Thursday, October 02, 2014

Managing Drought Risk on the Ranch

Enterprise Mix and Type of Operation

Livestock Enterprise Mix

The kind of operation you have greatly affects the drought mitigation plan you will ultimately adopt and the amount of risk you face.

For example, the drought mitigation measures that you adopt for a seed stock cow/calf operation are quite different than that of a stocker or yearling operation. The stocker operation is quite flexible in its ability to adjust numbers of animals, back grounding calves, while the seed stock operation will have limited ability if it is to maintain reputation and genetic diversity.

"So we have people say 'ok, here’s my drought risk, what’s the worst that could happen in some period of time. I’ll stock with my keeper herd to that level.' And by the keeper herd, I mean what would the genetic core be, what do I absolutely have to have to maintain my genetic program. I may have a few more cows than that, but those are cows that I’m willing to destock in drought. And then the rest of my grass or forage resource will be used by what I’ll call my disposable herd. Those might be my stockers, those might be a cull-cows enterprise, I might be custom grazing. Maybe I cut it for hay." (Ranching for Profit Consultant)

Calving Strategies to Increase Herd Flexibility

Ranch operations are likely to be most cost-effective when livestock enterprises are fit to the production environment. For cows or ewes, this often involves matching seasonally high levels of nutrient requirements with seasonally high levels of nutrient density in forage resources.

Use of both yearling and breeding animal enterprises allows ranchers to sell yearlings and retain cows or ewes when drought occurs.

“We’ll be more conservative towards feed supplies, and that’s why having a cow-calf deal and running your own yearlings appeals to me. That gives you an exit strategy if it turns dry without having to sell your breeding stock, without having to buy more feed on a seller’s market. The calves, if you wean your calves and sell them, as opposed to carrying them over, you’ve got what feed you would have used for them for your breeding cows.”

Match Grazing System to Enterprise Mix

Yearling enterprises with steers, heifers, wethers or ewes generally involve relatively short grazing seasons to optimize average daily gains.

Longer grazing seasons commonly used for breeding livestock enterprises provide a greater opportunity to make measurable year-to-year changes in when individual pastures are grazed. These changes optimize plant vigor and increase drought tolerance on semi-arid rangelands.

Comparable drought preparation can be accomplished with yearling enterprises by providing full growing season deferment to all pastures every three to four years.

Financial Considerations

However, diversification in and of itself does not imply risk mitigation. It is important that the diverse enterprises within the business entity are independent from the central cause of the risk.

As an example, a ranch that is both a cow/calf operation and provides eco-tourism/hunting service, may suffer with both enterprises if both are dependent on range quality. On the other hand, a ranch that may have a cow/calf enterprise and a dude ranch setup may flourish in the dude ranch business despite drought.

Having simultaneously more than one diverse enterprise in a ranch increases the portfolio of enterprises in the ranch, and makes the ranch more resilient to the effects of drought, but also complicated the picture and increases the need for effective management.


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