a cow-calf operation, should I raise or buy replacements? If I buy replacements, should they be cows or heifers; and, if I buy replacement cows, should I terminal cross and use high growth and high carcass EPD bulls?
     
  • What really is the optimum cow size and milking ability for my environment and market objectives? Are the market objectives the right ones for my situation – do they fit the resources of our ranch?
     
  • Can I work cooperatively with other ranchers to better meet my objectives and help them meet theirs? Perhaps my neighbor can produce an excess of bred cows, which I buy at a good premium over cull cow prices. I then can terminal cross, don’t have to calve or breed heifers, and have a very simple operation.
     
  • Does my ranch have other values that can be developed for other income streams – things like bird watching, photography opportunities, hunting, camping, gravel sales, etc.?

These and many others are WOTB questions. Getting answers to these questions requires learning, critical examination, analysis, seeing how others are already doing some of the things you are interested in and if it really pays. I highly recommend looking for ranchers who are already doing what you would like to do but think won’t work. You may be surprised when you actually came to understand what another rancher is doing and how they are doing it. You may discover that you can do it, too.

 

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I’m not suggesting that dollars are the only payout we get for what we do. However, it isn’t much fun to do something that continually loses money simply because it is our favorite thing to do. When our operations are in the black without infusions from our off-farm incomes, it is reasonable to do something less than economic best if total satisfaction is maximized.

If ranching isn’t fun and profitable, it isn’t sustainable. There’s very little incentive for the next generation to carry on. The lack of profitability begins to discourage the owners – even the wealthy. It wears on the ego of hired managers and employees.

In the long run, you can’t make it fun enough to compensate for lack of profitability. Until our ranches are nicely profitable, we must make decisions for profitability and not for convenience, personal comfort or to maintain our preferred way of operating. Once we are routinely profitable, then we can allow the fun and enjoyment to become part of the compensation.

Burke Teichert, consultant on strategic planning for ranches, is retired as vice president and general manager of Deseret. He can be reached at burketei@comcast.net.

 

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What's Strategic Planning For The Ranch?

Burke Teichert provides readers with his practical take on efficient and cost-effective livestock production and ranch management.

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Burke Teichert

Burke Teichert was born and raised on a family ranch in western Wyoming and earned a B.S. in ag business from Brigham Young University and M.S. in ag economics from University of Wyoming. His work...

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