Cattle Ranching’s Challenges Also Offer Opportunities for The Entrepreneurial Investor

Cattle ranching has been central to the western region’s economy since the 1850s. Although slowed by the Civil War, the industry exploded out of Texas in the late 1860s through the increased use of the railroads to deliver cattle to distant markets.

The Opportunity in Cattle Ranching

More innovations followed and the practice of cattle ranching spread across the West. While recent years have not seen the same explosive growth in revenue as the early decades, the cattle market remains enormous. According to census figures from the U.S. Department of Agriculture (USDA), sales of cattle and calves totaled $76.4 billion in 2012.

Ten states accounted for 73% of those sales, according to the USDA. While Texas ($13 billion), Kansas ($10.2 billion), and Nebraska ($10.1 billion) get the lion’s share in sales, western states such as Colorado ($4.3 billion), California ($3.3 billion), and Idaho ($1.8 billion) also have significant sales.

At first brush, those figures suggest that a cattle ranch investment presents an opportunity to play a part in a pillar of the western economy and realize some revenue at the same time. But despite the fact that beef is fetching record prices these days, consolidation in the meatpacking industry and increased costs to raise cattle have put the squeeze on smaller ranchers, as illustrated in this report from Montana.

How to Get Started as a Cattle Rancher

All of which means it’s essential to deeply research your options when considering the purchase of a ranch with a working cattle operation. Start the process by answering these questions.

  • Will you be the owner-operator or an absentee owner who either hires someone to run the operation or leases land to a neighboring rancher?
  • Do you want a cow-calf or yearling operation?
  • What do Stocking Rate and Animal Units Per Month mean?
  • How will you manage the herd during the winter months?

You can read more about these issues in our previous story: Top 5 Considerations When Buying a Cattle Ranch in the Intermountain West.

While it’s true that many ranchers are facing the challenge of getting top dollar for their cattle because of the enormous bargaining power of the dominant packing houses, that doesn’t mean it’s the only option. Consider these examples:

  • In Nebraska, cattle ranchers are building their own packing plant to circumvent the larger players in the industry.
  • Colorado passed a bill in 2021 allowing people to buy shares of animals — including cattle, pigs, and sheep — before they are butchered. The legislation (SB21-79) also enables the producer to distribute the shares without a USDA inspection.
  • Idaho entrepreneur Frank Vandersloot, the founder of the Melaleuca business empire, decided to create “the most progressive cattle breeding programs in the U.S. near Idaho Falls, according to this story in the Capital Press.

Meet ‘The Real McCoy’

Joseph McCoy was a livestock trader who wanted to bring the longhorn cattle from Texas to Chicago and from there distribute them to the East. McCoy knew that the railroad companies were keen to carry more freight, so he built a hotel, stockyard, office and bank in the village which became known as Abilene – one of the first cow towns. Cattle were to be driven from Texas to Abilene and then taken East by train. The plan worked: Between 1867 and 1881 McCoy sent more than 2 million cattle from Abilene to Chicago. His reputation for reliability gave rise to the expression ‘The real McCoy’.

Read the complete story at History on the Net.

Cattle ranching on cattle ranch for sale

Considerations for Future Cattle Ranch Owners

There are other aspects to cattle ranch ownership worth considering. For one, ownership supports a western tradition and the jobs that go with it. And grazing can have a positive impact on the critical seasonal habitats and connectivity for fish and wildlife on public and private lands, as noted by the Theodore Roosevelt Conservation Partnership.

And like any other ranch in most western states, you can apply for conservation easements. As I wrote about recently, that practice has been booming in Colorado, which is unique in that the state allows the landowner donating the easement to either use the tax credit for themself or sell the credit to a third party.

There’s no denying that investing in a cattle operation requires considerable research, but at the same time, it presents a significant opportunity for entrepreneurism. Start by checking out Mirr Ranch Group’s inventory of cattle ranches for sale and then contact us for guidance about your potential investment.

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