Plan ahead: How to manage a ranch for success after drought

Special to The Post

Most Texas producers continue to experience extreme drought that has forced severe herd reduction or liquidation. Those who still have cattle probably are facing pastures with limited or no grass, a scarcity of hay and extremely high feed prices.

A big question is how long you can continue to feed your cattle. You don't want to spend all of your cash reserves on feed and not have money to restock when the drought is over.

In two different producer meetings in Franklin, Jason Cleere with the Texas AgriLife Extension Service stressed that a drought management plan is needed to help manage the ranch through this dry period.

A ranch management plan is needed to provide management direction regardless of whether we are in a drought. We would never think of driving to an unknown location without a road map or GPS. The same principle applies to ranching. It is hard to reach our goals if we don't know what they are and how to get there.

Mission statement and vision

Stan Bevers, Texas AgriLife Extension Service economist, provided instructions on writing a management plan at the Texas A&M Beef Cattle Short Course two years ago. He said to start with a mission statement that explains the overall purpose of the ranch. Many of you probably have asked yourselves why you are in the ranching business as you try to survive the drought. Your reasons will become a lot clearer if you put them on paper and as you write, additional thoughts probably will be generated.

Bevers listed four options that might explain the purpose of a beef cattle operation:

* Use cattle for the sole purpose of maintaining an agricultural land appraisal for property tax assessment.

* Maintain the ranch as a hobby where making a profit is not important as long as it pays for itself.

* Manage the ranch in a profitable manner to provide a good livelihood for the family.

* Produce the best performing cattle in the state.

After you are satisfied with your mission statement, then develop your vision. Bevers explained that a vision statement describes the ideal results on management plan execution and creates a mental picture of the ultimate target.

Good vision statements describe results that will occur five to 10 years away -- or maybe longer. Examples of vision statements are:

* The vision is a ranch business with continued growth that is financially profitable and environmentally sound while providing a comfortable lifestyle for the family.

* The vision is growing the ranch business through the profitable marketing of quality beef and proper care of the land so future generations will inherit a viable operation.

Develop mission statement and visions with input from family members, employees and other stakeholders. For the management plan to be successful, all involved parties need to agree on its contents and commit to its execution.

Situation analysis

Once the mission statement and vision are finalized, establish a baseline by preparing an analysis of the current situation from which the ranch business will be moved forward. Bevers described a baseline as a starting point from which future performance will be measured. He further stated that a baseline should establish the current status of the ranch and include the past year's performance.

The situation analysis is written in a manner to provide direction for writing objectives and goals.

1. In an outline suggested by Bevers, the first part of the situation analysis is a general statement of overall observations during the past year, including rainfall, market situation and any abnormal occurrence the ranch had to face during the year.

In your general statement you would want to list the number of months without rain and discuss the upward trends of the cattle market. These factors directly are affecting your profits and should be documented in relation to frequency of occurrence.

2. Production resources are the second part of the outline where performance of the cow herd is documented. Production measurements, including pregnancy percentage, calving intervals, calving percentage, weaned calf percentage, weaning weights and pounds weaned per exposed female are calculated.

If you are not keeping these types of records, you should start immediately because it is the only way cow herd performance can be accurately measured.

3. Bevers titled the third part of the outline as Natural Resources. Under this heading, stocking rate, amount of feed and/or hay fed during the year and the salt and mineral program are documented. This documentation can help the operator determine if there are too many cattle on the pastures for the amount of available forage and the amount of hay and protein supplement on hand, as well as how long the existing feed supply will last. Remember that cattle need to be kept at a body condition score of at least 4 or 5 for a decent market value.

4. Human resources, the fourth part of the outline, is where an assessment is made of the number of people needed to make the operation successful and whether they are in place. Their capabilities and commitment are evaluated as well.

Through this exercise, it is determined whether family members can replace some of the hired employees or whether an employee or family member should be relieved of a responsibility due to lack of capability or commitment.

5. Part five is an assessment of machinery and equipment resources. Repairs and maintenance costs during the past year and current conditions of equipment are examined. This assessment may show money can be saved by replacing a piece of equipment and reducing repair costs.

The machinery and equipment resource analysis also provides a means for determining whether the first-time purchase of equipment (such as a front-end loader, herbicide sprayer or an arc welder) would make the operation more efficient.

6. Building and improvement resources, part six, is an evaluation of fence conditions, number and condition of barns and sheds, available pastures, livestock watering devices, weed and brush control programs and necessary pasture seeding. This is an evaluation of improvements that would pay for the investment through increased production and efficiency.

Evaluation of building and improvement resources provides information to use in planning for recovery after the drought and preparation for the next one.

Needs that might be identified from these evaluations include:

* Cross fence pastures to provide rotation opportunities for better forage utilization and conservation.

* Add hay storage capacity.

* Clean out tanks and ponds to increase water storage.

* Control brush to release more grass.

* Reseed pastures where insufficient forage exists for re-establishment

7. The last part is the financial situation and performance analysis which includes total expenses of the operation, total cost per breeding female, rate of return on the operation's assets and a breakdown of expenses by major categories. This is the part in which you calculate how much it costs to feed each animal per day and the amount of assets available to cover these costs.

Objectives and goals

A well-written situation analysis identifies the problem areas of a ranch operation and clarifies the needs. The mission statement gives the overall reasons for the ranch's existence and the vision statement defines where you want to be long term. Using the information collected in the situation analysis, objectives are written that support the mission and move the operation toward the vision.

Objectives can be considered as primary goals and should be few in number for the management plan to be achievable. Also, objectives must be realistic and measurable -- otherwise, there is no way to know if and when they are accomplished.

The next step is to establish annual goals for each objective. As with objectives, goals need to be realistic and measurable.

At the Third Annual CenTex Beef Cattle Symposium held Oct. 28 in Belton, Ron Gill, livestock specialist with the Texas AgriLife Extension Service, presented objectives and goals for dealing with drought. Using his information, the following list of examples was developed.

* Get the ranch back on a forage base within three years after the drought moderates or is over to reduce feed costs.

* Restock to 75 percent of the projected carrying capacity based on available forage. This may not -- and probably will not -- be 75 percent of the original herd as forage recovery may be slow or limited due to previous grazing and weather stress.

* Graze any excess forage with stocker cattle. This can be calves, yearlings or cows but need to be cattle that can be sold quickly when forage availability declines.

* Seed native forage in areas that need renovation when there is ample rainfall to establish a stand. This will preclude the need for annual purchases of fertilizer to apply on introduced forages.

* Over the next four years, develop a rotational pasture system to provide rest and protection from grazing pressure and to facilitate recovery from the drought.

* Solicit help from USDA Natural Resource Conservation Service personnel in developing the grazing management plan.

* Execute the plan once it is developed.

A well-designed management plan clearly defines the current situation and provides concrete direction for moving the business forward. Management through a plan helps prevent constant directional changes and provides a measure of business performance. A ranch management plan is essential for surviving the drought.