Now’s the Time

Politicians love to ask, “Are you better off NOW than you were four years ago?” As a consultant I ask the same question. Is your ranch carrying more cattle than it was two years ago and are your cattle healthier? How are you now compared to four, five or ten years ago? Is your ranch paying for itself, or do you still need an extra job to support the land and cattle?

If you can say you are better off; great. Ignore this column and let me know how you are doing it. I would be happy to pay you for that advice. But if you tell me that cattle prices are high and you are making money hand over fist, don’t bother to call. Ranching is about the long run and not the short haul. I surely hope everyone is making money while it is raining regularly and the grass is high. I hope you are making money with higher cattle prices. As wise men have said, “Any fool can make money when everything is going right.” (Wise women would be more tactful.)

Cattle prices are high because the nation has experienced widespread drought for the past two years. Cattle raisers sold off animals they would have kept except for the lack of feed. Even fertilizer prices are slightly better than a few years ago. These price fluctuations mean little in the long run. Once cattle prices rebound, prices will fall. For now, the higher prices go, the less beef people will eat. And the cycles will continue.

Quite a few people are leaving the ranching business which means fewer cattle will be raised. This may keep prices higher for a short period, but the Big Four slaughterhouses will just get beef from other countries. Fayette County has fewer ranchers each year. And this is a county with a high cattle population.

People who stick with the cattle business have begun to see what a drought can do and have started buying cheap hay while we’ve got good rain. A few have crossed-fenced their pastures to allow more rest time for the grass. But many have not. I have ranching friends that I’ve offered to help, but they are like most ranchers. They just keep on doing what they have done before. I guess they expect different results.

Prices of everything needed to keep a ranch running have gone up. Soil amendments, fencing, water troughs, corral panels, everything. These higher prices eat into profit.

Ranchers are lucky to have an Agricultural Exemption on ranchland. Without it taxes would be too expensive to pay based on what most ranchers make from their cattle operations. And land evaluations keep going up. Evaluations are based on what the land values are on real estate, not cattle ranches. And unless you have been asleep for the last 30+ years, you will notice more land is being purchased for recreational use than for ranching business. New ranchers may have a few cows, but ranching is just a hobby. The money they need to pay taxes comes from their other job.

“Now Times” are times to plan and reflect on where you want to go with your cattle business. If you’re sitting in an airconditioned tractor cab mowing pastures and putting out hay, make time to plan. Is it time to review your goals? Is it time to reevaluate your values? Should you take whatever profit you can make when cattle prices are high to purchase more cattle or make repairs to the infrastructure? Should you put it in other stock like Wall Street for a more reliable income? (Just joking about the “reliable income”.)

But you get the picture. The time to plan is now. A word of advice about planning. Don’t do it by yourself. Invite other stakeholders in the family and business to the table to talk. Sometimes family has a bigger stake in the planning than anyone. Get advice from friends in the ranching business and from business professionals. The more input you can get, the better decisions you can make. And if you still can’t decide what to do, it is time to get real about your values and goals. You still have time to sell your ownership and seek another lifestyle.

These may seem like harsh words, but everyone in the ranching business will sooner or later consider where they are headed in their operation. If it was easy, everyone would be doing it. If it made lots of money, there would be a rush to enter the business.

You can continue doing what you have been doing, or you can take the time to reflect and change the way you are doing things. Profitable businesses do this all the time. The CEO and COO are the ones responsible for planning, but if they are smart, they use good advisors.

While things are going well, take some time to plan. Now is the time.

David E. Will is a local rancher and consultant. He can be reached at 830-629-9876 or by email at dwill207@satx.rr.com