Ranch Diaries: Ways to reduce the inevitable risks

On cattle futures, planning for potential drought, and grazing cows to encourage forage growth.

 

Ranch Diaries is an hcn.org series highlighting the experiences of Laura Jean Schneider, who gives us a peek into daily life during the first year of Triangle P Cattle Company, a new LLC in southcentral New Mexico. Installments are every second and fourth Tuesdays of the month.

Since we unloaded our first steers in November, we’ve built our herd to about 600 animals. They’ve ranged all over the 30-square-mile Number 5 pasture, utilizing it well. Now we’re getting ready to move them to the south end of the ranch, where the other part of our lease is. After gathering the steers into a smaller fenced trap, we’ll take two days to drive them 20 miles across the ranch to another pasture. We’ll have good help­—several of our partners and their families are coming­—and whomever else we can recruit. Once the steers are settled, we’ll hire a few local cowboys to ride through them while we check in weekly, which will free Sam and me up to focus on the cows and calves­, whose numbers are growing daily.

Sam and I consider grazing management to be risk management. Keeping our cattle contained in one area at a time, rather than allowing access to all of the pastures at once, means recently grazed areas get a chance to rest and recover after the animals move on. Especially in brittle landscapes with low rainfall, we think it’s crucial to plan for a potential drought by reserving adequate forage. Since ranchers make their living from either selling forage as pasture (leasing) or harvesting grass with livestock, taking care of the land is really a way of maximizing resource productivity. We also like to leave adequate residual feed for the wild populations of antelope, mule deer, elk and other creatures to maintain ecological balance. After the good moisture we’ve had, grasses and forbs are already sprouting all over our lease country. Giving these seedlings a chance to mature without being grazed allows for the plant reproduction we depend on and ensures a stronger plant base for the next grazing period.

In addition to planned grazing, we manage risk with the Triangle P steers by hedging them to protect against a drop in the cattle market. While hedging effectively locks in a price for the steers regardless of a fluctuating market, we still face some risk: The cattle still need to make their expected weight gain in order to fill our contracts. (If you’re interested in further reading on the hedging process, here’s a helpful article from South Dakota State University.) 

I’ve mentioned in previous essays that economies of scale help improve efficiency by lowering overhead costs per cow unit. From our past experience, we’ve learned forming a partnership or LLC like the Triangle P isn’t the only way to reduce risk in ranching. In the past, Sam worked for a grazing association in Montana where 20 members pooled their resources to cut costs and purchased a ranch to collectively run 4,000 cows in the summer months. The Montana outfit Sam and I met on didn’t own a single cow but had thousands of yearling cattle on their ranch every summer: Their business strategy included providing full care for the cattle owners who leased their pastures, in addition to running a flourishing guest program. Many smaller operations we’ve worked for in various capacities, from direct sales to herd management, add value to their products by catering to niche markets, raising specialty breeds of cattle or obtaining organic or grass-fed certifications. They sell their product for a premium price to make a higher return.

We’ve also worked on cattle ranches that offered lodging, hunting and outfitting packages. These enterprises seemed to be a solid source of revenue when the cattle market fell or if herd numbers were cut during droughts. While we sold our mares before moving here, in the past Sam and I, like many other ranchers, have diversified by incorporating a horse breeding and training enterprise in our ranch operations. We’re still training several of our own young horses, to keep or to sell, and occasionally earn some extra income riding outside colts too.

We’ve found that flexibility is another way to manage risk. Right now, we’re not set on any particular class or breed of cattle. We’ll see what works best given the pasture conditions and the cattle market, and adapt as the situation changes. One possibility is to adjust the timing of our marketing. We might choose to wean our calves here and keep them on pasture this fall, instead of selling them immediately after weaning in order to maximize the company’s returns.

Hedging, grazing management, and resource conservation can help ranchers like us offset the challenges of making ranching viable. We’ll always be at the mercy of the weather, but maintaining a flexible outlook can help us navigate the markets and maximize the resources under our management. Maybe it’s a fundamental Western ideal, getting creative about problem-solving and making a living. Perhaps in many ways, times haven’t changed that much. We’re still trying to do that same thing.

Photographs at Triangle P, by Laura Jean Schneider.