Selecting Land

My good friend, Greg Judy, who actually has a Youtube channel to which you can subscribe for his interesting and informative videos about farming/ranching and a whole host of other topics related to profitable cattle and sheep farming, has offered up some key points for considering land purchases for your specific goals.

Greg’s check list when selecting a farm.

The check list really hasn’t changed in considerations for the purchase throughout history.

Buying undeveloped land may seem less expensive, but bear in mind the high cost of making it livestock worthy (or whatever it is you will use your land for). Perimeter fencing is expensive made even more so if hiring a bulldozer to clear the fence rows first is necessary.

As we get older, land which may be more expensive yet closer to a hospital or at least a sealed road will likely become more important.

If you are so fortunate to find a reasonably price parcel in the location important you, with limited buildings, then don’t wait because someone else will buy it. Desirable parcels of property are snapped up very fast. My observations of looking for properties, indicates that poor properties are offered at ridiculous prices just hoping for someone to bite; quality, in-demand properties will sell immediately and land auctions are becoming more popular due to immediate sell and they are bringing a premium price.

If the neighbours aren’t interested in the property and it has been languishing on the market, that is a red flag that something is wrong – do in depth research. Oftentimes, it can be high taxes, poor production values, swampy land, no water, low rainfall, the lay of the land requires constant maintenance (i have a 160 like that, every little rain causes my deep watergaps to blow out, fighting encroaching brush is an annual and long days event)

My personal search requires:

1. enough acreage in one block location with minimal perimeter (in other words more squarish, not nooks and crannies. one property online had 11 miles of perimeter to maintain yet enclosing only 1700 acres!)
2. A nice home which has been built with finishes which stand the test of time. Too many homes from the 80s and 90s and so faddish inside, it needs to be completely gutted and redone. May be better to tear it down and start again. Not out of the range of possibility, just be sure you aren’t paying twice for a new home.
3. Live water with no or little flood plain.
4. Located on a sealed road with minimal traffic
5. Near infrastructure to livestock auctions and other supportive ranch venues
6. Warm winters, warm winters, warm winters – did i mention warm winters?!
7. Minimal timber and very little brush.
8. I would like to not be close enough to neighbors to hear or see them, but within 2 hours of a major airport.
9. Price is critical – i’m not rich – the ranch i buy must find a way to pay for itself or at the least provide a good rate of return. This is nearly impossible in today’s environment where there is very little low risk good investment. Land is in too expensive for its productive value.

No One Owes You A Living!

The world, including the US, does not owe you a living. Or as Dave Ramsey would say, “You Are NOT Entitled To Anything“. If you dream to make a widget and insist that everyone must support you in your dream and insure that you make a full time living making that widget, then i fear you may be sorely disappointed.  Especially, if your widget making imposes on others’ freedom and property rights.

There are very few, if any, financially successful people with no debt and have, or are building wealth, working only one job.  Often the most successful have at least 2 or 3 other gigs on the side going.  (Even Warren Buffet has several unrelated income streams going!)  When you are in your teens, twenties, and even into thirties, you have energy, vision,  and motivation that enable you to put in 10-16 hours a day, 6 days a week.  This allows you to save, build equity, and work towards your dream job if you aren’t already doing that.  When you are older and that energy level drops, hopefully those side gigs are the money invested which are then working for you rather than you working for it.

I recently wrote a blog which told of the near impossibility of a person to get into farming or ranching these days.  This is largely due to the out of balance cost of land vs its productive value.  However, it is not yet impossible to farm and build wealth – even without incurring massive debt!  It may take longer, however.  And, i know of absolutely no one – young or old, in the present or in the past- who can farm or ranch (or any other business for that matter) full time without some sort of side gig.  Read stories of old timers – they were blacksmiths, carpenters, mechanics, traders, transportation specialists, suppliers; any skill they could put to use for pay was engaged.  Wives farmed alongside their husbands, raised the children, and often had a couple side gigs as well.  (Yes, i know that many women are farmers and ranchers, i am one, but also raised my own children, managed the household, and help with the farm.)  It is the same today – if you want to farm (or start any business for that matter) you’d better put a sharp pencil to how you’ll put food on the table and a roof over your head.  Don’t incur debt and make sure you have some savings.  (a borrower is always slave to the lender).  Operational farm debt is as bad as school loans.  Debt for building  a depreciating asset may be the worst of all!  What if something happens to you?  make sure you have plenty of life insurance!  Liability, maintenance, disease, accident associated with buildings and machinery are expensive and ongoing.  Once debt is incurred for a single purpose gadget, you have to keep it going or you may default or leave your family with a ball and chain which seldom adds value (it may actually devalue) to your property. Better yet, don’t go into debt.

Keep your paying job and save your money before you buy a single acre or cow or gadget. Many ranchers today are leasing both land and cattle which can be a great way to get started with very little investment or risk.  Best book i’ve read on this is Greg Judy’s book, No Risk Ranching.  Maybe you won’t have the exact same opportunities that Greg has, but use your imagination – maybe you’ll have to move – as Allan Nation, founder and former editor of Stockman Grass Farmer, used to say, “Everyone has an unfair advantage.”  Figure out yours and put your best foot forward.

Many farmers today still abide by the ways of Earl Butz to ‘get big or get out’ and we now have such an abundance and overproduction of all products that prices continue to slide.  Yet, the mantra continues to be ‘produce more’  and use the economy of scale to maximise profits.  That may good to a point, but the cost to the environment has been substantial by farming ‘fence row to fence row’  and with government subsidies now firmly entrenched there is less risk of a ‘failed crop’ resulting in going broke regardless of debt load or lack of wise financial planning.

I’m not espousing a return to farmers falling out due to the vagaries of weather, political machinations, or burdensome regulations.  Without subsidies, food, fiber, energy prices could soar to the level of parity and the consumer would certainly cry ‘foul’.  But, we all must remember that the economic  rule of supply and demand may cause us to consider better management practices.

There is the concept of focusing on profit rather than production.  If it is possible to make more money producing 120 bushel corn to the acre rather than 200 bushels to the acre, would that be something to consider?  what is the cost to the land and quality of life to produce 200 and even 300 bushels to the acre?  Can i do a better job of regenerating and improving the soil i have to increase pounds, bushels per acre and lower cost as well?  There are a lot of opportunities and new/old practices to learn – the hard part is keeping it simple and CHANGE!  This is a head issue – don’t be a stiff necked people.

Speaking of quality of life – how have you organised your dream?  does it enhance and edify others?  or detract from the lives of others?  is it sustainable?  is it regenerative?  can you keep doing this for the next 60 years?   If not, it’s not sustainable and you had better have a plan in place for the future, less strong, less energetic you.  Will your model rely on unpaid labor of yourself or your family?

Happy Planning

Proverbs 6:

1  My son, if you have put up security for your neighbor, have given your pledge for a stranger, if you are snared in the words of your mouth, caught in the words of your mouth, then do this, my son, and save yourself, for you have come into the hand of your neighbor:  go, hasten,^a and plead urgently with your neighbor.  Give your eyes no sleep and your eyelids no slumber; save yourself like a gazelle from the hand of the hunter,^blike a bird from the hand of the fowler.   Go to the ant, O sluggard; consider her ways, and be wise.   Without having any chief, officer, or ruler, she prepares her bread in summer and gathers her food in harvest.  How long will you lie there, O sluggard? When will you arise from your sleep?   A little sleep, a little slumber, a little folding of the hands to rest, and poverty will come upon you like a robber, and want like an armed man.   A worthless person, a wicked man, goes about with crooked speech, winks with his eyes, signals^c with his feet, points with his finger,  with perverted heart devises evil, continually sowing discord; therefore calamity will come upon him suddenly; in a moment he will be broken beyond healing.  There are six things that the LORD hates, seven that are an abomination to him:
haughty eyes, a lying tongue, and hands that shed innocent blood, a heart that devises wicked plans, feet that make haste to run to evil, a false witness who breathes out lies, and one who sows discord among brothers.

Cheapest Ranch to Buy Part 2

The second part of Jim Gerrish‘s excellent article and how to not only make your farm or ranch more profitable, but also improve soil, grazing, water, and wildlife.Jim Gerrish

In most locations, single-wire electric fence and water facilities are the main costs for improved grazing management.

What is the cheapest ranch you will ever buy? Part II

For a fraction of the cost of purchase, most ranches can make improvements that sometimes double their carrying capacity.

Jim Gerrish 1 | Aug 12, 2019

In Part 1 of this series, I made two fundamental assertions: The first was that time management of grazing period and recovery time is the primary determinant of pasture productivity. The second is that we should be assessing ranch output and profitability on a per-acre basis not on the per-animal basis commonly used in the ranching industry.

I ended that article with the observation that increasing pasture or range production by 40% would be more profitable than trying to increase individual animal productivity by 40%.

My 40% is not a magic number. It is simply the example I am using. I do that partly because of the commonly held idea that producing a 700-pound calf must be more profitable than raising a 500-pound calf. The other reason I am using 40% is because that is also a common level of increase in pasture productivity we see when ranchers implement management-intensive grazing (MiG).

MiG is the term I use to describe an approach to grazing management that is more intensive than the set-stocking or slow rotations common in the ranching industry. Our objective is to shorten the period of time any piece of pasture or rangeland is exposed to grazing animals. If we do this, the potential recovery period is always significantly extended. This is the key component of time management I have been referring to.

When we build subdivision fencing across the landscape of the ranch, we are not only subdividing space, we are also subdividing time.  Each time we make a smaller pasture increment, we reduce the amount of time the stock will be on that increment. That has a tremendous, and for some ranchers, an almost unbelievable change in the vigor and productivity of the pasture. With shortened grazing periods, we can more tightly control every aspect of the soil-plant-animal relationship. That is the component missing from almost all of the grazing management research of the last 100 years.

What is this management of time worth down on the ranch?

As mentioned above, the average increase in carrying capacity we see among our ranching clients adopting MiG and making investments in stock water development and subdivision fencing is about 40%. We have numerous clients who have doubled their carrying capacity. We have a few who have gotten less than 40%. All of this is the product of more effectively managing the period of time cattle are allowed to be in a particular area. On rangeland we usually work toward having that time period no more than 7-10 days. On productive pasture, we keep the length of the grazing period to no more than 3-4 days.

What does it cost to install all that fence, pipelines and tanks?

Every ranch is different, so of course the answer is that it depends! For example, is there already a good well on the property or do we need to drill a well? Is there already a pipeline network on the property that we can spur off of? Are there existing fences that are in reasonable locations that can be used in the new management scheme? These are the components that can make a difference. Here are examples from a couple of recent projects we have designed and which the ranchers implemented.

Jim Gerrish

Livestock water typically is the most limiting resource for managed grazing, but it is far cheaper than land.

Twice the ranch

On an 8,000-acre ranch in the Nebraska Sand Hills, we started a ranch that had 15-20 existing pastures with low-output windmills that allowed them to only carry 20-60 cows in each pasture. With a 7.5-mile pipeline project, 20 new stock tanks, and more than 20 miles of two-wire electrified high-tensile fencing, the ranch was split into about 60 permanent pastures with a stock-water supply system that allows 600-800 cows to be run in a single herd. The project cost was about $400,000 when we include the rancher’s labor contribution to the construction project. That is a big chunk of money, but on a per-acre basis it is only $50 per acre. In three years’ time, this ranch doubled its carrying capacity and the infrastructure investment was paid off in the third year.

That means they essentially bought another ranch for $50 per acre, while the cost to go out and actually purchase another ranch would have been $1,000 per acre, plus closing costs and added taxes.

Might double

Another recent project on a 30,000-acre ranch racked up an infrastructure development cost of about $1.1 million. That is a per-acre cost of about $36. Projecting a 40% increase in carrying capacity has the project paid off in year four. With a 40% increase in carrying capacity, the equivalent per acre purchase price is $90 per acre. I am confident this ranch will also experience a doubling of carrying capacity in 3-5 years, so the payoff rate should be accelerated. Why do I expect this ranch to double carrying capacity? Because the ranch is presently very under-supplied with stock water and much of the ranch is rarely even being grazed.

Remember the title on the article: “What is the cheapest ranch you will ever buy?”

It is the one you acquire by more effectively managing grazing and recovery time on the ranch you already own.

Read part one of this story here. Gerrish is internationally known grazier, grazing consultant and consultant. Find him at http://www.americangrazinglands.com.

TAGS: BEEF LAND MANAGEMENT PASTURE

Cheapest Ranch You Can Buy Part 1

Written by my friend, Jim Gerrish, for Beef Producer magazine:  This is Part 1

What is the Cheapest Ranch You Will Ever Buy?

Alan Newport

Changing the way we graze can dramatically alter the value and production of a ranch.

What is the cheapest ranch you will ever buy? Part 1

The value of grazing management cannot be overstated, author says.

Jim Gerrish 1 | Aug 09, 2019

Whenever a group of ranchers get together, sooner or later the conversation will turn to whose place just got sold and what did it bring. There will be some head shaking and bemoaning how you just can’t afford to buy another ranch or help your kid get started on a new place.

In much of the country, the price of ranch land is driven by non-ranching factors. People are paying way more for the recreational value or the view from the ranch than what livestock production can afford to pay.

There generally is a common-knowledge guide for how many acres it takes to run a cow in any neighborhood. Most people seem to believe this is a predetermined stocking rate that is determined almost entirely by the amount of rainfall received in any given year. The truth is, environment determines only the upper limit of the carrying capacity potential of a ranch. It is the ranchers grazing management that determines how much of that potential is actually realized.

The plain and simple truth of the matter is most ranches in the US are managed in a way that generally captures less than half of the biological carrying capacity of the ranch. The two primary ingredients for producing beef are sunshine and water. Most ranches are ineffective at harvesting these two “free” inputs. While sunshine and rain water are free ingredients, the landscape we use as our solar panel and water catchment is not free.

If we decide we need to increase the beef output on our ranch by 40% to generate the revenue flow we need to make a living, how might we go about doing that?

One obvious way is to buy another ranch that is 40% the size of our current holdings. If our current ranch is worth $1,000/acre and we have 1,000 acres, we would need to buy 400 more acres at $1,000 to get 40% more grazing capacity. That would be $400,000 outlay, plus there would be closing costs, an increase in taxes, and so forth.

The failed approach the ranching industry has taken has been the quest to increase output per individual cow by 40%. Rather than having cows that wean 500 pounds, let’s have cows that wean 700 pounds. The number of articles published in the last five years showing the folly of this approach is astounding. Go to the winter cattle production meetings and every one of them seems to feature a university researcher now showing big cows decrease ranch profitability, not the other way around.

A less obvious way to increase stocking rate is to get 40% more production out of every acre we currently own or control. Unfortunately, a lot of mainstream ranchers can only think of adding irrigation or more fertilizer or tear up the native range to plant some foreign wonder-grass. Is that really all we can do?

What if we found a way to capture more solar energy and water on every acre? How could we do that and what might it cost?

Let’s step back and ask why are most ranches operating at less than 50% of their biological carrying capacity? The simplest answer is there is too much bare ground. Bare ground doesn’t capture solar energy and make cow feed. Bare ground allows water to run off or set on the surface and evaporate. Why do most ranches have too much bare ground? Because cattle stay too long in the same place and pasture and rangeland are not allowed adequate recovery time to maintain plant vigor.

In 40 years of commercial ranching and grazing research I have learned the primary determinants of range and pasture productivity are:

1. The amount of time stock are allowed to be on a particular piece of ground
2. The time allowed for recovery

That local common-knowledge guide for how many acres it takes to run a cow is fundamentally flawed because it is based on management that completely ignores the role of time management on the nature of our soil health and plant community.

For the last 50 years the ranching industry and community focused on the animal and animal genetics, which misses the point that it is the land base controlled and the productivity of that land that drives ranch profitability, not individual animal productivity.

On a commercial ranch, most of our production costs are land-based costs, not animal-based costs. This is the reason why increasing the productivity of an acre of grazing land by 40% will always have much more impact of bottom line profitability than will increasing individual cow productivity by 40%.

Next week: Learn how to get that ranch production increase of 40% or more.

Gerrish is internationally known grazier, grazing consultant and consultant. Find him at http://www.americangrazinglands.com.

TAGS: BEEF LAND MANAGEMENT PASTURE

Profitable Ranch Strategies

Although Jim’s article in On Pasture is specifically geared towards livestock/pasture management, the principles can easily be applied to any business.

Kick the Hay Habit – Jim Gerrish’s Tips for Getting Started

By Jim Gerrish  /  September 17, 2018  /  No Comments

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This week’s Classic by NatGLC is from Jim Gerrish. Jim will be speaking about Grazing Lands Economics at the National Grazing Lands Conference in Reno in December, so we thought you’d like to have an idea of what he might cover. Jim is one of over over 50 producers who will be part of the conference talking about innovative grazing management. We hope you’ll join us! Register before October 16 to get the reduced rate of $395, and bring a friend or spouse with you for just $175 more.

Hay feeding still ranks as one of the top costs of being in the cow-calf business in the U.S. The good news is we do see more and more livestock producers ‘Kicking the Hay Habit’ with each passing year. There is much more to kicking the habit than just deciding one day that you’re not going to feed any more hay. It usually takes several management changes to get there.

Here are what I am seeing as the top five moves for getting out of the hay feeding rut.

1. Have a plan for year-around grazing.

This doesn’t mean just hoping you have some grass left over in the fall to use during winter. It means making a critical evaluation of all of your forage resources and mapping out when they can be used most optimally. Develop a calendar of when your stock are going to have their highest and lowest demands. As an industry we have given a lot of lip service to matching forage and animal resources, but the majority of ranchers still do a pretty poor job of implementing a sound plan.

2. Change your calving season to a less demanding time of year.

It is much easier to graze a dry, pregnant cow through the winter than a lactating mama. For many of today’s moderate to high milk producing beef cows, daily forage demand at peak lactation is 50-80% higher than when she is at dry, pregnant maintenance. Late spring or early summer calving seasons work well in a lot of ranch country once you change your mind about a few things. I’ve met very few ranchers who switched to later calving who ever went back to winter calving.

3. Make sure your cattle match your environment and climatic conditions.

You really want your cattle to survive and thrive on the native resources of your ranch. The more petroleum and iron you put between the sun’s solar energy and your cow’s belly, the less profitable you are likely to be. Cattle should be able to earn their own living. You shouldn’t have to earn it for them. Consider every head of cattle on your place to be a ranch employee. Your primary job as manager is to create a working environment for your employees to do their job.

4. Manage all of your pasture and rangeland more intensively.

This does not mean graze it more intensively, this means manage it more intensively. If you do, you will get more forage production and greater carrying capacity from your land. Simply rationing out what you are already growing is one of the easiest places to pick up more grazing days from every acre. One of the strongest arguments I can make for Management-intensive Grazing (MiG) in the summertime is to create more winter pasture opportunities.

5. Change range use from summer grazing to winter grazing.

In most environments with degraded rangeland, switching to predominantly winter use is a great strategy for improving range condition. Many public lands offices are very willing to work with ranchers on this kind of positive change. We do see some agency offices and employees who drag their feet on making any kind of change, but most are willing to work with you if you have a grazing plan that will help them meet their conservation goals.

You may not need to make all these changes in your operation. It depends on where you are right now and where you want to end up being. While some operations go cold turkey and try to make the entire shift in a single year, it may be easier to make the transition over 3 or 4 years. You will take some learning and adjustments to get comfortable with the new approach. Your livestock will also need to adapt to the new management regime.

Most beef herds in the US and Canada are made up of cows that are too big and have too much milking ability to live within the resource capability of the land base. Winter grazing is a lot easier with the proper type of cow on your place. Making the switch in calving season might be as easy as just holding the bulls out for a couple extra months. Changing cow type to a more moderate framed and lower milk producing animal will take quite a bit longer.

The key point is to have a plan for making the transition with a clear target of where you want to go.

Thanks to the On Pasture readers providing financial support.

Can you chip in? To be sustainable, we need a $15,000 match from readers to make our grant happen this year. If it’s an option for you, consider becoming an “Ongoing Supporter” at just $5/month. Being able to show that kind of support is especially helpful when we’re approaching outside funders.

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• Published: 9 hours ago on September 17, 2018
• By: Jim Gerrish
• Last Modified: September 14, 2018 @ 2:13 pm
• Filed Under: The Classic by NatGLC

NEXT ARTICLE →
Building a Ranch From the Ground Up (Part 1)

ABOUT THE AUTHOR

Jim Gerrish

Jim Gerrish is the author of “Management-Intensive Grazing: The Grassroots of Grass Farming” and “Kick the Hay Habit: A Practical Guide to Year-around Grazing” and is a popular speaker at conferences around the world. His company, American GrazingLands Services LLC is dedicated to improving the health and sustainable productivity of grazing lands around the world through the use of Management-intensive Grazing practices. They work with small farms, large ranches, government agencies and NGO’s to promote economically and environmentally sustainable grazing operations and believe healthy farms and ranches are the basis of healthy communities and healthy consumers. Visit their website to find out more about their consulting services and grazing management tools, including electric fencing, stock water systems, forage seed, and other management tools.

View all articles by Jim Gerrish »

Progressive? Marginally.

Why the mass exodus of young people from farming?  Here is another example of  one of several problems – well identified – yet apparently laughed off by the current generation of farmers and ranchers left scratching their heads wondering why junior is leaving for good.  Sad, very sad.

Copied from The Progressive Farmer – April 2018

Jim Gerrish on Making Change

Another great article by Jim Gerrish, consultant and owner of American Grazing Lands, published in The Stockman Grass Farmer.

Published as “Grassroots of Grazing” Jim’s regular column provides “Making Change is about Creating a New Comfort Zone” in the December 2017 issue which offers his observations about how people in the grazing/farming/ranching world accept or reject change often needed for the business to survive, or more importantly, thrive so that the next generation will be willing to be involved.

His closing comments of the article:  (you’ll have to buy a back issue for Jim’s full article as well as great articles by other authors)

“I had already come to understand people were not going to change just because something made biological and economic sense.  We all have to be comfortable with the idea of change before we will be willing to even consider change no matter how much empirical evidence is thrown at us supporting that change.

For many of us that comfort level is based on acceptance by our family and community.

I have found it is much easier to sell the ideas of MiG (management-intensive grazing), soil health, grassfed beef, summer calving, and a myriad of other atypical management concepts to someone who has no background at all in ranching and no tie to the local community than it is to get someone with 40 years of experience on a family ranch to change.  The lifelong rancher may grudgingly agree that those ideas make sense, but the most common retort is still, “but I can’t see how we can make that work here.”

That individual is absolutely correct, until you can see that it will work here, it probably won’t.  The biggest part of that “will it work here” question is how the rest of the family sees it.  The better a family knows itself, the easier it is for that one rabble-rouse to make a difference.  If the lines of communication are broken, the more likely it is that things will continue to operate the way they always have.

Then we are back to that sad situation so common in multi-generational agriculture:  We advance one funeral at a time.”

Jim Gerrish is an independent grazing lands consultant providing service to farmers and ranchers on both private and public lands across the USA and internationally.  He can be contacted through www.americangrazinglands.com

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When to Graze video