“What we're doing isn't rocket science,” says Kim Leeper of Mule Creek Ranch, Wilmore, KS. “Anyone can do the things we do.”
Perhaps, but few enough do so that theirs is an awesome sight: pastures filled with pea-pod uniformity, better than 95% calves weaned/cow exposed in 60 days or less, all without pampering; gain and cost of gain in the stocker pasture and feedlot that sets the standard; carcass performance that commands a reliable premium; discussions that revolve around helping the next guy in line succeed with the same cattle; and sincere enthusiasm about being in the cattle business as a business.
The same principles apply at eight other commercial ranches parlaying their breeding females into one of the industry's hottest commodities.
In three years, their annual Profit-Proven commercial sale at Pratt, KS, has traded 3,234 breeding females for an average of $1,088. This year's sale averaged $1,331. Understand that the bred cow-price across the U.S. is expected to average a historic high near $1,050/head this year. So, buyers are paying at least 27% more than average for their females.
In return, they get documented genetics, documented pasture, feedlot and carcass performance, source verification, added conveniences that include freeze-branded ID numbers, and a ready market for the calves produced by these females. Arguably, as much as anything, buyers are paying the premium because they realize they are getting the very breeding stock their progressive peers would have kept longer in the past.
This kind of excitement, not to mention the rewards for such efforts, has traditionally been tougher to find than Granny Moses' baby teeth. That's the story.
Market futility drives risk taking
“It was always frustrating to raise quality cattle then, when it came time to market them, you got the same price as a roping steer,” says John Adams of the XIT Ranch, Plains, KS. That's why he and his family became founding members of U.S. Premium Beef (USPB), now the largest vertically coordinated — and arguably most producer-lucrative — beef system in the nation.
That's why other Profit-Proven members, like Giles Ranch Co., Ashland, KS, also became involved in USPB.
“Traditionally, only one or two phases of the industry were making money and the others were losing. Now, there's the opportunity for all phases to make money because the information is there. And, it's beneficial to everyone that everyone stays in business,” Roger Giles explains.
In fact, frustration with the lack of market distinction between winners and losers didn't just drive Mark Gardiner and Gardiner Angus Ranch of Ashland, KS, to help found USPB. It also drove them to purchase a substantial number of USPB marketing shares, before anyone knew if the venture would be successful, solely for use by their genetic customers in marketing their own cattle for a premium.
So far, about 30,000 head of Gardiner Angus customer cattle have used the USPB shares to bring back about $1.8 million more than market price. And, that's just with the shares made available at no cost by Gardiner Angus. Other users of their genetics, like those behind the Profit-Proven sale, have their own USPB shares.
A self-fulfilling prophecy
Of course, the gap between want to and can do is wider than the Grand Canyon on a two-legged mule. Whether through the Profit-Proven Sale or USPB, the cattle draw premiums because they're returning more to buyers than the premiums paid for them.
For example, Mule Creek Ranch weaned 670 calves last year out of 678 females preg-checked as bred. Leeper sold 76 half-sisters in the Profit-Proven Sale in November. He'll have another 300 half-sisters on the ground as replacements this year.
At XIT Ranch, Adams has been known to get 97% conception rate on cows that produce well over half their mature weight in calf weaning weight.
At Giles Ranch Co., Giles explains, “We've always felt like we had a $30/head advantage in gain at the feedyard, then another $30-35/head advantage in other production efficiencies vs. the cattle we've purchased to stocker and feed.” As an example, their own cattle will gain 2-2.5 lbs./day on wheat pasture, a full pound more than what they get with purchased cattle.
Members of the Profit-Proven group share meticulous management, common sense and a willingness to embrace technology, such as artificial insemination (AI). They also share a long-standing commitment to genetics as the source of the potential they have to work with — management being how much of that potential they exploit.
How's this for potential? Through the 1970s, Henry Gardiner says his bulls (6-weight) would gain 2.7 lbs. and convert at 7.48 lbs. of feed to 1 lb. of gain. The last set they fed gained 5.84 lbs./day and converted at 4.21:1.
“We're getting twice as much of gain with 40% less feed,” he explains.
Now, the deep market these commercial producers have developed for their females by way of their steadfast commitment to genetics is accelerating the pace of improvement within their programs.
“I feel like we're improving, so we'll be selling more cows and keeping more heifers. If you weren't improving the cattle, you couldn't do that and be efficient,” Adams says. “When a cow exits our program now, it's when she can still add value to another ranch, rather than just to go to slaughter.”
You see, the oldest cows sold in the Profit-Proven sale are 7 years old, and the group has considered shaving a year from that maximum. At XIT Ranch, they'd normally run cows until they're 10 years old. Conversely, at Giles', where the soil is less sandy, they would traditionally start mouthing cattle at 9 years, but run some until they're 15.
In other words, with the demand their cattle's performance has created, these folks are finding they can make more money by turning cows over quicker. Then, with genetics, they take another step forward, faster.
Mule Creek Ranch, for example, uses AI extensively. “You can do in 6 to 8 years what a lot of folks spend a lifetime trying to do,” Leeper explains.
The same attention is paid to purchased bulls. Adams, for instance, bought the highest scanning bull for ribeye area and intramuscular fat in the Gardiner Angus sale two years ago. Bulls in that sale averaged $4,025.
Adding value that matters
“I'd suggest these ranches were paid what they were because of the value they added with genetics, herd health, records, source verification and other management,” Mark Gardiner says. He helps the Profit-Proven group coordinate the sale.
Buyers are willing to pay for source verification, too. Every head in the past two sales has been part of the American Angus Association's AngusSource program, which identifies genetics and source. They're also paying for records, which are evolving toward more individual data. But even the group information has value.
Mule Creek Ranch sold steer calves weaned at 5 months for $1.61/cwt. (485 lbs.) last year, in part because of the data he could share.
“The USPB information from the performance of past calves helped me get those premiums,” he explains. “I share my information with the buyers and they share their information with me, which is what I think we're all going to have to do if we're going to improve.”
On the other side of that trade, Gardiner points out, “The buyers of their calves the past two years say they've made more money with them than any plain ones they paid a lot less for.”
Bottom line, Adams explains, “We have more information today and can make great improvement in the cattle, and pass those benefits on to our customers.”
Gardiner adds: “It's the sum value of these ranches coming together and providing all these things. If you take any part of it away, you lower the sum value.
“They're all the time thinking, ‘What can we do better? How can we add more value?’ Their cattle have a reputation now. I'll get calls year-round about when the next sale is,” Gardiner says.
Leeper emphasizes he wants everybody to make money. That echoes a common mantra of the Profit-Proven group: “You don't have to get rid of everything you've got. You can improve on everything you have if you just take the initiative.”