Dennis: Algorithms. You have to find the right algorithm. I had an accounting professor that claimed that management principles remained the same, they only changed the jargon. I saw an ad for Accenture (formerly Anderson Consulting) touting their algorithm expertise. Agriculture, farming and ranching are perfect algorithm subjects. (Unit of Production) (Land) divided by the (Stocking Rate) times percentage marketability times average (sales price) less (Unit Cost of Production) = (Gross Profit)

 

Our Texas Panhandle neighbor across county road 'H' ran 3000 head of stockers on 7000 acres he inherited. The stocking rate was 1 cow for 25 acres. He grained them to accommodate the difference between 25,000 acres of land required to pasture raise 1,000 animal units or 3 stockers equals one head of cattle. The stocking rate in Pecos, TX. - you can see New Mexico from there - is somewhere between 75 and 200 acres per 1,000 lb animal unit, 1 cow or six goats or six lambs. In 1500 the grass was horse belly high but the cattle, sheep and goat herders left behind by Coronado overgrazed the living daylights out of the land. The grass never returned so if you want to raise livestock in West Texas and New Mexico you need one heck-of-a-lot of land.

Sheep and cattle are grazing competitors but your cattle ranchers could add six more goats for every existing animal unit because goats are browsers interested in fibrous plant material. Additional benefit is a 20% improvement in the pasture each year for the first three years. After three years the sage brush is not coming back. Two hundred dollars per acre was the cheapest per acre cost in the Panhandle. Six goats per 200 acre animal unit yields 33.3 acres per goat = $6,666 in land investment for each nanny goat. A 200 acre stocking rate at $200/acre really hurts when you had to spend $40,000 just to graze one single head of cattle. Why didn't the Spaniards screw-up Argentina like they did west Texas? Even at 25 acres/AU (there are grazing studies in New Mexico ranging from 33 to 45 acres/AU) you need to spend $5,000 on land for the cow and $833 for each goat. True Rusty our neighbor leased 400 of our 700 acres at $7/acre/yr. The in-laws would have loved to have had the whole thing in CRP at $40/acre but the Federal Conservation Program was dropped in our area.

The cattleman's algorithm goes something like this: you buy a 300lb 'stocker calf' at $1.00/lb put 500lbs on him and sell him to the feeder lot for a $500 gross profit. Renting 25 acres for $175 brings the gross down to $325 x 3,000 head leaves $975,000 of walking around money. To make up for those missing 18,000 acres of pasture Rusty bought 18 wheeler loads of grain and mixed his own feed for five cents a pound. Cattle can eat 30lbs a day my goats consume 3 to five pounds a day. Rusty's stockers got 10lbs from the grass and 20lbs from the grain and their 100 day stay cost Rusty another $100/head = $225 x 3,000 = $675,000. If Rusty could rent 25,000 acres for $7/acre = $175,000 divided by 3,000 stockers cuts his feed bill to $58/head but it is impossible to rent that much contiguous acreage. After you add a couple of $15,000/yr ranch hands, a fleet of trucks, tractors, trailers their gas and maintenance. After the mortgage, vet bills, your busted ribs bill there is an 60% chance you are going to lose money, 20% chance of breaking even and only a 20% chance of making an economic profit.

NPR had a report on feedlots, where over the past 20 years $3 of profit for ever $1,000 animal was the average or three tenths of a percent return. Accounts at failed savings and loans do better. Robert, the PCA (Production Credit Association) loan officer in Canadian, TX says their expectation is a $35/head profit if the cowboy is good. So, if I ran my meat goats with Rusty's 'stockers' the cost of land would be cut in half, the grass would grow, the stocking rate would drop to 12.8 acres/AU in three years and you could sell the offspring of 1,680 nannies ( 6 nannies/25 acre ) for $238 each or $399,840 (see VSU Proforma). 3,000 head at $35/head because Rusty is good, he can add $105,000 to the total for his stocker operation. So, why doesn't everybody run out and do this goat thing? The per pound price for goats has gone up every year since we started in 1998 from 80 cents to $1.40 a pound. Sheep also bring $1.35/lb up from a buck a pound. That's a good question.

The rancher knows the cattle algorithm. There are 100 million head of cattle. There are six million sheep. There are two million goats. The only time the American farmer made money was between the end of the Civil War and WWI. Adam Smith, in "The Wealth of Nations" states that the exchange of the produce of the farmer and his local community determines the quality of the nations' economy. Since the 1910 our government has interfered with every aspect of our economy but began with agriculture.  Since 1910 we have created a transportation system that enables the Liberal Kansas hog producer to purchase corn from Illinois ten cents a bushel cheaper than from the Liberal corn farmer. Since 1910, with government subsidized irrigation and corn prices, we have created feedlot beef as the standard. Grass fed beef comes from Argentina or from differentiated suppliers to Whole Foods. Our diet has been subsidized to death. Americans don't eat sheep and goat. Pigs, chicks and cattle are 100%, 100% and at least 40% grain (GM corn and GM milo) fed while sheep and goats are 100% natural. But Americans don't eat sheep and goats.

Somebody is eating them because the price keeps going up. I have to take back $93 of that $238 for the nanny goat's offspring to pay for her annual upkeep. Still $145 net per nanny times six is an AU worth having, especially since you can keep that old $35/yr cow clunker. When will New Mexico cattle ranchers start adding goats? Soon. 4-H started in Mississippi and Alabama as Corn Clubs. The Ag extension agents talked the ole' man into giving his kid an acre to plant in corn while he stayed with the tried and true cotton algorithm. When the kid sold the corn for five times as much as the farmer got for his cotton, everybody started growing corn. The government is turning the tobacco subsidy into goat grants. Texas tried raising Emu's which nobody on the face of the earth ate. Texas had 80% of the goats in America and the Palestinians ate them all. Texas has had a declining goat population for the last two years. The Texas farmer/rancher will demonstrate how you can make almost four times as much money from the same amount of land by raising goats and cattle. Soon. 

Why we went with dairy. No land, no money and a niche market that is created by the governments own idiotic regulations. I don't know the rules in New Mexico but in Texas we get to eat cake. My unit of production, the dairy goat nanny, produces the same $150 worth of offspring but throws in an additional 300 gallons of milk. At ten dollars a gallon my nanny brings home $3,150 a year and costs only $500/yr to keep. I can match Rusty's - and he is good - $105,000 take home pay with only 40 goats. I could do this in Santa Fe, New Mexico, even Albuquerque but it has to be close to an urban area. All this is possible simply because Teddy Roosevelt said all the milk sold in stores had to be pasteurized. $3,000 for just the milk. Back in 1910 greater profit came from the cheese. Same story as the milk. You can not purchase raw cheese, butter, or yogurt. I'm planning on taking my goat milk money and subleasing Rusty's 7,000 acres to have him run my 18,000 meat goat nannies. Dennis, thanks for asking, you got me all fired up here. TEG@analagoatcompany.com