Herdquitter Blog

If you are a cow-calf producer, I encourage you to be honest with yourself when you answer the following two questions.   Were you profitable in 2019?   If you were profitable, would you be able to prosper with that level of profitability year after year after year?   According to what I have read and heard, very few cow-calf producers showed much profit in 2019.   Most did good just to break even.   Many did not break even.

Contrary to popular opinion, there are many cow-calf producers who were very profitable in 2019.   While most of their neighbors were whining, complaining and blaming, these producers continued to make the necessary changes in their operation to keep up with the future.   They know nothing stays the same.   The present is different from the past and the future will be different from the present.

As we said in last week’s PCC Update, much has changed in the last 50 years – and yet nearly all of today’s cow-calf producers operate as though nothing has changed.   Fifty years ago, you could purchase a new pickup for less than $5000.   You could purchase gasoline for $0.35 per gallon.   Land could be purchased or leased for one-tenth what it costs today.   In the last 50 years, the cost of inputs has risen at least four times faster than cattle prices.

If you are a cow-calf producer, your survival will be dependent upon your ability to adapt and change.   The sooner you change, the better.   The most profitable and successful cow-calf producers started to make the necessary changes 10 to 20 years ago.   As time goes on, more and more producers are making these changes.   There have always been huge benefits to being early to make necessary changes.   There will always be consequences for being late.

Be honest with yourself…   Do you need to make some changes in your operation?   If you were not satisfied with the profits you made last year, you need to start making some changes.   The recurring theme in our Winter 2020 Newsletter is the need to change with the times.   The leadoff article demonstrates how change is accepted and adopted by different groups of people.   Which one are you?   Be honest with yourself.

 No matter where I go, I hear people say, “You can’t do that here,” in reference to many of the management concepts we share in our presentations, our newsletters and our PCC Updates.   In most cases, there are people within 100 miles of them doing exactly what they say cannot be done.   Most of the “can’t do that here” people are slowly but surely going broke as the cost of inputs continues to increase.

 Henry Ford once said, “Whether you think you can or whether you think you can’t – you are right.”   This is as true today as it ever was.   For the most part, we are limited only by what we think we can and cannot do.   The “can-do” people will always have a competitive advantage over the “can’t do that here” people.   Those who believe something cannot be done are often pushed aside by those who are already doing it.

While most people work for their money, the most successful people make their money work for them.   Likewise, while most cattlemen work for their cows, the most successful cattlemen make their cows work for them.   Who is working for who on your farm or ranch?

 A cow ought to be supporting the ranch – instead of being supported by the ranch!   Who is working for who?   The only cows that can effectively support the ranch are moderate-sized, low-maintenance cows that fit their environment.   The only way to produce cows that fit their environment is to use bulls that were produced by moderate-sized, low-maintenance cows that fit their environment.   Like begets like!   As long as you continue to use bulls that were produced by high-maintenance, 5 to 7-frame cows, you will ALWAYS be working for your cows.

If success was easy, everyone would be remarkably successful.   Unfortunately, very few people can be classified as remarkably successful.   Success, however, does appear to be easy for some people.   If you look closer, you will discover those people are very driven and focused.   They make things happen.   They see opportunities most people miss.   They are not afraid to step outside their comfort zone.   They are not afraid to try what others say cannot be done.

We still believe there will be more opportunities for you and your family operation to advance in the next ten years than there have been in the last 30 years – but only if you are able to break away from the status quo, herd-mentality way of thinking.   The future belongs to those who are able to think for themselves.   The future belongs to those who can successfully transition to a low-input (high-profit) program with efficient, low-maintenance cows.   If you have not already made this transition, NOW is the best time to get started.   Why wait?

 Everyone has some unique competitive advantages based on their location, their personality, their experiences, their acquaintances, etc., etc.   Most producers, however, never take the time to identify their competitive advantages because they are afraid to leave the so-called “comfort” of the status quo herd.   They fail to realize they must be different to rise above the herd.   The first step to becoming extraordinary is to stop being ordinary.   Don’t be afraid to dream.   Dream BIG while you are at it!

It seems as though most cow-calf producers are always looking for ways to increase weaning weights.   They can accomplish their goal by using large-framed, high-growth bulls, feeding expensive supplements, implanting calves and by using wormers and other toxic chemicals.  Of course, the companies that market these products claim they will increase both pounds and profit.   While these products may increase calf weights, they don’t necessarily increase profits. 

 The example below illustrates that not all pounds produced are created equal and that the value of gain is often much lower than we think. 

 Valentine Livestock Auction – November 21, 2019

 472# @ $180.18 = $850.45 per head

 572# @ $161.55 = $924.07 per head

Value of Gain = $924.07 – $850.45 = $73.62 or $0.74 per pound.

 Most producers believe the value of the added weight is the price received per pound.   As you can see, that is not the case.   The value of the additional 100 pounds in the example above is only $0.74 per pound.   

 Unfortunately, most producers underestimate the cost associated with achieving the additional calf weight and overestimate the value of the additional gain.   Increased expenses, reduced stocking rates, additional labor and increased overheads are usually associated with these practices.

 Producers must understand the cost associated with the additional weight gain in relation to the value of gain in order to maximize profitability.   A large-framed, high-growth, high-maintenance cowherd that produces large calves can be great for bragging rights but terrible for profits. 

Most Americans will be getting together with family and friends tomorrow to celebrate Thanksgiving Day.   Perhaps the following Old Testament verses will help prepare us for this special day.

 When you have eaten and are satisfied, praise the Lord your God for the good land he has given you.   Be careful that you do not forget the Lord…   Otherwise, when you eat and are satisfied, when you build fine houses and settle down, and when your herds and flocks grow large and your silver and gold increase and all you have is multiplied, then your heart will become proud and you will forget the Lord your God…   (Deuteronomy 8:10-14)

No matter who you are or what you have been through, I’m sure you have much to be thankful for.   We all do.   Most of us have so much to be thankful for it’s difficult to know where to begin.   After a while we tend to take our blessings for granted.   Worse yet, we often deceive ourselves into thinking that we are responsible for all that we have.   I encourage you to take time to consider your many blessings this Thanksgiving, and don’t forget to give credit where credit is due.

Monday morning, I read an article in which US Senator John Hoevan from North Dakota said, “These are challenging times for beef producers.”   A 65-year-old rancher from North Dakota was then quoted as saying, “We are at a tipping point in our industry.”   He went on to say, “Ranching is a great way to raise a family.   I would like to see my children be able to carry on this way of life.”   Obviously, this discussion took place in North Dakota.   However, I maintain it could have taken place in any beef-producing state.

So, what are the perceived problems?   The status quo beef industry wants us to believe the biggest problems faced by today’s beef producers are, in no particular order, beef packers, trade wars, tariffs and global demand for beef.   You will notice the average cow-calf producer has absolutely no control over any of these things.   That allows cow-calf producers to blame their failure on someone else.   They do not have to accept any personal responsibility for their failure.   That’s convenient – but it will never solve any problems!

If you are a cow-calf producer, then YOU ARE responsible for your success or failure.   You cannot blame someone else.   There are many cow-calf producers in North Dakota and other beef-producing states who are extremely profitable.   While most of their neighbors are whining, complaining and blaming, these producers continue to make the necessary changes in their operations to keep up with the future.   They know nothing stays the same.   The present is different from the past and the future will be different from the present.

These are challenging times – but only for those who refuse to take responsibility for the success or failure of their own business.   These are challenging times for those who refuse to admit the beef industry is not the same today as it was just 10 years ago.   These are challenging times for those who refuse to change what needs to be changed.   However, for those who are not afraid to think for themselves, the doors of opportunity have been thrown wide open.   The next ten years will be remembered as the best of times for some – and the worst of times for others.

Kit and Company,

Kat and I received an award from a local farm/ranch organization Sunday evening.   It was called the Young Producer of the Year award.   We were very honored to have a group of local producers recognize us for what we have been able to achieve in our short ranching career.  

However, I was very disappointed in the overall negative tone of the rest of the meeting.   There seemed to be no hope for anyone in production agriculture.   Ever since we began our journey, we have heard that it is impossible to get into farming and ranching unless you are born into it or have a spouse that was.   We continue to hear this message, along with a new one.   THERE IS NO MONEY IN AGRICULTURE!  

These negative messages are a disease that if repeated often enough and long enough, will eventually be believed by most people.   Buck Brannaman once said, “If all you are thinking about is your horse bucking you off, it will become a self-fulfilling prophecy.”   I think the same holds true in business.   If we only focus on the negative, we will only see the negative.   There is no doubt that money is tight in agriculture – but that does not mean success is impossible.

 When I graduated from college in 2009, I had dreams of owning my own ranch someday.   I didn’t know what it would look like or how this dream would be accomplished.   I seldom told anyone about my ambitions because when I did talk about it, I was told that I wasn’t born into that life, what did I know about ranching, I could never afford to get into that business – and this was from those who I was close enough to that I could share my dream.  

 In the fall of 2009, while working for another rancher, Kat and I attended our first PCC bull sale.   I was blown away by the entire organization.   The open sharing of ideas and the outside-the-box thinking.   Most importantly, you and your staff believed there was a way to make a good living in the cow-calf business.   Your program and philosophies are very different from what I learned in school.   Pharo Cattle Company has shown me that through the right genetics, proper grass management and working with nature, a decent profit can still to be made in this business.

As a first-generation rancher, I want to thank you, your staff and the entire PCC network for the positive encouragement we received.   Because of PCC’s positive messages, we have been able to accomplish many things that I was told would be impossible to accomplish.   Thanks for everything!

According to the Livestock Marketing Information Center (LMIC), the cost of producing a calf has increased from $384 in 2000 to $883 in 2014.   It more than doubled in just 14 years.   Keep in mind, though, that this is an average cost of production.   Some cow-calf producers have a much higher cost of production, while others have a much lower cost of production.

 Most longtime PCC customers have a cost of production of $400 to $500 per calf.   That is a $300 to $400 per calf advantage over average.   If you spend $300 to $400 less to produce a calf, you have essentially increased you profit per calf by $300 to $400.   In this business, that’s HUGE!

 There is another “Cost Per Calf” figure we should discuss…

 According to many university experts, you can only expect to get three years of use out of a high-maintenance, feedlot-developed Diesel Bull.   Even with supplementation, most Diesel Bulls can service no more than 20 cows their first year and no more than 30 cows their second and third years – for a lifetime total of 80 calves.   If the average Diesel Bull sells for $4000, your cost per calf is $50 ($4000 divided by 80).

 It is not at all uncommon for PCC Solar Bulls to provide at least six years of service.   In most cases, we are not afraid to turn our Solar Bulls out with 30+ females their first breeding season.   We expect our bulls to gain weight during their first breeding season – without being supplemented.   Our mature bulls can handle 50+ cows – for a lifetime total of at least 280 calves.   If the average PCC Solar Bull sells for $6000, your cost per calf is only $21 ($6000 divided by 280).

 Are you really saving money by purchasing a Diesel Bull for $2000 less than a PCC Solar Bull?   Hardly!   At $6000, a PCC Solar Bull is a bargain!   Your cost per calf will be nearly $30 less with a $6000 PCC Solar Bull than with a $4000 Diesel Bull.   Purchasing PCC Solar Bulls will also be one of the best investments you can make for the future of your business – and they come with a One-Year Warranty!

 NOTE: Most of today’s bulls are high-maintenance animals that require high levels of energy (grain, etc.) to perform.   We refer to these bulls as Diesel Bulls.   In contrast, our ultra-low-maintenance bulls can perform quite well on a year-round, all-grass diet.   We refer to these bulls as Solar Bulls because they don’t require anything other than free solar energy.

 In commodity agriculture, average is breakeven.   Below average producers are losing money.   The only way they can stay in business is to subsidize the farm or ranch with outside income.   Above average producers are profitable.   Some are extremely profitable.   They are profitable because their management differs substantially from average producers.   They have a distinct competitive advantage.

 Most PCC Customers are well above average.   Many have doubled their profits.   They are focused on production per acre – instead of production per cow (bragging rights).   They are using ultra-low-maintenance bulls – instead of the high-maintenance bulls everyone else is using.   They know nothing affects profitability as much as stocking rate and cost of production.

 Following the crowd and doing what everyone else is doing has never been the best way to manage a business.   In most cases, it is the absolute worst way to manage a business.   If you are part of the status quo herd, you will never be above average – and you will never have a competitive advantage.   Dare to be different.   Dare to be a Herd Quitter.

 John Nino, a PCC customer from California, showed up at our Nebraska Bull Sale last Saturday.   He and a couple of companions were in the area to buy some horses.   John purchased some bulls while at the sale.   While he was waiting for health papers, he came into the office to visit.   John shared the following story with everyone in the office – a story that I remember very well.

 The morning of our 2007 Colorado Fall Bull Sale (12 years ago), John called the PCC office at about 8:30 to submit some late sight-unseen bids on calving ease Black and Red Angus bulls.   I was in a hurry to get to the sale location in Burlington, Colorado – so I was probably a little short and rude with John.   Thankfully, John doesn’t remember it that way.

 John said he wanted five calving ease bulls and gave me a long list of bulls he wanted to bid $3000 on.   I promptly (and arrogantly) told him he would probably not get any of those bulls for $3000.   In response, John said he would increase his bid to $3500.   I told him he would be lucky get any of those bulls for $3500.

I took John’s late sight-unseen bids – and I am really glad I did.   John purchased five bulls for an average of $3120 – with a range of $2750 to $3500.   He would have only purchased two bulls with his original $3000 bid.   Two of the bulls he purchased would have been no-sale bulls if I had not taken his sight-unseen bids.

 John was concerned when the five grass-developed bulls arrive in California because they were not as big or as fat as the feedlot-developed bulls he was accustomed to.   John closed he eyes and turned those five bulls out with 300 heifers (60 heifers per bull).   Based on past experience, he expected only 120 to 150 of the heifers to get bred.   John was happily surprised when over 80% (245 out of 300) were bred.

 My favorite John Nino quote is, “The ability of your bulls to breed a large number of heifers in a short period of time has greatly improved my profitability.”   Since that sale in the fall of 2007, John Nino has purchaser 151 PCC Solar Bulls.   Most of those bulls were purchased for $3000 to $5000.   I am so glad I did not blow John off because I was in such a hurry to get to the sale in 2007.

 Instead of complaining about the markets or the weather or anything else, John says he feels blessed to be in the cow-calf business.   I agree with John 120%!   The cow-calf business is easy, it is fun and it is very profitable once you remove yourself from the status quo herd and the status quo, herd-mentality way of thinking.

The most gratifying part of my job is hearing from people who made the transition from high-input, break-even ranching to low-input, profitable ranching.   I receive emails on a weekly basis from those who are so glad they made the transition when they did.   Most wonder why it took so long to see the light.   I can remember having the same thoughts myself over 30 years ago.   Making a paradigm shift of this magnitude is not easy.

I visited with many PCC customers at our spring bull sales.   Most long-term customers have operations that are much more profitable, enjoyable and sustainable than they ever thought possible prior to making the transition.   I also visited with people who were very enthusiastic about taking the first steps in making the transition.   They saw the light, and they are extremely excited about the future for their family and their business.

A few new customers will admit they are a little nervous about making the transition.   It requires going against what their neighbors and family believe to be right.   They have seen the light – but they are reluctant to enter what we call the New Frontier in Beef Production.   I remind them that the New Frontier is not totally uncharted territory.   Well over 2000 PCC customers and others are already there.   Those who are part of the New Frontier are two to five times more profitable than their status quo neighbors will ever be.   Their lifestyle is also substantially better than their neighbors.

Status quo ranching may have made sense 40 to 50 years ago – but it is making less and less sense every year.   As cattle prices continue to go up and down, up and down, the cost of land and inputs continues to increase – sometimes at unprecedented rates.   Most status quo producers are slowly but surely going broke.   Some status quo producers see the futility in what they are doing – but it seems as though they would rather fail conventionally than succeed unconventionally.

The fact that most status quo producers will not change until they are forced to change gives the rest of us HUGE opportunities.   Throughout history, the first to enter new territories and new frontiers have always had HUGE advantages over the late-comers.   I continue to believe the next ten years will be remembered as the best of times for some – and the worst of times for others.

By Tim Goodnight

 Over the past two weeks, we have discussed several important areas that producers must address in order to produce high-quality grassfed beef.  This week, I would like to discuss two of the most frequently asked questions we hear when visiting with customers.

 Endophyte-infected fescue is one thing many PCC customers ask about.  With endophyte-infected fescue accounting for 35 million acres of grassland and hosting 8.5 million head of cattle, it is the main forage resource for many PCC customers.  Simply put, endophyte is a fungus that exists within the plant that produces toxic ergot alkaloids.  These toxic alkaloids, when consumed by cattle, can result in fescue toxicity, fat necrosis and fescue foot.  Symptoms such as a reduction in feed intake, reduced daily gains, elevated body temperature, increased respiration rate and lowered reproductive performance have all been documented. 

 While there is limited research on the flavor profiles of grassfed beef finished on endophyte-infected fescue, testimonials seem to indicate that beef quality, flavor and texture are all negatively affected.  With that said, there are several successful grass-finishers in the “fescue belt.”  They have accomplished this by adopting grazing techniques that have improved soil health and significantly increased plant species diversity.  These producers are also using superior grass-based genetics that have been bred and selected for fescue tolerance.

 Protein/Energy Ratio.   Protein content of finishing forages is another topic many customers ask about.  Most ranchers we speak to talk about protein when discussing forage quality.  In nearly every case, protein is not the most limiting nutrient in grass-finishing pastures.  Energy is.  Too much protein and/or not enough energy in the animal’s diet will create “off-flavors” in the meat.  Excess protein that is capable of creating “off-flavors” is often seen when producers finish cattle on immature forages that are high in soluble and degradable proteins.

 When grass-finishing cattle on planted annuals, it is important to monitor Total Digestible Nutrients (TDN)/ Crude Protein (CP) ratios.  TDN at 70% or above and CP at 18% or below should be the target.  TDN/CP ratios between 3.5 to 5.5 would be ideal in most cases.  Typically, when the ratio drops below 3.5, you encounter too much protein and not enough energy.  When the ratio climbs above 5.5, you likely have overly mature forages that are low in both energy and protein.  This is a general guideline and there are exceptions.

 In addition to forage analysis, producers can determine forage quality by measuring plant BRIX levels using a refractometer.  Plant BRIX is a measure of the soluble sugars, proteins, minerals, amino acids, lipids, and pectins in the plant.  While many universities have animal nutrition tables that predict performance based on forage analysis, we have found plant BRIX to be more accurate at projecting ADG and animal performance.  Forages with high BRIX levels have been shown to produce beef that is superior in flavor, texture and nutritional profile.

 You are what you eat.  This is true for cattle as well as for people.  Grass-finishing beef is best accomplished by taking a systems approach.  Soil health, forage quality and diversity and adapted grass-based genetics are all required to produce high quality grassfed beef. 

By Kit Pharo

Whether you want to believe it or not, your long-term success in the cow-calf business will be dependent on your willingness to make some changes.   We all have the ability to change – but not everyone has the willingness to change.   Unfortunately, most producers will not change until they are forced to change.

Cattle prices will continue to go up and down, up and down – while the cost of inputs will continue to go up, up, up.   In the last 50 years, the cost of inputs has risen four times faster than cattle prices.   As time moves on, more and more producers will fail to have enough income to cover their expenses.

 WHATCHA GONNA DO?   

 Those who would like to increase their long-term profit need to start thinking in terms of production and profit per acre – instead of per animal.   They need to work with nature – instead of against nature.   They need to implement proper grazing management to make the most of every ray of sunshine and drop of rain that falls on the land they control.   They need to reduce and eliminate expenses.   And… they need to produce cattle that fit their environment – instead of artificially changing the environment to fit their cattle.

 Pharo Cattle Company has the low-input, grass-based genetics you will need to produce efficient, easy-fleshing, 3 to 4-frame momma cows that can increase pounds and profit per acre.   Our 3 to 4-frame cows weigh 1100 to 1250.   That’s big enough!   In contrast, most seedstock producers have high-maintenance, 5 to 7-frame cows.   Their bulls will continue to take you farther and farther in the wrong direction.

By Tim Goodnight

 In last week’s discussion on what is required to produce quality grassfed beef, I focused on animal genetics.   While selecting the right genetics is essential to producing quality grassfed beef, there are several other factors to consider.

 Grassfed beef producers face many challenges that the feedyards do not.   Feedyards are very good at producing vast amounts of beef in confined areas using formulated rations.   Unfortunately, many consumers feel these production practices produce beef that lacks flavor.   A growing number of consumers are also concerned about the environmental, human health and animal welfare aspects of conventional production practices.

 When it comes to producing flavorful beef that is better for the environment, the consumer and the animal, grassfed beef producers have an incredible story to tell.   While this story is important, it must be backed by a high-quality eating experience. 

 Soil Health is at the top of the list when it comes to producing quality grassfed beef.   While the chemistry of the soil may be useful in determining yield and dry matter production, soil biology is a better tool for predicting forage quality and animal performance.   Moving away from the use of synthetics and tillage, while maintaining a living root system and introducing adaptive grazing principals will stimulate soil biology and build soil organic matter.   Improving soil health will benefit animal performance and health, as well as the quality of the meat produced.

 Forage Diversity is also important to both animal performance and meat quality.   The benefits of species diversity in grazing programs has been well documented.   The symbiosis that takes place between plant species when a variety of root systems exist cannot be ignored.   Increased dry-matter production, improved animal health and performance along with significant increases in soil organic matter have all been documented.   While introducing diversity is easy to accomplish in planted cover crop mixes, the latent seed bank present in our pastures can also be accessed to increase diversity through the implementation of adaptive grazing techniques.   

 Water Quality is another critical factor when it comes to animal performance and the flavor of the meat.   The muscle of an animal is roughly 75% water.   Water quality problems such as high concentrations of minerals, nitrates, bacterial contamination, algae growth, fertilizers and/or other chemicals can impact flavor.   If water quality is poor or tastes bad, cattle will limit how much they drink.   Limited water intake will reduce forage consumption and daily gains.   Knowing that water consumption is essential for animal performance and that the rate of gain effects carcass quality, it should be no surprise that water quality impacts not only the flavor but several other meat attributes as well.

 Finally, grass-finishers must place an emphasis on Stockmanship.   Producers can do everything right when it comes to genetics, soil health, forage diversity and water quality but can lose it in an instant with poor stockmanship.   Poor animal handling will stress cattle.   This stress causes several chemical reactions that negatively impact meat flavor and texture.   How the animal is handled from the time it’s a calf to the time it’s processed is critical in achieving quality grassfed beef.

 Whether you are a grass-finisher or not… the issues discussed above are the same issues that determine your success on the ranch.   This alignment between cow-calf producers and grass-finishers is one of the most exciting developments in the beef industry.   Never have the interests of the ranchers and finishers been more closely aligned than they are in the grassfed beef sector.

 We will continue this discussion next week…