A key to cattle business survival
Originally published March 29, 2024 on Grainews
By Heather Smith Thomas
Produce more pounds of beef per acre versus more pounds per cow, this U.S. rancher says
North America producers are receiving higher prices for cattle than ever before — “yet very few are really profitable,” Kit Pharo says.
Most cow-calf producers “are too dependent on outside inputs, which are also at record-high costs,” says Pharo, who operates Pharo Cattle Company in Colorado and was the keynote speaker at the recent Holistic Herd Management Conference at Valleyview, Alta.
Pharo says there’s a wide range of profitability among ranchers in Canada.
Due to continual selection for bigger weaning weights, average cow size has increased 40 percent. Stocking rates have decreased; the same land can’t support as many cows because they consume more forage than the smaller cows of 50 years ago. Cost of production has increased, and profits have decreased.
“If everyone was making money like they were in 2014-2015, I wouldn’t worry, but they are not making that much money now, even with higher cattle prices, because expenses have risen. People need to make major changes regarding how they operate.”
Pharo promotes profit per acre, not overall production of meat, as the route to profitability.
For that, he uses a “two trucks” illustration. Take two ranches of equal size. One produces 50,000 pounds of 400-pound calves (more total calves). The other ranch produces 50,000 pounds of 600-pound calves (fewer animals).
“Fifty thousand pounds of calves is a truckload,” he says.
Using recent market prices for calves, the 400-pound calves on the blue truck are worth $42,000 more than the 600-pound calves on the red truck. It follows that the lighter calves are worth more per pound.
“For over 50 years, the average cow-calf producers have been breeding and selecting for the wrong thing,” says Pharo, “Their ‘bragging rights’ (weaning bigger calves than the neighbours) may have increased, but at the expense of their profits.”
With proper grass management — using rotational grazing and regenerative practices to improve soil health and grass production — and the right kind of low-maintenance genetics, many cow-calf producers today have more than doubled the amount of beef they produce per acre.
“This is happening in many environments, on four different continents,” Pharo said.
Consider the two ranches represented by the two trucks. One ranch continues to focus on increasing pounds per cow (weaning weights). The other ranch is focused on doubling pounds per acre through a combination of low-maintenance genetics and proper grass management. The income difference is significant.
“The ranch represented by the two blue trucks (with double the original stocking rate) is grossing $215,500 more than the ranch represented by the red truck. This is why some cow-calf producers are extremely profitable, while most cow-calf producers are struggling to make a decent living. Many ranches that were put together and paid for with 350-pound calves are now struggling and going broke with 600-pound calves.”
The beef industry, he says, has been based on what fundamentals were like 50 years ago, when land, feed, fuel, labour and equipment were cheap.
“We need to learn how to operate differently than we did 50 years ago. What worked so well back then will never work again,” he says.
Pharo mentions the need for increasing production, but also the fact that ranchers need to eliminate some expenses.
Otherwise, he says, they might as well sell their cattle and land at the top of the market and do something different because it’s only going to get worse; expenses will keep going up.
There are ways to eliminate and reduce some expenses, such as calving in sync with nature — that is, when cows can be on grass rather than fed hay, with less labour and facilities required for cold-weather calving.
“For Canadians, that will save more than $100 per cow, which equates to $100 more profit per cow.”
Producers should learn how to graze more and feed less, Pharo says.
Those big cows require a lot more feed and aren’t producing as many pounds of calf compared to their own body weight as smaller, more efficient cows.
“For 50 years we’ve been trying to get bigger weaning weights, and succeeded, but cows are 40 per cent bigger, too.”
Increasing production per cow did not work, so we need to increase production per acre. Many folks at the holistic conference are already producing twice as much beef per acre as their neighbours and doing it long enough that they know it works, Pharo said.
“Ranchers in many regions have doubled or even tripled production simply by having the right kind of cows and knowing how to manage grass. If you can go from 50,000 pounds of calves to 100,000 pounds of calves on the same ranch, that’s huge.”
Change can be difficult for ranchers who have been doing things a certain way for a long time. “The older we get, the less we want to change; we don’t like risk. When we were 30 years old, risk was not such a big deal, but when you are 60 or 70 years old risk becomes a big deal.”
In a multigenerational ranch, trying to convince Dad or Grandpa there should be some changes can be hard.
But cow numbers across the U.S. and Canada are lower than they’ve been for 72 years, so the industry can’t afford more ranches going out of business.
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