Fall 2016 KRIRM Newsletter

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FEATURES

Published by the KING RANCH ® INSTITUTE FOR RANCH MANAGEMENT

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Wagon Tracks

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A Legacy of Dedication

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A New Journey Begins

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“Making the Future Cowherd More Profitable”

By Dr. Clay Mathis Bob Kilmer’s 40-year commitment to Matador Cattle Company and the ranching industry

By Ashley Patterson Three new students join the ranks of the KRIRM master’s in ranch management program

By Ashley Patterson

Practical Stockmanship in Ranching

The 2016 symposium to feature top cattle handling experts and a live cattle handling demonstration

Cover Art “Riding Out to Meet the Day”

By Tim Cox www.timcox.com

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Texas A&M University-Kingsville 700 University Blvd., MSC 137 Kingsville, TX 78363 361-593-5401 361-593-5404 fax krirm@tamuk.edu http://krirm.tamuk.edu Clay P. Mathis, Ph.D., Robert J. Kleberg, Jr. & Helen C. Kleberg Endowed Director Ashley Patterson, Editor

MANAGEMENT COUNCIL Chair: James H. Clement, Jr., King Ranch, Inc. Caroline Alexander Forgason, Robert J. Kleberg, Jr. & Helen C. Kleberg Foundation Gus T. Canales, A.T. Canales Ranches Dave DeLaney, King Ranch, Inc. Bob McCan, McFaddin Enterprises Eric Jacobsen, AgReserves, Inc. Neal Wilkins, Ph.D., East Wildlife Foundation John Welch, Welch Cattle Company Fred Bryant, Ph.D., Caesar Kleberg Wildlife Research Institute Allen Rasmussen, Ph.D., Texas A&M University-Kingsville

“Making the Future Cowherd More Profitable” From the Director, Dr. Clay Mathis The future of the beef industry is encouraging. Recent years have yielded exceptional prices that have allowed unprecedented profits, especially for the cow-calf sector of the beef supply chain. At the same time, great advancements in production and genetic technologies have improved the production potential of cow-calf enterprises. The future holds expectations for continued global population growth and rising demand for protein.

There are also challenges ahead, but they are not all new.

A growing population with evolving social norms and interests in agriculture, increasing costs of production, labor challenges, and an uncontrollable pattern of precipitation topped the list of concerns for beef producers 20 years ago, and still do today. Even though the prevalence and magnitude of external factors affecting the beef industry will remain largely unpredictable, there are enough trends to speculate where cow-calf managers should focus their efforts to maintain or improve efficiency and profitability in the decades ahead.

Looking Back. Revenues and expenses for beef producers have changed greatly over the past few decades.

According to CattleFax, weekly 550-pound calf price from 1988 to 1995 averaged $90/cwt and increased to $165/cwt from 2008 to 2015 – an 88% increase.

However, when adjusted for inflation the difference is only 18%. The revenue portion of the profit equation is primarily a function of weaning rate and weights, calf price, and cull cow value, whereas the expense component is much more complicated. Producers recognize that more than half of the expenses for a cow-calf enterprise can be categorized as depreciation, labor or feed. In general, business expenses are influenced by broader economic factors like minimum wage, and the costs of energy, grains, and land. These external factors have changed over time, and in some cases the change was dramatic.

Figure 1 illustrates the relative change in corn, oil, land value and minimum wage over the past 20 years. Each of these is important because they strongly influence major

cost categories in a cow-calf enterprise. The magnitude of inflation adjusted increase in oil and land values is remarkable, 284% and 134%, respectively. So remarkable the more moderate increases of 9% for labor and 24% for feed appear less significant. However, when considering the proportional contribution of feed and labor to the total cow-calf budget these smaller increases may be equally impactful.

Looking Forward. Understanding the changes that have occurred over the past 20 years provides context for identifying where producers should focus their efforts to ensure profitability in the future. The historic data should be viewed holistically in that future efficiencies and profits will not be mutually exclusive efforts to controlling costs and increasing revenues. Instead, success will come from optimizing expenses and performance by building a production system to yield the lowest unit cost of production for the most valuable calf possible in the operational environment. Excellent genetics exist, and there is opportunity to better utilize advanced genetics across most of the commercial cowherd in the U.S. However, there is greater opportunity for improving efficiency and profit for most operations through management.

If the historical trends in prices and inflation over the past 20 years continue for the next two decades, a future scenario can be created with prices of oil, corn, ag land and minimum wage in today’s dollars that approximate $307/barrel, $5.77/bushel, $6,786/acre, and $7.90/hour, respectively, in 2036. It is difficult to speculate these trends over 20 years, and seems likely this extrapolated

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A scenic view of cattle on the Matador Ranch in west Texas.

Bob Kilmer’s 40-year commitment to Matador Cattle Company and the ranching industry

By Ashley Patterson

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vital component of a successful ranch is understanding consumer needs and expectations, embracing change, and ensuring that the operation meets those consumer demands. This is exactly what Bob Kilmer, ranch manager of Matador Ranch, strives for every day.

A Matador Way of Life

Nearly 95 miles east of Lubbock, Texas, lies the small town of Matador, recording a population of 605 in 2013. This town is home to the legendary 130,000-acre Matador Ranch, which the town was named after. The sprawling ranch is part of Matador Cattle Company that operates three ranches spanning 460,000 acres and 12,000 cattle in Montana, Kansas and Texas. The company is committed to raising the highest quality beef, raising the standard through its beef quality assurance certification. This commitment runs deep with each ranch and within each manager.

As a native of eastern New Mexico, Kilmer’s affinity for land and livestock started at a young age, leading him to pursue a career in agriculture. This passion led him to study animal science at New Mexico State University where he graduated in 1976 with a bachelor’s degree. Upon graduation, he immediately began work as a farm hand with the company he would call home for nearly 40 years. While those years of employment took Kilmer to Montana as the bookkeeper for the Beaverhead Ranch, to the corporate offices in Wichita, 4 I Fall 2016 I KRIRM

Kan., and to the feed yard in Lubbock, his service and dedication to Matador Cattle Company remained constant.

He began the position of ranch manager of Matador Ranch in 1998, one that he continues to hold today.

Matador Ranch is a cow-calf operation made up of a breeding herd of black baldie Hereford/Angus cows with a portion of those cows bred back to Charolais bulls as a terminal cross. The bulk of the cow herd calves in the fall, and Kilmer explained when the market presents an opportunity, the ranch retains a portion of its calf crop or purchases stocker cattle. Those cattle are turned out on native pasture through the winter months then gathered in April and placed on an intensive grazing system that utilizes an introduced grass known as WW Spargrass. The cattle graze in this system until mid-August at which time they are marketed.

The Key to Success

A unique component of the company is the Market Based Management® (MBM®) principles that each ranch applies to their operations. The use of this tool is what Kilmer believes is the key to the success of the company. Simply put, MBM® drives all of the business decisions, Kilmer explained. It is the business philosophy and framework that the Matador Cattle Company applies to innovate and improve in order to create greater value. Every decision involving economics, production, and even employee development is based on

MBM®. Developed by Charles Koch, MBM® has been refined and redefined over the years to where it is today, Kilmer said. Operating the business on a day-to-day basis within the parameters of MBM® allows greater collaboration and innovation among the managers and employees.

“We are expected and allowed to operate the ranches as if we were the owners,” said Kilmer. “Obviously there are authorities we stay within….on big decisions, we frame them up and discuss them with management before we embark on that kind of change.”

Within MBM®, one of the 10 guiding principles discusses creative destruction, which reinforces the importance of being attuned to your customers’ changing desires, anticipating them, and building the capacity to satisfy them when you’re able to do so.

“Within Matador Cattle Company, the use and acceptance of Creative Destruction is imperative to meeting customers’ needs and the long-term sustainability of the ranch,” said Kilmer. “The same should and does apply to the industry as a whole. Customer expectations change, so as an industry, we too must change to meet those needs.”

Looking back on ranch history, Kilmer explains that most of the decisions and operations of the ranch were right, but consumer demands and needs changed along the way, forcing the ranch to change in order to meet those demands. Kilmer notes that they weren’t necessarily wrong in the past, only that change is inevitable and must be embraced.

Sharing the Knowledge

Matador Cattle Company also urges the ranches and employees to “…seek and use the best knowledge, and proactively share that knowledge while embracing a challenge process,” said Kilmer. This encouragement is also part of the guiding principles of the company. While Kilmer said the ranch constantly seeks knowledge from neighbors, industry affiliates and universities, the ranch returns the favor to the industry.

“We believe it is only right that we share back with the industry to help others and share our management philosophy that helps us succeed and grow,” he said.

This knowledge was shared with the King Ranch® Institute for Ranch Management (KRIRM) on several occasions—Kilmer was a speaker at the 2011 Holt Cat® Symposium on Excellence in Ranch Management that discussed the business management of hunting enterprises. Bob Kilmer, an employee of Matador Cattle Company for 40 years, serves as ranch He and other manager of Matador Ranch in west Texas.

Matador Ranch employees also collaborated with a KRIRM graduate student, Jen Livsey (Johnson), on a master’s thesis project. This employee management project surveyed ranch managers and almost 200 ranch employees working at 15 of the largest ranches in the United States.

“Speaking with Jen really opened my eyes to the fact that there are organizations in our industry that are trying to help ranchers, farmers and industry affiliates improve in various ways,” said Kilmer.

A Blessed Life and Career

Through everything, Kilmer said he feels blessed to work for Matador Cattle Company because he appreciates the use of MBM® and how it allows him and his fellow employees to act like ranch owners.

“We have three of some of the most productive ranches in the United States to call home, and to have this entrusted to our care is humbling,” he said.

And, as any rancher would say, the family-oriented business of ranching is worth it all. Kilmer feels fortunate that he was able to involve his family in the business, one that allowed many learning opportunities and chances to teach work ethic.

Integrity and doing the right thing motivates Kilmer and the ranches within Matador Cattle Company. Those principles and others are sure to lead the continued success of the company.

Quarter horse mares and colts from Matador Ranch’s broodmare band.

Matador Ranch is one of three ranches that make up Matador Cattle Company.

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Three new students join the ranks of the KRIRM master’s in ranch management program

By Ashley Patterson

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o matter their education, no matter their agricultural background, King Ranch® Institute for Ranch Management (KRIRM) graduate students have one common goal—to further their ranch management career by attending the only master’s program in ranch management in the world. This August, the institute welcomed three new students who joined the ranks in pursuit of that shared vision.

Justin Staley

Justin Staley originally hails from South Central Idaho where he grew up learning about the rewards and value of hard work. Staley experienced the agricultural life alongside his parents and siblings on the family’s small farm. During his childhood, Staley learned firsthand the importance of work in the areas of livestock production and also equipment operations through his family’s construction company.

The foundation of a ranch life for Staley was laid early in life while working on ranches. A summer spent on the Bell A Ranch in Burns, Ore., was instrumental in giving him a taste for several of the Great Basin traditions. After completing a church mission for two years after high school, he returned to Idaho to study at the College of Southern Idaho in Twin Falls. He furthered his ranching and cowboy skills during the summer months working for a family ranch close to home.

Realizing the need for education, and taking advice from his father on the importance of earning a college degree, Staley transferred to Brigham Young University-Idaho to complete his bachelor’s degree.

“I pursued an education in agriculture because I grew up in agriculture, I enjoyed ranching and working with horses, 6 I Fall 2016 I KRIRM

cattle and dogs,” said Staley.

While he was completing his bachelor’s degree in ag business with a minor in animal science, a visit to Deseret Cattle and Citrus in Florida Justin Staley on horseback in Sheridan, Wyo. helped him land an internship with the legendary ranch in the winter of 2009.

More than a year later, Deseret Ranches offered him a fulltime position at the Handcart Ranch and later, Sheridan Ranches of Wyoming. His most recent employment with Deseret was in Utah with Deseret Land and Livestock as a cattle foreman for the past two years.

Staley described his time with Deseret as a time of growth and opportunity, giving him experiences overseeing employees, working with commercial and seedstock cattle, as well as range and irrigated land. Staley has been a direct benefactor of Deseret’s commitment to growing their employees through training and exposure.

Staley’s own commitment to growth is evident in his pursuit of higher education. He is confident that the program will prepare him to manage people and ranches, and he hopes to lead a management team on or near a Great Basin ranching operation upon graduation. Staley and his wife, Crystal, have three children, Ezra, Atlee and Kade.

Candace Weeda

From childhood, to international studies, to a position with the National Cattlemen’s Beef Association (NCBA), Candace Weeda grew to learn her place is in the beef business. Growing up on a diversified crop and commercial cattle operation near Creston, Iowa, Weeda developed a love for livestock and the beef industry, saying agriculture has been her family’s way of life for generations. This rural upbringing ultimately led her to pursue an agricultural education at Kansas State University where she graduated in 2012 with a dual bachelor’s degree in agricultural economics and agricultural communications and journalism.

After studying agriculture in Australia and Ireland, Weeda took the opportunity to work for NCBA in 2013 as the associate director of communications. She told the story of cattlemen and women by producing NCBA’s Cattlemen to Cattlemen television show. As Weeda worked with ranchers across the country she was exposed to many facets of the industry including complex policy issues, international market opportunities, consumer concerns about beef production and more. She earned another chance to study agricultural systems abroad in New Zealand after she was awarded the 2015 Alltech International Federation of Ag Journalists scholarship.

“I have learned so much outside of our borders about food production and how the United States competes in a global market,” said Weeda. “Traveling to Australia, New Zealand and Ireland exposed me to new ways to think about ranching here at home. I also have a much better understanding of what global consumers want in their beef and how U.S. beef producers can meet those needs.”

Weeda felt called to return to her ranching roots in early 2016, and she moved home to the family commercial cowcalf operation in southwest Iowa. However, her pursuit of lifelong learning did not subside. Her travels and exposure to various segments of the beef industry cultivated Weeda’s desire to seek higher education.

“My desire to come to Kingsville to pursue this master’s degree stems from the excellent reputation KRIRM has throughout the beef industry,” explained Weeda. “The leadership development and personal growth offered at KRIRM is what I look forward to the most. In all of us there

Weeda (middle) on-site during a filming of NCBA’s Cattlemen to Cattlemen.

is always room for self-improvement, so I am very eager to dive into the leadership curriculum.”

Hank Willemsma

Honesty, hard work, and a positive attitude is what drives Hank Willemsma to face challenges. Coming to the KRIRM program from Tiemann Land and Cattle in Pflugerville, Texas, Willemsma managed the stocker yearling and cowcalf operation in central Texas since October of 2012. In this position, he also managed the cowboy crew, developed animal health protocols in coordination with a consulting veterinarian, oversaw equipment maintenance, and monitored nutrition and shipping arrangements.

Originally from Las Cruces, N.M., Willemsma has spent his life on the ranch, starting from the ground up as seasonal labor for various operations including Padlock Ranch and Swenson Land and Cattle. As Willemsma gained experience and skill, he started Oxbow Land and Livestock in Marlin, Texas, in 2013 while managing Tiemann Land and Cattle.

Along with his wife Winona, they raise commercial cattle and Blue Valentine ranch horses.

“I have been very fortunate to work in many different kinds of ranching situations from feedlots to small familyowned cow-calf operations to half million-acre cattle ranches,” said Willemsma.

Willemsma’s educational career took him to New Mexico State University where he earned a bachelor’s in animal science with a minor in agri-business. After graduation and employment in the industry, Willemsma soon realized his passion to become a ranch manager.

“I love ranching and the cattle industry, and decided that I wanted to make a career as a ranch manager,” he explained.

During his first management position, he quickly knew that he wanted to be part of the decision making process on a ranch, in hopes to influence the direction of a ranch and make positive impacts on people and the environment.

He believes his experiences as owner of Oxbow Land and Livestock, and his work addressing concerns and striving to achieve productive solutions for Tiemann Land and Cattle will help him succeed in the KRIRM master’s program.

Willemsma (left) pictured in Marlin, Texas, at Oxbow Land and Livestock.

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The 13th Annual Holt CatÂŽ Symposium on Excellence in Ranch Management to feature top cattle handling experts and a live cattle handling demonstration at King Ranch

Photo by Jesse Mae Dalton 8 I Fall 2016 I KRIRM

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ractical stockmanship on the ranch continues to be a valuable and necessary practice, important to the rancher, the industry as a whole and the beef consumer.

The King Ranch® Institute for Ranch Management (KRIRM) will host a symposium on “Practical Stockmanship in Ranching” Oct. 20-21, 2016, in Kingsville, Texas.

The 13th Annual Holt Cat® Symposium on Excellence in Ranch Management will feature top cattle handling experts from across the country, including professionals with the National Cattlemen’s Beef Association (NCBA), Texas A&M AgriLife Extension and board certified veterinarians. These speakers will offer their expertise on cattle handling topics that go beyond the basic principles and practices.

“Cattle handling and stewardship has always been a high priority for managers in our industry,” said Clay Mathis, KRIRM director. “Today, more than ever before, how we handle cattle matters.”

Practical, low-stress stewardship is important not only because it can improve performance and health of livestock, but also consumers of beef are interested in the welfare of the animals they eat. A keynote address, presented by Shawn Darcy of NCBA, will discuss consumer perceptions on production practices and animal welfare. Darcy will illuminate what consumers are saying about the industry and how cattle are handled.

Equally important, producers that have made strides to

improve cattle handling have great testimonials of success and cost-effective change. Two presentations during symposium will include these producer stories on implementing change in cattle handling. Additional topics will include the impacts of stress and handling on cattle performance; best management practices for castrating, dehorning, and euthanizing; cowboy safety and worker’s compensation; cattle handling facilities large and small; and more.

The symposium will conclude with a low stress cattle handling demonstration at the King Ranch arena. This demonstration will be led by Dr. Ron Gill and Curt Pate.

They will demonstrate reading cattle behavior, teaching cattle to respond, and low-stress handling on horseback and foot.

“Learning from the premier cattle handling experts in the industry will make a great educational experience for cattlemen,” said Mathis.

Transportation to the arena will be provided by KRIRM. Registration for symposium is $150, which includes workbook materials, equipment, refreshments and meals. A tradeshow of more than 25 industry vendors will be open during the entire symposium. For more information, to register, or to download the agenda, visit krirm.tamuk.edu/ symposium or call 361-593-5401. A brief overview of the agenda can be found on page 11.

Para todas las presentaciones y demostraciones habrá traducción simultánea al Español.

The annual symposium draws a crowd of more than 225 ranchers and land owners from across the country, representing more than 2.5 million acres of ranchland and 150,000 head of beef cattle.

Cattle handling experts Ron Gill, Ph.D. (above) and Curt Pate will lead the live cattle handling demonstration at the King Ranch arena on Friday, October 21.

Photos by Ross Hecox.

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Commit to Lifelong Learning

Upcoming Events September 23-24, 2016

B.K. “Kley� Johnson Lectureship on Current Ranching Issues: Human Resource Management

scenario overestimates oil, and underestimates corn and labor especially. Nevertheless, these values are concerning.

Producers should ask themselves if their current cowcalf production system can remain financially successful in such a price environment. Using the same approach to extrapolate the 18% inflation adjusted increased calf prices from the past 20 years equates more recent $175/ cwt calf prices to $206/cwt in 2036. Global population growth will increase food demand and beef price; however, the same influence will elevate the cost of grains and energy.

Focusing Efforts for the Biggest Impact. Individual producers will not be able to control commodity prices, the price of grazing land, or the competitive rate of compensation for adequately skilled labor. As world population grows, demand for food and energy will increase as well, elevating both revenues and expenses.

Considering the proportional changes in calf prices and expense category indicators over the past 20 years, cow-calf producers should prepare for these trends to be somewhat similar in the future. There is no silver bullet to success, but producers interested in making improvements will likely refine their production system with a focus on labor optimization, purchased feed, and depreciation to minimize unit cost of production.

The overarching philosophy of management will be of paramount importance to success in the years ahead.

The interconnectedness of a cow-calf enterprise to other agriculture and nonagricultural enterprises and activities on ranches will be inescapable. As production systems are adapted to the changing business and social pressures, a focus on habitat, wildlife, and societal views on production methods will be warranted.

Figure 1. Inflation adjusted 20-year relative price change in corn, oil, ag land, and minimum wage

October 20-21, 2016

13 Annual Holt CatÂŽ Symposium on Excellence in Ranch Management

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Visit krirm.tamuk.edu, or follow us on Facebook and Twitter to learn more about our upcoming events and program.

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% Price Increase

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Oil Ag Land Corn

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Thursday, October 20

Friday, October 21

Trade Show open from 11:00 AM to 5:30 PM 11:00 am REGISTRATION 1:00 pm WELCOME/INTRODUCTIONS 1:15 pm Consumer Perception on Production Practices and Animal Welfare 2:15 pm Impacts of Stress and Handling on Cattle Performance 2:45 pm BREAK & TRADE SHOW 3:10 pm Best Management Practices for Castrating, Dehorning, and Euthanizing 3:50 pm Cowboy Safety and Workers’ Compensation: A Ranch Manager’s Perspective 4:30 pm Panel Discussion 5:30 pm Social Hour at Caesar Kleberg Wildlife Research Center 6:30 pm DINNER AT Caesar Kleberg Wildlife Research Center

Trade Show open from 7:00 AM to 1:00 PM 7:00 am COFFEE & TRADE SHOW 8:00 am Cattle Handling: Cowboy Tendencies 8:45 am Cattle Handling Facilities Large and Small 9:30 am Financial Considerations for Building Corrals 10:00 am BREAK & TRADE SHOW 10:30 am A Producer’s Experience: Implementing Change in Cattle Handling 11:00 am A Producer’s Experience: Implementing Change in Cattle Handling 11:30 am Panel Discussion 12:00 pm LUNCH 1:00 pm TRAVEL TO KING RANCH ARENA 1:30 pm Low-Stress Cattle Handling Demonstration 5:00 pm ADJOURN Visit krirm.tamuk.edu/symposium for more information on speakers and event details.

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NON PROFIT ORG U.S. POSTAGE PAID 700 University Blvd, MSC 137 Kingsville, Texas 78363

2017 Event Schedule Coming Soon!

Get ready to mark your 2017 calendars! Our 2017 event schedule will be available soon. This schedule will be posted on our website and social media pages, and will also be mailed out in our Texas Farm Credit Certificate in Advanced Ranch Management certificate booklet. We will also notify our email subscribers through our e-newsletter service. If you would like to make sure you are on our mailing and/or e-blast lists, please call 361-593-5401.

Some noteable highlights on the schedule is the return of the Advanced Genetic Technology in Beef Cattle Lectureship, which will be offered through two separate sessions and locations. Prescribed burning is also returning to the schedule.

Check for updates on our webpage (krirm.tamuk.edu/lectureships) and follow us on Facebook and Twitter.

sa Don’t mis ate single upd M! from KRIR 93Call 361-5 ake 5401 to m n re o sure you a ts! g lis our mailin