New Generation: Creative Expansion Solutions

April 25, 2015 02:14 AM
 
New Generation: Creative Expansion Solutions

By Jared Wareham

One of the cattle industry’s current challenges is finding ways to get the next generation of producers established. Multigenerational farm families sometimes have difficulties expanding to support an additional dependent household. However, a new emerging trend of custom grazing is offering new opportunities. 

When we think of beef production, most of us consider the traditional ranch or farm model, where the producer owns all of his or her own stock and grazes land they own or lease. In this model, a large percentage of the next generation of beef producers rely on outside income to subsidize operational overhead and provide the cash flow a cattle business demands. Often, that means taking a job in town or straining the “home” ranch for additional wages it cannot afford. 

Consider a niche production scenario, such as custom grazing, to help achieve your goal. Livestock markets need good custom beef producers to graze calves for themselves or customers. Large ranches utilize custom graziers to manage cows on overstocked pastures during times of drought. They also seek relationships with young managers to care for cattle when an investment opportunity arises. 

Additional custom production systems include grazing developmental heifers or bulls, dairy cattle, horses, sheep and goats. Match your land resources to the animal type that provides you with a solid combination of risk management, operational flexibility and cash flow. Properly managed land can support the grazing of multiple species. For example, a combination of stockers and sheep will provide you with two forms of income and an increased return per acre. 

Custom graziers generally operate under a contracted yardage basis. This fee can be paid monthly at the completion of that grazing period. If you can acquire a solid land base and get past the idea that you have to own cattle, custom agriculture can provide you with the necessary tools to generate steady cash flow for your business and monthly household requirements. 

With the current high cost of land and cattle, you cannot afford to pay for both simultaneously. This is why custom grazing is a valuable tool for young agriculturalists who have to start with a limited asset basis. Creation of a custom system can accomplish both of your short-term operational needs: lowered risk and increasing cash flow. These are two critical elements young cattlemen and women need to keep in mind. 

Custom graziers can also take advantage of progressive government cost-share programs to help with the financial burden of installing a managed grazing system. Local Extension personnel can also provide additional business resources, such as tables to help calculate custom yardages, as well as historical rate information. 

You might not have long-term interest in grazing sheep, goats or stocker cattle, but that’s not the issue at hand; paying for the land and staying on the farm is the objective. If you practice good risk management and cultivate the cash flow you need through custom grazing or another activity, you can create your own business. Once you’ve paid for that first farm, you might have the freedom to switch to a production system in line with your long-term goals.

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