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Hooray!

PROCHAIN ÉVÉNEMENT
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Hooray!

Sean McGrath started his ranching career with a weather wreck – and that’s about as good as his luck got for several years.

“We had a tremendous drought in 2002, and since we background our calves, that meant we had sold them when BSE hit in May 2003,” recalls the 37-year-old producer from Vermilion, Alta.

“But of course, BSE threw everything into uncertainty. We really had to ramp up our risk management and we’ve probably redone our marketing plan 10 times since then.”

It has been a long, hard slog for the Canadian cattle industry, and if you’re looking for insights into how to survive tough times, there are lessons to be learned at Round Rock Ranching (roundrockranching.com), a fifth-generation operation that McGrath farms with wife Tanya and parents Fred and Anne.

Some you can see straight off – 80 per cent of the ranch’s 3,000 owned and rented acres is native grassland. In summer, thanks to more than three decades of intensely managed, rotational grazing, it can stand “stirrup high,” just as it did when McGrath’s great-grandfather homesteaded there in 1906. Come winter, when many producers are bringing cattle into pens for feeding, the McGraths are sending theirs to pasture – first to feed on hay that’s been “raked bunched” into strips and later on round bales. When McGrath goes to check on those cows and move electric fences, he’ll do it on horseback – and that, too, is a legacy of BSE.

“We started experimenting with rake bunching after reading some scientific papers out of Oregon,” says McGrath. “Bale grazing was the same way. You sit down and do the math. It’s still not common in this area, but for us, it works. I mean, it saves us $15,000 a year.”

The horses, too, must earn their keep.

“We don’t start a tractor unless we have a good reason,” he says. “We sat down as a family and we set a target of not spending more than $5,000 a year on diesel fuel. And we’ll drive that down further. I don’t know how yet, but we’ll find a way.”

That last comment hints at what’s really going on at Round Rock Ranching. An effective business approach is a lot more than just grabbing a few cost-saving ideas, says McGrath, a consulting geneticist and occasional business management columnist.

“You may find some low-hanging fruit,” he says. “For example, if your costs have crept up to $800 per cow per year, there’s probably some simple things you can do to shave a couple of hundred bucks off that. But once you get your costs lower, it’s just a constant effort to keep them down – because you’re always battling inflation – and to push them even lower.”

McGrath uses what he calls a “decision-making framework” to drive change. Even though he jokes that he “hates accounting,” he carefully tracks all of his costs and participates in the provincial AgriProfit$ benchmarking program to drive profitability. That’s why he knows how much is saved by bale-grazing the ranch’s 200-head herd in winter. And it’s why he’s not yet sold on corn grazing.

“It was break-even compared to swath grazing, but there was a lot more cash outlay to put the same acres in the ground. It increased our risk but didn’t provide enough benefit, but I’ll experiment again with it next year.”

The system helps in other ways. Take the fuel savings. When the family set the $5,000-a-year target a decade ago, they were spending close to $1,000 in month for diesel.

“Having a target makes you get creative,” says McGrath. “When we started, we were feeding cows and cleaning corrals and moving bales. So we moved to swath grazing, then bale grazing, and in 2002, we started winter grazing the prairie. Now, we often don’t even start swath grazing until the end of January. Come November or December, guys are bringing cattle home just as we’re taking our cows out to grass.”

McGrath is quick to add their system is tailored to their specific operation and if their situation was different – such as if they also grew grain – their methods would change.

“We’re just doing what works for us,” he says.

He’s also adamant that even when times are tough, you can’t solely look at cutting costs.

“Don’t forget about adding value,” he says. “For example, I booster all of my calves two weeks before weaning. So I vaccinate all my calves twice while they’re on the cow. That’s an extra cost that most guys wouldn’t have, but I’m convinced we obtain more dollars from those calves when we sell them.”

He also invested in himself, spending several thousand dollars in 2007 to take an executive development program and then working with the family to develop a business plan for the farm. McGrath also likes to spend time at trade show booths, carefully listening to the advantages of the newest technology. The family has invested substantial dollars in more robust electric fencing, although the folks pitching solar-powered water pumps never made a sale. (McGrath has detailed instructions on his website on how he made his portable pump from a piece of farmyard “junk” and some inexpensive parts.)

“I might be able to build something for $1,500 but if I need something I can take home and plug in, I might pay $2,500 because the expertise and convenience is worth an extra thousand,” says McGrath. “I’d say the same thing if you’re buying a $50,000 tractor instead of a $20,000 one. That’s fine as long as you understand why you’re doing it and have a good reason. Just understand the decision you’re making.”

And don’t get tripped up by “analysis paralysis,” he adds.

“Take marketing. You could sit down and look at what the Canadian dollar is going to do, where’s the U.S. economy going, where is oil heading, and all sorts of other things. Or you can say, ‘I’m pulling the trigger and selling my cattle.’”

In that case, knowing your cost of production allows you to easily set a minimum price target. Other goals can be tougher to set, but you need to have them, says McGrath.

“A lot of management is grey – not black and white. You need a target so you know how you’re doing.”

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