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Management

Successful Ranches Need to be Flexible, Creative, Connected

Written by John Ritten

I think running a successful ranch is going to look a lot less familiar as we head into the remainder of the 21st century. Of course, that depends a lot on how you define “successful,” but I will assume a successful ranch is one that generates enough money to be self-sustaining.

I think one of the biggest changes is that ranchers are going to have to focus more on business management than ever before. While having a fundamental understanding of the animals, plants and soils we manage is going to continue to be important, I think the emphasis on where we need to spend time and energy will shift. The next generation of ranchers will continue to need to be a mix of animal scientist, soil scientist, agronomist and business manager. However, I think moving forward, the more successful ranchers will spend proportionately more time on the business than the science of ranching.

Flexibility

Flexibility is going to be key to being successful in the future. The world seems to be changing faster all the time, and those who want to succeed will need to be able to adapt and do it quickly. This may be challenging for some, as many ranchers tend to cite one of the main reasons they are ranchers is for the tradition and lifestyle that ranching affords them.

However, in order to maintaining that lifestyle, I think ranches will need to adapt to a variety of coming changes.

For one, as we’ve seen in recent years, I see livestock market volatility continuing, rather than abating, in the foreseeable future. Livestock markets are integrated with far more products in far more places than ever before, so there will continue to be external pressures on livestock markets. Understanding – and taking advantage of, all the marketing channels available to you may very well mean keeping the ranch operating in the long run.

Beyond just markets, being up to date on global politics is going to be more important to ranchers than ever before. The world is now our marketplace, and seeing changes early can help us to prepare for both the ups and downs associated with changes across the globe if we have designed our business to be adaptable.

Also, long-term weather forecasts are going to continue to improve as models continue to improve. Understanding how to use these forecasts to our advantage can help maintain long-term stability for our business. However, to take advantage of or minimize the damage due to these sorts of events, ranchers will need to have a strategic plan for how to respond to a variety of outcomes, and understand when to make changes to the operation.

Therefore, we must be both more flexible and forward-looking than previous generations have needed to be.

Creativity

I also think ranchers will need to be more creative in the future. We can no longer afford to do things a certain way, just because we have always done things a certain way. While the status quo may be our best alternative, ranchers need to run all of their major decisions and operations through some sort of test to see if any improvements can be made.

Further, ranches will need to find new ways to succeed.

I think diversification in the extreme may be required from many operations if they are to continue to support a family. I’m not sure that an operation will be profitable enough to support the same number of people it has in the past unless new revenue streams are added.

I’m not sure how much further we can push the low-cost and/or increased production efficiency agendas. In fact, I think we need to stop selling low-cost commodities and start selling high-value products. However, this requires a new way of thinking and will likely require a lot of time and effort to make it work.

Connectivity

I also think ranchers are going to need to be more connected. While I understand pretty much every rancher knows everyone else within a 50- or 100-mile radius, I am talking about being connected in a global sense. Again, many ranchers I talk to say they ranch, in part, because they tend to like cows more than people, but to have a thriving ranch in the future, I see the need to reach out to people and businesses that work to stimulate demand for your product and industry.

Most young people these days have smart phones in their pockets. Instead of using apps that connect them to their friends more easily on the weekend, I think ranchers need to use these tools for market research and networking. Instead of selling calves at the sale barn, why not find people farther down the supply chain that have found a successful business plan that markets diverse products at a premium? If you can find a way to easily meet their standards, you can create a win-win situation by selling them an input that meets their needs while getting a premium in the process.

I think we will start to see a lot more of this integration as labels such as the Sustainable Beef label backed by Wal-Mart and McDonalds start to take hold. Again, those ranches that succeed will be able to stand up and promote themselves. Rather then get upset or defensive when someone challenges our practices or tries to promote a term like sustainable, those ranchers who can stand up and say, “I believe in sustainability, too. In fact I have exactly the product you want right here,” will undoubtedly fare better into the future.

Ranchers who are able to turn threats into opportunities will be in a better position moving forward.

I really do think the future of ranching is bright. However, it will take innovative, business-minded ranchers to fully take advantage of the opportunities that arise.

Too often, out industry gets stuck in a rut or gets defensive when faced with challenges. My advice to young ranchers is to fully embrace change and be willing to take some chances. If you have the business acumen required to analyze these opportunities, you should be able to find ways to make your ranch a better place.

However, the one thing all of my points have in common is that, in my view, successful ranchers are going to be spending more and more time and energy on activities that look a lot less like what ranchers did 100 years ago. To own and operate a ranch, I really believe you will pay people to tend to animals and plants so you can focus on running your business.

Let someone else worry about pulling calves. You need to be deciding how to respond to any change in Japan’s demand for beef, the next La Niña cycle and how to get your product into the Trader Joe’s in Fort Collins.