building a local feed system that works
BUILDING A LOCAL FEED SYSTEM THAT WORKS Prepared by: Joel Salatin Close your eyes and imagine walking down the aisles of the supermarket in your town. Yell out what could be grown within 50 miles of that supermarket. Everywhere in North America, some 80 percent of the items could be obtained from the foodshed, but instead food grown in the region is trucked many miles away to be processed and trucked somewhere else for packaging to be trucked somewhere else for inventorying and finally trucked back to the community for sale. In Manitoba you won't grow local bananas and coffee. But if everything that could be grown here--meat, poultry, dairy, berries, fruit, vegetables, grains--were actually sold here, the economic and ecological effect would be enormous. Agriculture's industrialization has made most food producing and processing components human unfriendly with noise, dust, stench, and ugliness. When you have to don a moonsuit and walk through sheep dip to visit the chicken house, it's not a production model that anybody wants in their neighborhood. In the ultimate expression, therefore, of western Greco-Roman linear reductionist systematized compartmentalized fragmented disconnected parts-oriented thinking, we have kicked the village-imbedded butcher, baker, and candlestick maker out of the community and hidden them from view. This isolation encourages nutritional, social, economic, and ecological shortcuts. I would suggest that this system even opens the door for that dreaded term bioterrorism. We hear a lot these days about biosecurity. Every public and private thinktank agrees on the vulnerabilities of the North American food system: 1. Centralized production 2. Centralized processing 3. Long distance distribution and warehousing. Wouldn't you think that the policy makers would attack these weaknesses? No, they would offer radio frequency tags in every Little Red Hen. They offer radiation so at least we can eat sterile poop. They offer genetic engineering. All of these encourage continued consolidation and weakening of a biosecure food system. What would a food system immune to these vulnerabilities look like? The opposite of centralized production sounds a lot like smaller family farms. The opposite of centralized processing sounds a lot like community abbattoirs and canneries. Even cottage industry, home kitchens. The opposite of long distance hauling sounds a lot like local.
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We have the antidote to all the fears and paranoia in the food system. All it takes is for the local producers and the local patrons to get together. Nobody knows yet exactly what that connection looks like. We have some prototypes out there: Community Supported Agriculture, farmers' markets, farmgate sales, metropolitan buying clubs and hybrids of these. To be a credible, viable portion of the food system, we must duplicate the efficiencies of the industrial food system to some degree. That requires scaling up production beyond just weekend warrior volume. It means producers clustering around entrepreneurs who have people skills. It means forming a processing and distribution network to move product at a competitive scale. And it means finding enough capital to finance the ramp up in volume. The economic revitalization that occurs when local dollars turn over multiple times in a community is significant. And it's healthy development that plows money into the local infrastructure.
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NO RISK RANCHING - CUSTOM GRAZING ON LEASED LAND Prepared by: Steve Kenyon Are you running a business? Or are you farming? Are you improving the profitability of your Agri-business? Or someone else’s? For generations now we have been taught the fundamentals of the family farm by our father’s. The dilemma I have with that is that the fundamentals are all on production. We have been taught how to run a tractor, build a fence, or pull a calf. And we are good! We are efficient, and we do a great job at getting more and more productive. But have we become more profitable during this process. On my operation, the last thing that I worry about is production. Production is dictated by Economics and Finances. Whatever production practices I use on my farm have to work economically and financially before they can be implemented. Now, my ranch has different advantages and different disadvantages than yours. What works for me, might not work for you, but the truth is in the numbers. Economically and financially, are you running a business, or are you farming? Economics is profitability and we manage this with a Gross Margin Analysis. Finance is your ability to cash flow a venture, and this we manage with a simple spreadsheet cash flow. Two separate sets of books. If I can work through my economics, develop a profitable plan, and have the ability to cash flow the venture, should I go ahead and jump in? Maybe, but there is one more aspect to our farm business that has seniority over Economics and Finances. Human Resources! If the people side of your business is not able to perform the task then the venture could fail. 85% of all employment turnover is due to personality conflicts, not job ability! Human resources is the most important part of any business. With out it, you are sure to fail. In most farm business, we add in an extra degree of difficulty on the human resource side, most of the time we deal with family members! So how does all this relate to No Risk Ranching? It is hard to swallow that title, so how about Low Risk Ranching? Well, the risk of having a successful business starts with good planning and good management. By building good people skills, understanding the abilities and needs of the people in the business, and continuing the education of those people, you will be able to move forward in your business. You also need the people in the business to understand the economics and finances of the business. Once these are taken care of, the production falls into place and your risk in minimized. If you don’t have these parts in order, you’re at risk of having a wreck! If you see the light at the end of the tunnel, but you don’t take care of your human resources, your economics and your finances, watch out, it is probably a train coming! At the present time, we own 9 head of livestock, (6 goats, 2 horses and a donkey) and manage 4000 acres of pasture. This might seem a little under stocked to some people but we also graze 350 cow/calf pairs on a year round basis and run an additional 500 yearlings for the summer. Of these 4000 acres, we own 155 acres and lease the rest. In
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our area, the land is too high in value for agricultural purposes. Our quarter of bush land is valued at $200,000 due to the urban pressures of Edmonton and the increased demand for recreational land. As an investment, land in our area has the ability to be quite profitable because of appreciation and the demand for acreages; it however does not cash flow very well for an agricultural stage one business. That is why we have continued to expand our operation through leases arrangements and with an investor strategy. I am not saying we don’t want to own any more land… it is a good investment. We just have to be able to cash flow it. For every quarter of land that we own, we need to offset the negative cash flow that it creates with 10 quarters of leased land. Our investor strategy was developed to encourage investment in land through our company that will allow the investors to own the land but not have to manage it. We then assume the management of the land in a sustainable manner. Of course we promote the environmental benefits that we can provide but also the investment potential of real estate in our area. A win-win for both sides. Our profit center is in land management; the investor’s profit center is real estate. It does, however, take a little Human Resource Management in dealing with 18 different landowners. Another part of our risk management is in the livestock side of our business. At the present time, we do not have a cow/calf profit center. We determined a few years back, that on our operation, the economics did not work. We make a profit from our custom grazing and we do not have the market risk, the breeding risk, the cow depreciation or the death loss. That does not mean that we will not own cows in the future. I believe that in the cow/calf profit center, the revenue created from selling of the calf at weaning will provide cash flow for the operation. The profitability of the profit center comes from the ability to manage for the cattle cycle. You buy low, sell high. If a cow is too expensive to buy, then she is too expensive to own. We try to work with the cattle cycle, not against it. Cow depreciation is a huge loss that most producers don’t account for because it is hidden, but believe me, it is a big cost and needs to be in your numbers. Our Grazing profit center has it’s own built in risk management. By managing the land through Intensive Cell Grazing, we limit the amount of risk we have in the crop we grow. By managing for the grazing concepts, (graze period, rest period, stock density & animal impact) our only risk is weather. Temperature and rainfall limit our growth potential, but we always get to harvest our crop. Snow, hail, frost? We can still harvest, and because me manage to improve the health of the land, we reduce the risk of temperature and drought. We build humus and thatch which helps to absorb rainfall and reduce evaporation. It also helps to control soil temperature in order to maintain a longer period of growth for the plants. Healthy pastures are profitable pastures. Our ranch is also a low cost operation. We use no chemicals, and no fertilizers. Our pastures are managed to recycle nutrients and improve forage quality by understanding the grazing concepts. We manage for weeds and pests strictly through management. If we work with Mother Nature, we are able to let her do all the work. By keeping the biology of the soil happy and healthy, we allow Her to work for us, not against us. These organisms in the soil help us import and recycle nutrients. Legumes are a very important
31
source of nutrients for us. Why would anyone buy nitrogen fertilizer when the air we breath is 78% N!!! We just have to understand how Mother Nature pulls it from the air. We also have very little equipment. We manage 350 Cow/calf Pairs year round and 500 yearlings for the summer, and yet we run our business with out needing to own a tractor. Our goal is to get the animals to do the work for us. If we have minimal investment, we can lower our risk. We own a bale truck, a quad and 2 horses. Even when we swath graze, we lower our risk by purchasing the crop from other producers. They take the risk of growing the crop and we purchase what is produced. We have developed ourselves as a market to other producers. We will take Oat crops, barley crops, salvaged crops, crop residues or whatever else we can beg, borrow or steal. I just don’t want to own the equipment. With minimal equipment, we use less fuel, spend less time turning circles, have a lower repair bill and incur less depreciation and opportunity cost on those assets. It is the depreciation and opportunity cost that really sneak up on a business with out you realizing it. When we have to feed, we still use a grazing mentality by bale grazing. Here our big savings is in lowering the labour and equipment costs of winter-feeding. The Average Alberta yardage rate for feeding dry cows is $0.70/head/day. Through bale grazing we have been able to reduce our yardage down to $0.07/head/day. So there you have it, Low Risk Ranching Greener Pastures style. We feel we need to stay on top of our Human Resource Management, our Economics and our Finances. If we can keep these in check, the rest falls in place. Check us out on the web at www.greenerpasturesgrazing.com or call (780) 307-2275. Find out when and where our next Year Round Grazing Systems course is being held. We might be coming out your way very soon.
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THINKING OUTSIDE THE BOX - GRAZING MANAGEMENT ON THE OTHER SIDE OF THE FENCE Prepared by: Steve Kenyon
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We have the antidote to all the fears and paranoia in the food system. All it takes is for the local producers and the local patrons to get together. Nobody knows yet exactly what that connection looks like. We have some prototypes out there: Community Supported Agriculture, farmers' markets, farmgate sales, metropolitan buying clubs and hybrids of these. To be a credible, viable portion of the food system, we must duplicate the efficiencies of the industrial food system to some degree. That requires scaling up production beyond just weekend warrior volume. It means producers clustering around entrepreneurs who have people skills. It means forming a processing and distribution network to move product at a competitive scale. And it means finding enough capital to finance the ramp up in volume. The economic revitalization that occurs when local dollars turn over multiple times in a community is significant. And it's healthy development that plows money into the local infrastructure.
29
NO RISK RANCHING - CUSTOM GRAZING ON LEASED LAND Prepared by: Steve Kenyon Are you running a business? Or are you farming? Are you improving the profitability of your Agri-business? Or someone else’s? For generations now we have been taught the fundamentals of the family farm by our father’s. The dilemma I have with that is that the fundamentals are all on production. We have been taught how to run a tractor, build a fence, or pull a calf. And we are good! We are efficient, and we do a great job at getting more and more productive. But have we become more profitable during this process. On my operation, the last thing that I worry about is production. Production is dictated by Economics and Finances. Whatever production practices I use on my farm have to work economically and financially before they can be implemented. Now, my ranch has different advantages and different disadvantages than yours. What works for me, might not work for you, but the truth is in the numbers. Economically and financially, are you running a business, or are you farming? Economics is profitability and we manage this with a Gross Margin Analysis. Finance is your ability to cash flow a venture, and this we manage with a simple spreadsheet cash flow. Two separate sets of books. If I can work through my economics, develop a profitable plan, and have the ability to cash flow the venture, should I go ahead and jump in? Maybe, but there is one more aspect to our farm business that has seniority over Economics and Finances. Human Resources! If the people side of your business is not able to perform the task then the venture could fail. 85% of all employment turnover is due to personality conflicts, not job ability! Human resources is the most important part of any business. With out it, you are sure to fail. In most farm business, we add in an extra degree of difficulty on the human resource side, most of the time we deal with family members! So how does all this relate to No Risk Ranching? It is hard to swallow that title, so how about Low Risk Ranching? Well, the risk of having a successful business starts with good planning and good management. By building good people skills, understanding the abilities and needs of the people in the business, and continuing the education of those people, you will be able to move forward in your business. You also need the people in the business to understand the economics and finances of the business. Once these are taken care of, the production falls into place and your risk in minimized. If you don’t have these parts in order, you’re at risk of having a wreck! If you see the light at the end of the tunnel, but you don’t take care of your human resources, your economics and your finances, watch out, it is probably a train coming! At the present time, we own 9 head of livestock, (6 goats, 2 horses and a donkey) and manage 4000 acres of pasture. This might seem a little under stocked to some people but we also graze 350 cow/calf pairs on a year round basis and run an additional 500 yearlings for the summer. Of these 4000 acres, we own 155 acres and lease the rest. In
30
our area, the land is too high in value for agricultural purposes. Our quarter of bush land is valued at $200,000 due to the urban pressures of Edmonton and the increased demand for recreational land. As an investment, land in our area has the ability to be quite profitable because of appreciation and the demand for acreages; it however does not cash flow very well for an agricultural stage one business. That is why we have continued to expand our operation through leases arrangements and with an investor strategy. I am not saying we don’t want to own any more land… it is a good investment. We just have to be able to cash flow it. For every quarter of land that we own, we need to offset the negative cash flow that it creates with 10 quarters of leased land. Our investor strategy was developed to encourage investment in land through our company that will allow the investors to own the land but not have to manage it. We then assume the management of the land in a sustainable manner. Of course we promote the environmental benefits that we can provide but also the investment potential of real estate in our area. A win-win for both sides. Our profit center is in land management; the investor’s profit center is real estate. It does, however, take a little Human Resource Management in dealing with 18 different landowners. Another part of our risk management is in the livestock side of our business. At the present time, we do not have a cow/calf profit center. We determined a few years back, that on our operation, the economics did not work. We make a profit from our custom grazing and we do not have the market risk, the breeding risk, the cow depreciation or the death loss. That does not mean that we will not own cows in the future. I believe that in the cow/calf profit center, the revenue created from selling of the calf at weaning will provide cash flow for the operation. The profitability of the profit center comes from the ability to manage for the cattle cycle. You buy low, sell high. If a cow is too expensive to buy, then she is too expensive to own. We try to work with the cattle cycle, not against it. Cow depreciation is a huge loss that most producers don’t account for because it is hidden, but believe me, it is a big cost and needs to be in your numbers. Our Grazing profit center has it’s own built in risk management. By managing the land through Intensive Cell Grazing, we limit the amount of risk we have in the crop we grow. By managing for the grazing concepts, (graze period, rest period, stock density & animal impact) our only risk is weather. Temperature and rainfall limit our growth potential, but we always get to harvest our crop. Snow, hail, frost? We can still harvest, and because me manage to improve the health of the land, we reduce the risk of temperature and drought. We build humus and thatch which helps to absorb rainfall and reduce evaporation. It also helps to control soil temperature in order to maintain a longer period of growth for the plants. Healthy pastures are profitable pastures. Our ranch is also a low cost operation. We use no chemicals, and no fertilizers. Our pastures are managed to recycle nutrients and improve forage quality by understanding the grazing concepts. We manage for weeds and pests strictly through management. If we work with Mother Nature, we are able to let her do all the work. By keeping the biology of the soil happy and healthy, we allow Her to work for us, not against us. These organisms in the soil help us import and recycle nutrients. Legumes are a very important
31
source of nutrients for us. Why would anyone buy nitrogen fertilizer when the air we breath is 78% N!!! We just have to understand how Mother Nature pulls it from the air. We also have very little equipment. We manage 350 Cow/calf Pairs year round and 500 yearlings for the summer, and yet we run our business with out needing to own a tractor. Our goal is to get the animals to do the work for us. If we have minimal investment, we can lower our risk. We own a bale truck, a quad and 2 horses. Even when we swath graze, we lower our risk by purchasing the crop from other producers. They take the risk of growing the crop and we purchase what is produced. We have developed ourselves as a market to other producers. We will take Oat crops, barley crops, salvaged crops, crop residues or whatever else we can beg, borrow or steal. I just don’t want to own the equipment. With minimal equipment, we use less fuel, spend less time turning circles, have a lower repair bill and incur less depreciation and opportunity cost on those assets. It is the depreciation and opportunity cost that really sneak up on a business with out you realizing it. When we have to feed, we still use a grazing mentality by bale grazing. Here our big savings is in lowering the labour and equipment costs of winter-feeding. The Average Alberta yardage rate for feeding dry cows is $0.70/head/day. Through bale grazing we have been able to reduce our yardage down to $0.07/head/day. So there you have it, Low Risk Ranching Greener Pastures style. We feel we need to stay on top of our Human Resource Management, our Economics and our Finances. If we can keep these in check, the rest falls in place. Check us out on the web at www.greenerpasturesgrazing.com or call (780) 307-2275. Find out when and where our next Year Round Grazing Systems course is being held. We might be coming out your way very soon.
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THINKING OUTSIDE THE BOX - GRAZING MANAGEMENT ON THE OTHER SIDE OF THE FENCE Prepared by: Steve Kenyon
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