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FEATURES 3 4 6 8
Wagon Tracks
“Good vs. Excellence“ By Dr. Clay Mathis
KRIRM Class of 2015
Trio of students reflect back on KRIRM By Kindra Gordon
A Vision for the Future
Ranching professionals benefit from new KRIRM leadership program By Ashley Patterson
11th Annual Holt Cat® Symposium on Excellence in Ranch Management Summary By Rhonda Wulf and Ashley Patterson
Published by the KING RANCH ® INSTITUTE FOR RANCH MANAGEMENT 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
Cover Photo: The Old Bar 13 Horse Barn by David Stoecklein www.stoeckleinphotography.com 2 I Winter 2015 I KRIRM
“Good vs. Excellence”
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From the Director, Dr. Clay Mathis
In this issue of Wagon Tracks, I would like to focus on the decisions made by “good” versus “excellent” ranch managers. The industry is a tricky one; cow-calf producers are continually challenged to make profits despite the weather, cattle markets, and the cost of input commodities and services. Even though markets have been strong, there is still a difference between good and excellent management. Good managers make many small decisions to keep costs low relative to the value of the weaned calves they produce. However, the real separation between those managers and perhaps an “excellent” manager is that the very best managers also understand and find leverage in the production system that has longstanding benefits to the operation. Good managers work very hard at chipping away costs and capturing slightly higher prices, but that same intellectually energy may be even more fruitful if directed toward higher leverage changes to the operation. Those producers who have a clear view of the financial position of the ranch and the drivers of net income and return on assets will be best prepared to make the high leverage decisions with long-term benefit to the operation. Granted, there are generally many small decisions across all areas of the business to keep cost low, yet still achieve goals. However, in most systems there are a few high-leverage interventions that can make a big impact. These changes will not be the same on all operations, but all managers should seek to find these areas in the operation that if changed could improve their ranching operation. Examples of these changes that may have significant long-standing benefit are listed in the table below. Notice in these examples that labor, depreciation, and pounds weaned are affected in almost every intervention. A number of other examples could also be included, especially those that affect genetic makeup of the cowherd, which is always a long-standing change. Success in the cattle industry does not happen on accident. At KRIRM we feel it is important for our graduates to clearly understand that decision-makers at
“Even though markets have been strong, there is still a difference between good and excellent management.”
the most successful operations have built production and marketing systems that minimize labor, feed, and depreciation expenses relative to weaned calf value. We also encourage those interested in improving the profitability of their cow-calf operation to use a managerial accounting system that shows a clear picture of the operation financials and allows measurement of unit cost of production. With this understanding and a solid managerial accounting system in place, great managers are able to seek practical, high leverage alterations to the production system with a keen focus on optimizing inputs and outputs. Adequate information, in combination with a big picture view of what matters most to the success of the business is critical to achieving excellence in ranch management. Examples of potentially high leverage interventions with significant economic consequences Intervention
Potential Impact on the System
Implement Managerial Accounting System
(+) ↑ information to make decisions across all facets of the operation (-) ↑ short term cost for professional services
Purchase bred replacement females (+) ↓ labor needed for calving instead of raising replacements (+) ↑ weaning weight with terminal system (+) ↑ total cows by 5-8% by reducing forage needed for heifer development (-) ↑ depreciation on tax return Contract Haying/Farming
(+) (+) (+) (-) (-)
↓ labor ↓ equipment depreciation ↓ equipment repairs, maintenance, fuel ↑ service cost ↓ control of farming/haying activities
Implement Crossbreeding System
(+) (+) (+) (+) (-)
↑ reproductive performance ↑ cow longevity ↓ number of replacements developed annually ↑ calf age and weight at weaning ↑ complexity of the production system
wagon WT tracks
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Photo taken by Tyrell Anderson at the shipping pens on the Brighton Reservation, Seminole Tribe of Florida Incorporated.
By Kindra Gordon
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he will to succeed is important, but what’s more important is the will to prepare.” That quote by iconic collegiate basketball coach Bobby Knight applies as much on the court as it does to the “game of life.” Three individuals have been doing their part to prepare for future success in the ranching industry through enrollment in the King Ranch® Institute for Ranch Management (KRIRM). The trio of Tyrell Anderson, Cody Peck and Rhonda Wulf will complete their Master’s degrees in Spring 2015. Here, they each reflect on their KRIRM experiences and share their views for the future.
Tyrell Anderson
Having his older brother, Austin Anderson, and brother-inlaw, Less Nunn, as past KRIRM graduates and seeing their excitement for the program and subsequent career success following their graduation “had a great influence on my decision to apply for the program,” explains Tyrell Anderson. Over the past two years, Anderson says the relationships he has gained with fellow students and KRIRM staff have had a profound influence on him. “As students, we constantly challenge and encourage each other, thereby helping each other along the road of personal growth and development. I also have great respect for our director Dr. Mathis. He has 4 I Winter 2015 I KRIRM
been a great mentor to me and has taken great time to help shape me into the industry leader that I will become in the future. These relationships will continue long after I leave the Institute.” Anderson also values the opportunities he has had to be involved in special projects with various ranching operations and managers from across the United States. From genomics to analytical thinking, financial analysis and strategic planning, Anderson says the wide berth of experiences and relationships developed will provide a foundation that will continue to influence him throughout his career. Upon graduation, Anderson’s goal is to work with a progressive, forward thinking operation to achieve continued success and growth in the future of their operation. While his primary interest is in seedstock production, Anderson says he also enjoys the challenges of working in a multi-faceted operation. Whatever opportunities come his way, Anderson says, “I hope to continue developing my abilities as a manager and beef producer, while at the same time being a leader in the industry through applying the skills I have gained while here at KRIRM. Anderson adds that ten years from now he hopes to have gained the knowledge and experience to be able to give back to the industry by helping develop and mentor others in the industry, including students like himself. He concludes, “To make a difference a person needs to stay plugged in and engaged – and not become complacent.”
Rhonda Wulf
Sage advice from a person she respected directed Minnesota native Rhonda Wulf to pursue her master’s degree at KRIRM. “I was advised to find the best person or business in the industry and learn from them and also meet as many people
as I could. I was also searching for a program with a business component to complement my animal science background,” shares Wulf. She adds, “After two years at KRIRM, I can say this program was well-suited to my goals. Dr. Mathis has encouraged us to think on a high level and has designed a program to facilitate that. We have had exposure to several influential managers in the industry. I am humbled by the opportunity to be a part of this program KRIRM Class of 2015 from left to right: Tyrell and grateful for the faculty, management Anderson, Rhonda Wulf and Cody Peck. council and donors who have made this possible.” Also of her experience, Wulf appreciated that KRIRM balances the science and the business of ranching with real projects with partnering ranches. “We had the opportunity to participate in multiple projects, which has helped take the mystery out of decision making. We were able to take some data, and with reasonable assumptions come to a conclusion and present it to the management team of the ranch. The mentors on these ranches provide valuable feedback; it was a valuable opportunity to interact with these managers.” As Wulf prepares for her future role in the industry, she says she especially values the ability her KRIRM experience has given her to “evaluate the bigger picture – from a system view – to make informed Rhonda Wulf ’s summer project featured selecting for profitable Wagyu genetics on feed decisions.” Of this she says, “A manager here at AgriBeef Co. Boise, Idaho. needs to be knowledgeable in all aspects of the business to be able to see how each decision affects the rest of the system.” Wulf credits a broad offering of courses from managerial finance to ruminant nutrition and real estate law, as well as discussions on industry issues with teams from across the country for fostering her systems thinking approach to the future. She says, “The in-depth exposure to the beef industry in different regions of the country has helped me better understand the beef supply chain and the broader scope of some of the issues the industry faces. It is interesting to compare Calving season at Padlock Ranch Company, the challenges and opportunities from one where Cody Peck spent his internship in the region to the next.” summer of 2014
As she prepares to graduate, Wulf says a strength of the KRIRM program is the unique experience each student brings to the program. “Most students in the program have been ranching for several years prior to coming back to school and those combined experiences are invaluable when working on projects, discussing careers and industry issues.”
Cody Peck
Cody Peck had many reasons for pursing his master’s degree through the KRIRM program. He liked the fact that exemplary students from across the U.S. are brought together to share ideas and challenge one another and also the diversity of the coursework offered, particularly the business focus in combination with other science coursework. All total Peck says, “Anyone who comes to KRIRM is in good hands.” As he prepares to graduate, Peck particularly values the business and financial experience he has gained from working on numerous projects. He states, “I greatly improved my ability to analyze complex information, multi-task on multiple projects simultaneously, and I gained the ability to present the information professionally and concisely to a board of industry giants. It has given me a great deal of confidence and no doubt will aid me in future management endeavors.” Like his classmates, Peck describes the network of relationships developed— with students, faculty, and cooperating ranches—as invaluable. “The ability to bounce ideas off of people of this caliber whom I’ve met through the KRIRM program will continue to aid me greatly in the future.” Peck adds, “This experience has been nothing but positive. I feel ready to meet any challenge I may face in the years ahead.” As he looks to graduation, Peck’s interest is in managing a large progressive cattle ranch while raising his family, and having a willingness to continue to grow and learn, and exemplify people first leadership. KRIRM I Winter 2015 I 5
By Ashley Patterson
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he King Ranch® Institute for Ranch Management (KRIRM) vision is powerful. “We are determined to educate leaders who will make a positive difference in ranching, and ensure that our hard earned heritage is not lost.” With that in mind, KRIRM continually seeks new and innovative approaches to educate KRIRM students and industry stakeholders. In 2013, keeping with the strong vision of KRIRM, the Excellence in Ag Leadership Program was launched in an effort to develop the next generation of leaders in the ranching industry. Ryan Rhoades, Ph.D., assistant professor at KRIRM, leads the two-year, distance-education program of 20 young professionals in the industry. With the help from National Cattleman’s Beef Association (NCBA), 14 individuals from across the nation were identified as high potential leaders and were given the opportunity to work alongside the six current KRIRM graduate students in this program.
The Need For Leadership Education
The “why” behind the creation of this program not only involved the KRIRM vision, but also feedback from KRIRM alumni and management council on what the institute could do to better prepare students after their time at KRIRM ended. “The overwhelming response was leadership development,” said Rhoades. As increased leadership education took place in the KRIRM graduate student curriculum, the leadership program was the next logical step, explained Rhoades. It became clear that the program would offer participants a truly unique opportunity to learn more about their strengths 6 I Winter 2015 I KRIRM
as a leader, network with industry leaders, and position themselves to be an effective future leader of the ranching industry.
The First Year
A one-day workshop held in conjunction with the 2014 NCBA convention and trade show kicked off the program in Nashville, Tenn. Participants received the results of their personal 360-leadership assessment completed by their managers, co-workers, peers, and direct reports, which identified unique leadership strengths of each participant, said Rhoades. One leadership program participant, Ben Neale of Tennessee, said this assessment was enlightening; the assessment allowed him and other participants to work through their strengths and weaknesses, in turn learning how to be more efficient and improve leadership skills among their teams. “The 360 assessment is beneficial in the fact that we have the opportunity to truly see what others think and not what we perceive them to think,” he said. That feedback can be disheartening, said Neale; however, the results from this assessment are intended for participants to truly understand and capitalize on their strengths. The first webinar was held in June of 2014; Paul Genho, Ph.D., president of AgReserves, Inc, offered participants valuable insights about what leadership is and the natural abilities of a leader. When the program was first designed, having the opportunity to network with the most influential industry leaders was a must, explained Rhoades. Genho was
a valuable resource as he was able to share great leadership success stories. KRIRM student and leadership program participant Cody Peck said he used the information learned in the webinar to continue growing in self-awareness. Genho’s experience in the industry brought great value to the webinar. “Dr. Genho was able to take timeless principles, combine them with the wisdom of experience, and apply them to the beef industry,” said Peck. “In doing so, he has shed light on the most elusive topic in management.” Participants also attended two lectureships that were part of KRIRM’s 2014 outreach program. These lectureships included human resource management and systems thinking. The first, systems thinking, was used to implement a unique approach to developing leaders. Challenging industry projects create an opportunity for leaders to collaborate, learn, and utilize skills developed during training or educational sessions, said Rhoades.
plan for, understand, and successfully lead current and future employees of the ranch. Leadership, supervision, coaching, and hiring were some of the topics discussed in managing the people in the ranching business. Gardner benefited from these lectureships as he explained it was a great opportunity to interact with other industry professionals and use the information discussed back home. “They really gave us some tools and methodologies that, if we spend time incorporating them into our daily lives, we can have some real positive impacts on our families, our businesses, and within the livestock organizations we belong,” he said.
The Future of the Program
As the program begins its second year, Rhoades is optimistic about the value and impact it will have on the industry for years to come.
In August 20114, the John B. Armstrong Lectureship on Systems Thinking Participants learned more about their strenghts and weaknesses as a was the first KRIRM lectureship that leadership participants attended. leader at the 360-degree workshop during the 2014 NCBA convention.
Systems thinking is a language for learning and action that helps us understand more deeply how organizations and complex systems really function. Participants were asked to discuss and analyze tough industry questions and concerns, as identified by NCBA. Some of these topics included conflicts over: the Beef Checkoff, motivating beef producers to interact with congress about beef-related issues; American consumer distrust in agricultural beef practices; communication to consumers in how well land and animals are cared for; and sustainable beef production practices. Brett Gardner, one program participant from Oklahoma, simply stated the systems thinking lectureship was incredible. He went on to describe how the lectureship was helpful in identifying the core problems with the above issues, particularly relating to consumer distrust in agricultural production practices. The human resource management lectureship was also a positive experience for the leadership participants. It is designed to build the skill-set of ranch managers so they can
“We certainly believe there is a need for leadership and an opportunity for us to provide the industry with a unique program that has long lasting impact,” said Rhoades. On the agenda for the second year, the program will include more workshops at NCBA, including media training, policy, and leadership development workshops; additional leadership webinars; and the strategic planning lectureship in Kingsville on March 6-7, 2015. Through each and every lectureship, webinar, workshop, and casual conversations among participants, the Excellence in Ag Leadership program is building the next generation of leaders. The participants in this group understand this important feat, and are willing and able to take on their role as leaders in the beef industry. “Ranching, by its nature, creates self-driven, independent people,” said Neale. “If we harness those characteristics and utilize them to lead people toward a common goal we, simply put, benefit the entire world with what we do.” KRIRM I Winter 2015 I 7
By Rhonda Wulf and Ashley Patterson
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he word “sustainability” takes on a number of meanings when discussed among the beef industry. In recent times, this topic has become more important in the eyes of the beef consumer. But differing opinions and definitions among the industry has made it difficult for beef producers at all levels of production to understand what the consumer truly wants. The recent King Ranch® Institute for Ranch Management (KRIRM) symposium addressed this topic at the 11th Annual Holt Cat® Symposium on Excellence in Ranch Management held in October of 2014 in Kingsville, Texas. In an effort to understand the overall meaning of the issue of sustainable beef production, perspectives from all sectors of the industry are necessary. KRIRM hosted the nation’s leading experts on sustainability from companies such as McDonald’s, Tyson Foods, Inc., Cargill and more. These perspectives brought insight into what the consumer wants and how the beef industry can come together to address this important topic.
Industry Trends
Sustainability is at the forefront of the beef industry; it is a current business reality for all beef producers. To begin the symposium, several trends were identified to understand how the U.S. arrived at the point of food companies requesting assurance of sustainably-raised food from all sources, not just beef. Worldwide affluence has been increasing over the last 50 years, but with that, less consumers are directly involved in agriculture. Plus, environmental awareness has increased. In the last 30 years, alternate marketing and branded programs 8 I Winter 2015 I KRIRM
have rapidly gained momentum. Kim Stackhouse, director of sustainability research at National Cattleman’s Beef Association (NCBA), discussed a recent survey conducted by NCBA that revealed factors in the consumer’s decision to purchase included trusted brands, environmentally friendly, and supporting causes individual consumers believed in. McDonald’s also explained a survey conducted that showed the fastest growing consumer concern is the impact of the supply chain; consumers want to know where their food comes from, said Bob Langert, VP of corporate social responsibility for McDonald’s Corporation. These survey findings reiterate what Nicole JohnsonHoffman, VP of Cargill Value Added Meats Foodservice, explained about consumers’ definition of quality. Hoffman explained that quality has a different meaning than it did several decades ago. Now consumers include humane animal welfare and environmentally-responsible raised beef as qualifications for high quality beef, she said. These industry trends created a consumer demand, and food retailers are requesting a sustainably verified product from beef producers.
What is Sustainable Beef Production?
Now comes the question of “what is sustainable beef production?” Consumers have shaped the industry by demanding it, but the industry struggles to accept a definition. Cameron Bruett, president and chief sustainability office for Global Roundtable for Sustainable Beef Production (GRSB), spoke to symposium attendees about their recently released definition of sustainability. GRSB is a multi-
Symposium speakers included the top industry experts on sustainability, including representatives from the National Cattleman’s Beef Association, Cargill, Global Roundtable for Sustainable Beef, and more.
national organization of stakeholders including everyone from producers to consumers who have come together to continuously improve sustainability of the global beef value chain through science, leadership, and multi-stakeholder engagement and collaboration Because of the diversity in the industry, GRSB concluded that developing a set of standards is not their role. However, Bruett explained that the organization defined sustainable beef as a socially responsible, environmentally sound, and economically viable product that prioritizes planet, people, animals, and progress. Through their mission of advancing global beef sustainability, GRSB developed five guiding principles that Bruett explained involves natural resources; people and the community; animal health and well-being; food; and efficiency and innovation.
Sustainability Success Stories
The symposium agenda also included industries outside beef to explain their sustainability success stories. This issue is not new; the industries shared their stories on how they addressed sustainability issues when they arose. The forest industry has been addressing these concerns since the 1990’s. Also, agricultural industries in Brazil in the Amazon region have faced social pressures from environmental groups for just as long. These case studies have painted a great picture from which the beef industry can learn. The Sustainable Forest Initiative (SFI) was formed in the 1990’s when the spotted owl’s endangered state brought controversy to the forefront of the industry. What was once a public relations program, SFI evolved into a market based performance program and is now an independent business since 2007. Rick Cantrell, Ph.D., president and CEO of BlackBriar Environmental LLC., urged the beef industry to
Kim Stackhouse (left) and Wayne Fahsholtz answer questions during a speaker panel at the 11th annual symposium.
publish once there are results. He said, “People want to hear what you have done, not what you are going to do.” Aliança de Terra in Brazil is a third party verification company that is a valuable and transparent resource for companies seeking to evaluate responsible production practices in their supply chain. John Carter, director of the program, said Aliança auditors encourage the producer in the things they are doing right and to work together on an action plan for improvements. This action plan, along with photos and videos of the business, is uploaded to a website making everything transparent and adding accountability. A seal identifies the products verified by Aliança, and by eating Aliança beef, the consumer is helping the environment, explained Carter.
Beef Industry Action Items
After sustainability was defined and attendees understood the success stories, a number of symposium speakers encouraged beef industry to take action. These action items included two-way communication, continuous improvement, knowing your customer, conducting research, obtaining metrics and verification, and eliminating food waste. These items can be the driving force behind the industry continuing their efforts in collectively addressing sustainability. Hoffman encouraged two-way communication with consumers; instead of the one-way, “tell our story” strategy that presents facts to the consumer, the industry must show the consumer that their concerns are heard and validated. KRIRM I Winter 2015 I 9
Commit to Lifelong Learning
Upcoming Events March 6-7, 2015
Strategic Planning Lectureship
August 10-13, 2015
John B. Armstrong Lectureship on Systems Thinking
She further explained that consumers have good questions, some science based, some urban myths, but most are a part of their belief system at an emotional level. Emotion cannot be overcome with science, said Hoffman. Wayne Fahsholtz, retired CEO of Padlock Ranch, brought a rancher’s perspective to symposium. He advised that zero impact is not possible; food production results in tradeoffs and impacts, but the industry goal should be continuous improvement over time, he said. Agri Beef Company stressed to the attendees to know their customer. Wade Small, president of livestock division for Agri Beef, said questions and concerns from consumers or between segments of the supply chain can be answered before growing into something unmanageable. Bruett touched on the same topic as he explained that large packers hear the concerns of the consumers from beef retailers, and are often the messenger to the rest of the industry. Other action items for the industry include conducting research, using the right tools to improve sustainable practices, and reducing waste. Research is key in leadership teams of industry stakeholders coming together to implement a plan for sustainability, said Cantrell. Tools must be in place so the American beef industry can see where risks are coming from and how the operation, producer, and ultimately the industry can continually improve, said Carter. Lastly, Stackhouse explained that 20 percent of the beef produced in the U.S. is wasted post harvest. With solutions to reduce waste by half, sustainability could be improved by 10 percent overnight, she said.
Conclusion
As producers examine their operations, part of the solution is always looking for ways to improve production and reduce waste. Sustainability is here to stay, and will be part of standard beef production, for where there is shared value, there is good business.
September 18-19, 2015
B.K. “Kley� Johnson Lectureship on Current Ranching Issues: Managerial Accounting
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A symposium attendee taking notes during the program on sustainability.
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