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Your Business Plan Should Match Your Mindset … And Your Resources

Doug and Linda Wray’s business model for their beef operation is unique. So is yours. From the outside looking in, any two ranches may appear to be very different from each other even though the process of developing a farm business plan would have been quite similar.

“The whole thing is a mindset,” Wray explains. “At this point, we feel we have the best fit to what nature allows us to do.” Their business model is designed around a complimentary mix of livestock classes and grazing scenarios.

They run 225-plus cows, background and grass their calves as yearlings, retain their own replacement heifers and either sell or send the market yearlings to a custom feedlot when they reach about 950 pounds.

The cattle graze year-round in one way or another — rotational grazing, stockpiled grass, bale grazing, swath grazing and straw bunch grazing. Because forage is the foundation of their business and the beef industry, Wray is helping to kick start the newly-formed Alberta Forage Industry Network by serving its chairman.

Their business plan has evolved from a mindset that they had to reduce input costs and their exposure to uncontrollable outside costs. Today, their all-inclusive goal is to add value to their own forages by optimizing the value of their calves. Where the future may lead depends upon if and when something comes along to push them out of their comfort zone.

“We are constantly looking at new ways of doing things and new ideas. Once I hear someone else’s analysis of a different concept and know it’s possible, my mindset is changed a bit for ever after,” he says.

Retaining their calves, backgrounding and grassing them through to at least the finishing stage was one of the first major departures from their comfort zone as a mixed farm.

High feed grain costs during the past two years pushed them a little further. Retaining ownership right through the finishing period became a viable option that fit within the scope of their business plan. Wray adds it was a rewarding experience because they learnt a lot about the performance of their cattle that will pay off in many ways down the road.

An interesting calculation coming from all of this is that grain comprises only 10 per cent of the lifetime ration of his finished animals. The lifetime ration includes the feed the dam consumes during the gestation period as well as the feed the calf consumes throughout its lifetime.

In their system, the weaned calves swath graze through the winter on oat-barley swaths, then go right on grazing through the summer. He shaves some time off the finishing period by taking them right up to about 950 pounds on forage.

“This was surprising to me only because it was the first time I had figured it out using my own numbers. The percentage would be pretty normal for any yearling operation not using grain during backgrounding and not feeding grain to cows,” he explains. “It shows that Canada can produce quality grain-fed beef with very little grain and it highlights how important forages are to beef production. By far and away, forages are the biggest part of the ration.”

Strategies to build a plan that works

1. They identified their natural resources and assets.

At Irricana, snowfall and weather stress are minimal. On average, they get about 11 inches of rain. Typically, there are only about five weather-stress days during the winter when it’s too cold and windy for grazing.

The fertile, light black soil, allows them to grow diverse and high-quality tame forages. The mainstay is a meadow brome-alfalfa mix, which is now providing more stocking days than it did 10 years ago.

Human resources is another consideration. Having attended pasture schools, the Ranching for Profit program and many industry conferences and workshops, they count aptitude for management and management skills among their assets. They also put good neighbours high on the list.

2. They identified threats and risks to their business.

Weather also falls into the risk category. Not only is the amount of moisture usually the number one limiting factor to production, but the high variability of moisture throughout the growing season and from year to year is one of the greatest challenges to manage. The only all-inclusive plan is to plan for the whole range of possibilities.

“So we have plan B, C, D and E for years with a wet spring, dry spring, wet summer, dry summer or any combination,” he explains. Keeping a running tally of precipitation and soil moisture gives him a good sense of what he’ll have in terms of feed to the end of October. For instance, every inch of rain in August generally translates into another week of feed at the end of the season. He also makes a point of monitoring forage conditions when he’s rotating the stock every two to three days.

Adjusting the feed program through this winter’s unusually heavy snow cover has called for a brand new plan B. Last winter, bunched barley straw and chaff provided 90 cow-days per acre of winter grazing. This winter, there was a foot of snow cover by Christmas, making it difficult for the cows to clean up the bunches. He’s been supplementing with bales and figures they’ll be lucky to get 60 cow-days per acre worth of feed from the bunches this winter. They also had to pull the cows off some native pasture, specifically rented to provide late fall grazing, about three weeks earlier than anticipated.

Plan A for swath grazing the calves was working well despite the snow cover, he adds. The upside is that the dugouts should fill and the grass should get off to a quick start on good spring moisture.

Business conditions are another major risk factor. It goes without saying that there’s nothing producers can do to control market prices, however, it is possible to adjust your business plan to mitigate risk.

Retaining their calves and expanding into grassing yearlings is one example. Investing $400 in the straw buncher is another. During their years of mixed farming, utilizing crop residues in the feed ration was a given and they still keep a half section for growing annual crops for swath grazing. When barley grain started to look like a profitable proposition, they decided to harvest the grain and bunch the straw. As it turned out, selling the grain and grazing the bunches trumped swath grazing in 2007.

3. They matched their business to their resources and environment.

By evaluating their assets and risks, they determined that the cow-calf operation is a good fit for their ranch. The mild climate is ideal for wintering cows and they have access to family members and other people who can help out at strategic times.

The ideal cow genetics for their year-round grazing operation is a 1,350-pound foraging machine. Time and stress-saving changes have included calving on grass beginning May 1 and locking the cows in the corral at weaning rather than the calves, which has reduced the number of calves they have to treat.

Retaining their calves through to at least 950 pounds has proven to be a good move because their environment allows them to grow high-quality feed to efficiently put on the pounds. Considering that 80 per cent of forage production occurs during 20 per cent of year, the yearlings help to capture more of it when its in its prime and allow flexibility to adjust numbers if conditions turn dry. When moisture is plentiful and the forages get too far ahead of the plan, they have rented pasture to a purebred producer.

4. They strive for sustainability. The Wrays have been able to significantly reduce their

energy inputs. Relying largely on perennial grass-legume forage mixes has reduced their dependence on fuel, fertilizer, and herbicides, while bale grazing gives them free nutrients.

In their mixed farming days, the whole family spent a lot of time and resources moving feed to the cattle. By optimizing the grazing period so the cattle feed themselves they have reduced the need for equipment to process and handle feed and they’ve been able to reallocate how labour is used.

The goal of adding value to their own forages by optimizing the value of their calves is being met by matching livestock production cycles to nature and good grazing management. The combination has improved soil health and pasture productivity.

Strategic alliances with neighbours have helped them achieve efficiencies and reach targets in management, production and marketing.

Evaluation is an on-going process. Knowing their cost of production is one component. When figuring out the cost per head per day for each of their grazing systems for each class of livestock, they include yardage (moving the fences) as well as related capital purchases and rentals. When it comes to analyzing the impact of their decisions, they look at the whole system as one.

“Positive margins in this business are a challenge to generate,” he concludes. “We need to capture every advantage and pay attention to detail.”

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