Flint Hills ranch finds selling service pays better than production

by Allan Nation

BEAUMONT, Kansas: The Flint Hills in eastern Kansas are one of North America's few remaining tall grass prairie ranges. Thanks to a very shallow soil over limestone rock, most of the region has never been plowed.

Looking much as it did 100 years ago, the Flint Hills are thick with warm-season natives such as Big bluestem, Little bluestem, Indiangrass and Switch grass. Annual rainfall is 30 to 35 inches.

These high calcium soils and the native grasses they grew have long had a reputation for putting excellent gains on yearling cattle in the late spring to mid-summer time period.

In the post-Civil War era, two-year-old steers were trailed up from Texas in the spring and allowed to fatten here before loading onto rail cars for the trip to Chicago.

The Flint Hills continued to be a grass fattening stop for Texas cattle heading for the high dollar Chicago market until the mid 1950s.

Pete Ferrell said his family operated their 7000-acre Flint Hills ranch as a seasonal fattening ranch from the 1880s until the late 1940s. In the post World War II era, he said the availability of cheap cottonseed cake and the rise of feedlots turned many in the Flint Hills from seasonal custom grazing to owned cow-calf production. He said his family was one of these.

Today, Ferrell has taken the ranch back to its original roots as a custom grazing business.

"We're no longer in the cattle business. We're in the grass business," Ferrell said.

"We are no longer in the production business. We are in the service business."

The ranch today is 7000 acres of deeded ground with an additional 5000 acres of leased ground. Ferrell said the ranch will only expand in the future with leased land.

In 1992, the ranch ran 200 owned mother cows. In 2002, it ran 3,000 cow equivalents.

Ferrell said the ranch gave up on cattle ownership in 1992 and started custom grazing for others. He said this was a difficult decision for him because he dearly loved beef cows.

"I had to learn the hard way that the only pretty cow is one that will also look good for you on paper."

Ferrell said the shift to custom grazing was just one of the changes he made. Some others were:

* Stopped making hay.

* Stopped using frequent fire.

* Stopped using set stocking.

All of the above are traditional Flint Hills production practices.

The other big change was stopping checkbook accounting and going to a sophisticated accounting system in conjunction with future focused financial planning.

"We now know exactly what are costs are and charge accordingly. Because we no longer have the risk of livestock ownership, we are a pure service company and services typically have a higher return."

He said the ranch has learned the value of private consultants and is willing to pay for and listen to good outside advice. He said Dick Diven and Ranching for Profit have been particularly valuable. Perhaps the biggest profit improver was adopting Stan Parson's productivity standard of "One full-time labor equivalent per 1000-head grazed."

He said the ranch has three full-time employees for its 3000-cow equivalents. He said such labor productivity was possible because of the ending of hay making and stopping the practice of calving out heifers for others.

"Today, we only take in cows four years of age or older," he said. "We don't have time to be calving heifers."

COWS MORE PROFITABLE THAN YEARLINGS

While the ranch will graze either yearlings or cows for clients, Ferrrell said they find the cows to be more profitable.

"The stocker market is very fickle. Demand expands and contracts based upon the price of grain in the feedlots and you can't count on a client being there every year.

"The cow market is much more stable. Most people are in the cow business for the long haul."

Ferrell said yearlings are charged $12.50 per hundred pounds of incoming weight rather than on outgoing weight.

Cow-calf pairs are charged $150 for a May to November six month graze. The fee includes grass, water and care. This price is considerably less than upper Midwest prices.

All out-of-pocket expenses (such as animal health charges) are charged to the client as they occur. Ferrell said they encourage that all cattle be vaccinated for Pasturella due to the region's sizzling summers.

To prevent squabbling over whose bulls are to be used for breeding, the ranch advertises its grass in 1500-acre blocks.

"It's up the client to fill the block," Ferrel said.

"If he can't fill it with his own cows, it's up to him to find the additional cows and work out the details concerning the bulls."

Ferrell said that while he would prefer to work with as few cattle owners as possible he admitted there is some income safety in diversity.

He said his biggest cow client decided to cash in his herd on the high cattle prices in 2001 and he had to scramble to replace him.

He said most of the cows he grazes during the summer and fall go to crop residues in the Midwest for the winter. Many of the cow owners are crop farmers who own no permanent pasture but who want to own cows to utilize their corn stalks.

ALL TEMPORARY FENCE

Currently, the ranch's cattle are grazed in herds of 500 head. This particular herd size is due to stockwater limitations.

All stockwater is from tanks gravity fed from rainfed upland ponds.

"We are gradually rebuilding our stockwater tanks so they could handle 1000-head herds but that will take awhile," he said.

The ranch has no permanent grazing cells and all interior fence is temporary. All incoming cattle are trained to electric fence before going to the range.

The interior fencing is built with temporary polywire and step-in fiberglass posts. Ferrell said his day herders can build a mile of such minimalist fence in an hour.

Paddocks are typically 50 to 80 acres in size for a 500-head herd. Only the front fence is electrified and solar powered fence chargers are used exclusively.

The cattle are always shifted in the morning and cattle are never moved any faster than a slow walk at any time to prevent stress.

Operations manager, Tom Hamm, said he was initially attracted to the ranch because it didn't have any machinery and didn't make hay. He said working on a pure grass and cattle ranch was a lot of fun.

"We don't want any technology on this ranch that can't be fixed with a pair of pliers," Ferrell said. "We believe simplicity is the key to profitability."

Ferrell said they have found the native warm-season grasses respond well to high stock densities and an occasional good pugging. However, to prevent long-term sward damage the paddocks are never built in exactly the same place two years in a row.

During the growing season the cows are rotated to fresh grass every three to six days. "We let the day herders decide when to move the cattle," Ferrell said.

"We take the grass shorter in the spring but leave the residual longer with each rotation in the fall."

He said giving the native perennials adequate rest in the fall prior to frost was critical in maintaining sward health and vigor. The fence line contrast between the Ferrell Ranch and its set-stocked and burned neighbor is dramatic.

He said the herders use a rest period of 45 days on the first rotation and 90 days on the second. After the first of September, a residual of at least six inches is left after each grazing.

The ranch has a drought clause in its grazing contract that allows Ferrell to either short-wean the calves if necessary or ship cows.

"We stock every spring as if it is going to rain. Our critical date is the Fourth of July. If it hasn't rained by then we start destocking."

This winter a contract herd of 450 cows will be winter-grazed on these grass residuals for the first time.

"Warm-season natives go completely dormant in the winter so it is safe to take the grass right in the ground and utilize it fully," Ferrell said. "Most people around here just burn these residuals off in the early spring."

While he does occasionally use fire for cedar control, he does not burn on a routine basis. "With fire, carbon that should be going into your soil with the manure goes off in the air as smoke."

SELF SUPERVISING EMPLOYEES

Ferrell said he knew a lot of ranchers were afraid of seasonal grazing programs because of the necessity to over-winter cowboys who are generating little income.

"We see winters as a time of rest and learning for the staff. We encourage them to go to schools and conferences in the winter. I think having a down season is an important part of keeping staff productivity high."

Every employee is given every other weekend off and a two week paid vacation as well.

"We want our employees to have a home life as well as a ranch life."

He said that all employees are cross-trained to do multiple tasks. He said it was absolutely necessary to have motivated "self-supervising" employees for optimum productivity.

Ferrell said that while his ranch is now both productive and profitable, it got there through 22 years of making mistakes and learning from them.

"You have to realize that even when you don't get what you want, you're getting experience."

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