Be sure to check out our upcoming webinars on cattle production and targeted grazing - we have a great line-up of speakers and topics!

Tuesday, October 6 (6pm) - Introduction to Targeted Grazing

This webinar will provide an overview of targeted grazing, including grazing management, picking the right grazer for the job, livestock management, and customer relations. Cost: $10. Click here to register!

Thursday, October 15 (6pm) - Cattle Health – From Parasite Management to Vaccination Programs

With Dr. Gaby Maier (UCD School of Veterinary Medicine Beef Extension Specialist) and Dr. Becky Childers (Large Animal Veterinarian). Learn about controlling external and internal parasites, developing a vaccination program for your herd, and the importance of establishing a working relationship with your veterinarian. FREE! Sponsored by Tahoe Cattlemen's Association. Click here to register!

Tuesday, October 20 (6pm) - Beef Business Basics

With Dan Macon, UC Cooperative Extension; Judd Tripp, Placer County Rancher; and JC Baser, Placer County Rancher. This webinar will focus on basic economic analysis for new and existing ranching businesses. Our rancher panel will share their experiences operating successful foothill ranching enterprises. FREE! Sponsored by Tahoe Cattlemen's Association. Click here to register!

Thursday, October 22 (6pm) - The Basics of Grazing Management

With Dan Macon, UC Cooperative Extension; Greg Lawley, Placer County Rancher; Joe Fischer, Placer/Nevada County Rancher. Well-managed grazing can improve pasture productivity and cattle health. Learn the basics of grazing management and hear from ranchers who use these practices every day. FREE! Sponsored by Tahoe Cattlemen's Association. Click here to register!

Tuesday, October 27 (6pm) - The Business of Targeted Grazing

Join Dan Macon and a panel of targeted grazing contractors to learn about the ins and outs of building a targeted grazing business. Cost: $10. Click here to register!

Thursday, October 29 (6pm) - Beef Cattle Nutrition

With Dr. Pedro Carvalho, UC Davis Feedlot Management Extension Specialist. Learn basic information about beef cattle nutrition, from grazing to ration formulation. FREE! Sponsored by Tahoe Cattlemen's Association. Click here to register!

Once you've registered for each webinar, you'll receive a Zoom link that will allow you to participate. We'll also post videos of each webinar on the Ranching in the Sierra Foothills YouTube Channel. 

Over the last several months, I've had several conversations with ranchers about capital expenditures – purchases of durable, relatively expensive assets. I suppose many of us in agriculture think about equipment – trucks, trailers, tractors, ATVs (at least that seems to be what those of us in the livestock business consider). We might also consider handling equipment – corrals and chutes, for example – or breeding animals. And most of us (myself included) have a limited amount of capital with which to work. How do we figure out our priorities?

First, I think it's helpful to define a capital purchase. Unlike an operating expense (feed, for example), a capital purchase exchanges one asset (cash, generally) for another. Capital purchases are included on our balance sheet; operating expenses show up on our profit and loss statement. Obviously, there are costs to owning an asset. If we borrow money to purchase a truck, the interest payment is an expense. So is the annual depreciation. But the truck (or the breeding cows, or handling equipment) are assets of our business.

As business owners, why would we make a capital purchase? From my perspective, a capital purchase plan must be tied back to the specific needs of the business. What are the weak links in terms of business profitability? A capital purchase should address these weak links. For example, if we know we need to reduce our overhead costs (and as a reminder, overheads are land-related and labor-related in a livestock business), then equipment that makes our labor more efficient may be justified. If we know our gross margins (revenue minus direct expenses) are positive, then perhaps we need to think about expanding our productive capacity (e.g., buying more breeding animals). Or said another way, if we know we need to expand our business, and we have a limited amount of capital to invest, will reducing our overhead address the key challenge, or should we buy more livestock? These are critical questions!

We should also think about the source of funds for the purchase. Are we going to use the profits from our business? Our personal savings? Are we going to borrow money? If we use our personal savings, we should formalize a plan to pay back this investment – after all, the business is borrowing money from outside the business (even if that money is ours). If we are going to formally borrow money from a bank or other source, what are terms? Is collateral required? What is the interest rate?

If you're like me, you probably like shiny paint and new equipment. When I visit larger operations, I find myself envious of their sheep handling equipment. I would love to have a portable commercially-built sheep handling system, for example. But if I think about the function of a handling system (rather than the object – or the brand name), I can come up with alternatives to this large expenditure. For example, our current handling system is comprised of a home-built wooden alley and Bud Box set-up, with t-posts and wire panels for holding pens. For us, this system does everything a factory-built set-up will do, at a fraction of the cost. The function of a set of corrals is to facilitate easy sorting and handling. Building our own system has allowed us to invest our capital elsewhere.

Examining the function of a specific piece of equipment is also related to the bottlenecks in our operations. For example, when we started in the sheep business, we had a small, bumper-pull stock trailer. I could hall 12-15 mature ewes at a time (depending on whether they were newly shorn or in full fleece). As our flock grew, we began to realize that we were spending much more time hauling livestock from ranch to ranch. In this case, we ultimately made two investments: a larger stock trailer (that more than doubled our capacity) and a border collie (which allowed us to safely herd our sheep to some of the places we'd been hauling them previously).

Sometimes, one purchase requires another. For example, when we installed our K-Line irrigation system, we also had to buy an ATV to move water. In other words, the $9,000 we spent on irrigation improvements required an additional $3,500 purchase of a used ATV. We've considered buying a double-deck stock trailer, which would require also buying a loading ramp and always loading from facilities that we can reach with a truck and trailer. Like our border collies, the ATV has multiple benefits. At the moment, we can't justify adding a double-deck trailer.

Once we've decided what our capital purchase priorities are, there are several ways we can evaluate the financial implications of these investments. For new businesses (1-3 years), I think a simple payback period is an important analysis. To use this tool, we divide the total cost of the purchase by the annual positive change in profit (either through increased revenue, decreased expense, or a combination of the two). Here's an example:

Used ATV

• Purchase Price = $4,000
• Operating Costs (fuel, maintenance, depreciation) = $400/yr
• Labor Savings (irrigation, fencing, etc.) = $1,400/yr
• Net Income Change = +$1,000/yr
• Payback Period = $4,000 ÷ $1,000 = 4 years

All of this is a rather long-winded way of saying that capital purchases require a plan – just like every other aspect of our ranch businesses. We need to have a clear understanding of where the economic weak links in our business may be (e.g., overhead expenses vs. productive capacity vs. improving gross margins). We need to think about the function that we need accomplish rather than the object we think we need. We need to think about the entire investment required. And finally, we need to think about the financial and cash flow implications of making the purchase.

Photo credit: Roger Ingram

As some may know, I've been doing a weekly podcast called "Sheep Stuff You Should Know" with my friend and fellow sheep producer, Ryan Mahoney. We started the project as an excuse to talk regularly about livestock during the initial COVID-19 shelter-at-home order, but it's turned into a great opportunity to explore topics that interest both of us. Since we started, we've talked about economic benchmarks, livestock guardian dogs, genetic selection, and our favorite lamb dishes. We've interviewed Ryan's grandfather, legendary sheepman Dick Emigh - and Dr. Fred Groverman, the dean of Shropshire sheep breeders in the U.S. But our conversation about value-added marketing several weeks ago has really stayed with me. We were talking about how each of us evaluate new marketing opportunities, and about the importance of budgeting and economic analysis. Ryan said, "It's easy to project your revenue on paper - we all like to think that all of our lambs [or calves, for that matter] will be top quality. But no matter what size operation you have, you'll always have tail enders - those lambs that simply don't grow. To be realistic, our budgets need to acknowledge this fact."

Since this conversation several weeks ago, I've been thinking about our tail enders. There are always a handful of lambs that simply don't perform - maybe they were challenged with health issues as lambs, perhaps they were more susceptible to internal parasites like barberpole worms or coccidia. In talking with cow-calf producers, this seems to be a common issue. We all have animals that simply fail to thrive for one reason or another.

For me, this suggests I need to examine my management and my genetic selection. I need to keep better records - do my tail enders come from the same ewes every year? From the same rams? This year, I'll go back through my lambing records and note the dams of these tail end lambs. I'll also take a look at our weaning procedures - are there things we can do when we separate lambs from ewes that will reduce stress and maintain productivity.

In the meantime, I need to sell these lambs. We market most of our lambs shortly after weaning (typically at a premium), but I always hang on to these poorer performing lambs in the hopes that maybe I can turn them around. That means that I've got a handful of poor doers now that I've spent money and time on - perhaps not the best investment I could have made. Maybe I need to rethink my market timing. Maybe these tail end lambs - and our cull ewes - should go to the sale at weaning.

I'm curious - how do you deal with your tail enders? Do you have any? If you do, what is YOUR marketing strategy? I hope you'll share your thoughts in the comments!

And if you're interested in our Sheep Stuff podcast, here's the link!

Can any of us remember a summer like this?! The work of ranching continues - irrigating pasture, checking livestock, preparing for calving or breeding season. And yet the COVID-19 pandemic casts a pall over everything we're doing. Market disruptions - including increasing demand for direct-to-consumer meat products - add to the uncertainty we're all grappling with. I'm wearing a mask when I go to the feed store and limiting my trips to town. And, as I write, this, my youngest daughter is starting her last year of high school - from home.

Given the continued rise in COVID cases here in Placer County, our UC Cooperative Extension staff continues to work from home. But while we're not in the office, we are still out and about serving our communities. Our 4-H staff is working with our volunteer leaders and 4-H members to start the new 4-H year. Our nutrition staff continues to work with schools throughout the community to provide school gardens and nutrition/healthy lifestyles information for kids and adults. Our Master Gardeners have developed some incredibly innovative online educational opportunities. Check out our website at http://ceplacer.ucanr.edu/ for more details!

Our agricultural programs are also ongoing! I am working with colleagues at Davis and elsewhere to put on a bi-weekly webinar on a variety of grazing and livestock production topics. Our Working Rangelands Wednesdays series has covered topics like drought, targeted grazing, water quality, and fuel load reduction. You can register to participate in these webinars here.

I've also been collaborating with Ryan Mahoney of Emigh Livestock on a weekly podcast called Sheep Stuff Ewe Should Know (available on Spotify and Apple Podcasts). While our focus has largely been on sheep industry topics, I think you'll find that many of our episodes are broadly applicable to all livestock production. If there's a topic you'd like us to take on, please send me an email at dmacon@ucanr.edu.

Research projects aren't standing still, either - we are wrapping up our early weaning project at the Sierra Foothill Research and Extension Center this fall. I'm continuing to collect data on predators and livestock guardian dog behavior on the Tahoe National Forest this summer. Our northern California irrigated pasture research continues, and we're about to start a collaborative forage variety trial with specialists from UC Davis and farm advisors from throughout the state. I find that I especially enjoy the days I get to spend in the field!

We are planning a number of virtual workshops this fall, including our "So You Want to Start a Farm or Ranch" workshop and our Beginning Farming Academy - stay tuned for details. And I'm working with the Tahoe Cattlemen's Association to organize a beef production workshop or webinar in late September. Watch my website for more information!

If you're on  Instagram, you might check out my IGTV channels - covering a variety of topics from forage production and management to livestock guardian dogs. You can follow me on Instagram at @flyingmule.

Finally, I am available by phone, email, and in person! If you have a pasture, livestock, or range management question, call me at (530) 889-7385 or email me at dmacon@ucanr.edu. I'm always glad to get out in the field, so don't hesitate to contact me!

These are strange times, to say the least. Stay safe, and stay positive. I hope to hear from you!