Gallons of ink and millions of megabytes have been used to describe the financial losses cattle producers have suffered during the coronavirus pandemic. The virus dealt ranchers a tough hand, for sure, but its impact on ranch profitability has not changed the advice from Burke Teichert.
“You have to zero in on what you can control,” says the long-time ranch manager turned business consultant. “And you should work on things that you can control fairly quickly.”
Simple advice, but Teichert says the financial struggles of many ranches preclude COVID-19 and managerial changes are necessary for economic survival.
“If you are struggling economically, a change of mindset that leads to changes in what you do rather than how is needed,” he says. “It’s time to become a possibility thinker.”
Teichert’s advice is rooted in a career in ranching. Raised on a western Wyoming family ranch, he earned a bachelor’s degree in ag business from Brigham Young University and master’s degree in ag economics from University of Wyoming. He has served as a university faculty member, cattle reproduction specialist and manager of seven cattle ranchers for Deseret Land and Cattle. He retired in 2010 as vice president and general manager of AgReserves Inc., where he was involved in seven major ranch acquisitions in the U.S. and the management of several farms and ranches in the U.S., Canada and Argentina.
Since peak cattle prices in 2014 and 2015, ranch profitability has been in decline and many ranches have been forced into foreclosure. The coronavirus pandemic is likely to increase that financial pressure on ranchers and just “getting a little better is seldom good enough,” Teichert says. In presentations at ranch seminars, he makes four suggestions every rancher should consider.
These are all things ranchers can control. The first, cut overhead costs as much as possible is self-explanatory. “Market well” suggests you explore all the ways to market your calves and your cull cows rather than just being a seller of cattle. Managing for cowherd fertility is essential because you need as many calves as possible to sell each year.
“Next we need to focus on three key ratios that will drive profitability in a big way,” Teichert says.
Acres per cow
“If I can manage my grazing lands in such a way that I can run more cows on the same ranch I can increase profitability. And I’m referring to using good grazing methods rather than buying more inputs. Obviously, that’s much different in the desert of Wyoming than it is in Missouri or eastern Kansas.”
Cows per full-time employee
“If you can organize herds and time and motion and everything in such a way that one person can handle more cattle you can improve profitability.”
Fed feed versus grazed feed
“Graze as many days as possible. Most of the time — not all of the time — but most of the time, substituting a fed day with a grazed day just changes your profitability.” Sometimes, he says, feeding hay is economically the right thing to do. “But the fewer days cattle have to be fed hay the more profitable you will be.”
WOTB versus WITB
Experience leads Teichert to expect many ranchers will resist change, yet many of those who don’t change will find it more and more difficult to make a living as full-time ranchers, and many will exit the business.
The hesitance to change, he says, comes in many forms:
1) “This is the way we have always done things,” 2) ranchers are often so busy in the daily grind they don’t have or take the time to see, study and learn new ways; 3) just plain stubbornness: “We’re smart people, and we already know how to do things;” 4) laziness: sometimes it is easier to work physically on tasks you already understand how to do than to study, think and analyze practices that are new or different; 5) the fear of getting made fun of by the neighbors when you begin to use practices that are new or different: We have an egocentric need to be accepted.
When speaking to ranchers, Teichert’s business suggestions fit with those from the Ranching for Profit School, a business operated by Ranch Management Consultants in Wheatland, Wyo. One principle the school teaches ranchers is the concept of WOTB (working on the business) versus WITB (working in the business).
“WITB are those chores ranchers do every day: feeding, fixing fence, etc.,” Teichert says. “WOTB is the planning and
budgeting we should be doing regularly. To be successful, you have to budget time to work on your business, and you need to be asking some hard questions. What is right about our ranch? What is not right about our ranch? Where are we struggling?”