Mastering the Basics
Box 1-2. Priorities for Profit in a Livestock Operation If you are engaged in livestock production, it’s important That’s the best we can do under conventional to understand the relationship between the number livestock management. Because the belief was that of animals you run on the land (stocking rate) and reducing livestock numbers would improve the land profitability. Due to the belief that overgrazing was a and increase forage production, improving animal result of overstocking, ranchers have long looked to performance has become the highest priority. Vast sums individual animal performance (conception rates, weight have been spent on techniques and practices to improve gains, etc.) for profit—to their detriment. Now that animal performance. However, the money ranchers we address overgrazing by planning grazing time, the spend on better breeds, supplements and feed, and other picture changes dramatically and so do the priorities practices, is considered a variable cost. As these variable for profit. For a cow-calf producer, for example, the costs have risen, profitability has generally kept falling following is now the actual order of priority for profit: because stocking rates have continued to fall. The land has continued to deteriorate as plants are still being 1. Stocking rate overgrazed and soils and plants overrested. 2. Conception and calving rates When ranchers learn to improve their land’s 3. Weight gains productivity by keeping their animals bunched and Higher conception/calving rates and weight gains cannot moving under Holistic Planned Grazing, the picture compare with simply increasing stocking rate, as the changes dramatically. More animals are needed, not graph shows dramatically. fewer. When we increase the stocking rate to point Generally, the fixed or overhead costs are the C—a doubling of animal numbers to the benefit of the highest costs, and they exist whether you run one land—profit increases substantially. While the variable animal or a thousand. Fixed costs would include the costs increase greatly with a doubling of animal numbers, money tied up in the value of the land, salaries, the the fixed costs don’t change. Income keeps rising and so buildings, vehicles, fencing, and other developments. does profit. In practice, the effect can be even greater Then come the variable costs, which increase as the than shown in the graph because the variable costs number of animals increases. Variable costs would can also drop proportionately as the quality of feed on include labor, supplements and feed, veterinary and regenerating soils improves. marketing costs, and so on. At Point A the rancher would have no livestock and no income from animals, but $ would have the ranch and its costs. He or she would then “fully stock” the ranch—based me Profit Inco on past thinking that linked numbers to overgrazing—to Variable Costs point B, and both the income (dotted line) and variable costs would increase. The income Overhead (Fixed Costs) from livestock would rise considerably, but the profit (income minus fixed + variable B C A Stocking Rate Stocking Rate x 2 costs) is only moderate. Conventional Holistic Planned Grazing
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