The way Jared Souza sees it, all indicators point to a great financial year for cow-calf operations.
“Coming from a recent high in 2019, there are 1.5 million fewer beef cows in the US,” says Jared. “It’s simple supply and demand: tight supply, high demand. The market should be very good.”
You’ll note that Jared said the market “should” be good. Spoken like someone who grew up on a cow-calf operation and understands an industry where the challenges are routinely beyond human control. Such as the drought conditions during last year’s breeding season and the heavy snowstorms this spring that have brought fatal results during calving season in Wyoming.
The Cow-Calf Cycle
“This calf today that’s drowning in the snow was bred in a severe drought in most areas of the country,” he tells me. “That makes it difficult. You had health and nutritional concerns during certain parts of the breeding season, causing marginal breed-up in some parts of the country (owing to weather challenges). In some cases in Wyoming, the Governor has requested disaster assistance for some of the winter impacts on the sheep and cattle industry.”
Don’t get Jared wrong. Even though he left the cattle business to be a full-time broker for us at Mirr Ranch Group, his father and uncles remain in the business and he has a warm place in his heart for the delicate balancing act of breeding and calving, and weaning — and then starting over again.
The cycle starts in late summer with breeding season. Almost 80% of dairy producers in North America use artificial insemination for breeding cattle, according to a National Library of Medicine report. But only about 4% of beef producers do so, owing to how time-consuming the process can be and its high failure rate. No matter how they breed their cows, the goal is to complete the process in a tight time window, Jared says, so that when they arrive a little more than nine months later “you have a more even calf crop; you don’t have a big age gap, ., and you calving season is confined to an appropriate window of time, all to position your herd to start the cycle all over again.”
The Agricultural Dance
For most operations, nine months, (nine months 10 days to be exact), for a Angus cow, later means calving season arrives in April and May. And that window needs to be just as tight as the breeding season for operators to successfully perform this intricate agricultural dance.
“There are two different programs there,” Jared says. “You have cows that have calved a couple times; they don’t need as much hand-holding, they are kind of seasoned warriors and can do their own birth. But you (often still) need to collect data on each one of those calves.”
Jared says all the cows need to be checked on during calving season, and some operators are still feeding every day as well. They are looking to see who is ready to deliver, maybe tagging calves, and also making sure calves have sucked especially in poor weather, with special attention to the heifers. “They’ve never done this, they require a lot of help … and sometimes they aren’t good moms, they don’t know what they’re doing” and require support nurturing their calf.
As if that isn’t enough, because the cows are calving in a confined space, there’s always a worry about the spread of sickness. And then, of course, a turn in the weather can create huge problems.
“Right now is a critical time. Hay piles are running short during calving and you’re hoping for green grass (to replace the snow) because it dramatically lowers your feed cost. The faster you can get those cows on grass developing those calves the easier it is for you.
“Let’s say you’ve got a cow-calf operation with a hay base, but your calves are utilizing your meadows. As soon as spring weather comes, everybody wants to get them out of their meadows and start the hay crop for the next winter. It’s an incredibly difficult time because of the workload you have in such a short time.”
The process starts all over again in the fall, Jared says. “Just about everyone is getting ready to wean in October. And as you wean that calf off, that cow is already pregnant again and you’re trying to prepare her to grow yet another calf through the winter months and her nutritional requirements are changing.”
A Candid Prospective on Cattle Operations
All the while, Mother Nature and other challenges hover. “These operations have small margins. So let’s say you have one bad blizzard that eliminates 10% of your calf crop. That single-day event can strip your entire margin away. We pray for this moisture all the time because we need it, but then we get it and we’d rather not see several feet of snow and extremely cold temperatures.” A cow’s energy from feed requirement increases by 1% for each degree below freezing and doubles if she is wet and those needs are sometimes hard to meet during prolonged blizzards.
Given all these nuances, it’s no wonder Jared is candid when prospective investors inquire about buying a cattle operation. (At Mirr Ranch Group, many of our clients lack the knowledge to run a livestock operation on their own, and a significant percentage choose to lease the ranch to a well-established operator. In these situations, we help the landowner design and implement grazing practices that also address their recreational and conservation considerations.)
“My first question is ‘How much do you want to work? What are you capable of doing?’ I laugh when people from different industries say ‘I work my (butt) off, 40-50 hours a week, and have done it for years.’ And I tell them ‘You aren’t even scratching the surface of an ag operator. There are people out there who will be putting in 80-90 hours every week for the next six months calving and haying.”
And the way Jared sees that, a working cattle operator wouldn’t want it any other way.
“The ag business is a lifestyle. Very few people ever get rich in the ag industry, it’s something they want to wake up and do every morning because they’re proud of it.”
Ken Mirr is the Founder and Managing Broker of Mirr Ranch Group. Have a question about the West or investing in a ranch? Email him at Ken@MirrRanchGroup.com.