Land is our largest investment, asset and expense. So how exactly can we add to its production?
One key goal to start with: Convert unproductive land to productive. On unproductive areas, feed hay (old cheap hay is fine), overseed, manage for hoof action and position the mineral feeder. Cattle perform miracles in converting poor land into production.
Attached to this article is a picture with a lake of coal residue that was useless. We fenced half, overseeded the raw coal fines, placed a mineral feeder and fed 2-year-old hay in winter. It became productive over a couple of years, with the added nutrients in hay and manure, combined with seed and hoof action.
What about trees? Add a second layer of forage with trees for livestock and wildlife. Trees planted 30 or so feet apart do not hinder grass production; as the sun moves across the sky, the angles of sun and shade change, permitting forage growth beneath. Trees provide shade for animals and additional drought tolerance for forage, plus fruit and leaf forage. With the proper trees, there are no leaves within reach of cattle or wildlife, as they are consumed.
We plant apple, pear, persimmon, oak, plum, honey locust and osage trees. An osage tree is planted with each fruit tree, as they are thorned when young and protect the fruit trees. Honey locust grow into fence posts and produce a palatable, bean-looking seed. All tree seeds are available on Amazon.
Managing your lesser-productive acres with hoof action, some overseeding and feeding old hay, and it could get back into grass production in a couple of years. Image by James Coffelt.
Next, try logging the forest for all trees of low value. The fewer low-value trees, the faster trees of value grow. Plant trees of value.
Try to have the most efficient size and type of livestock. Stocking rate has the largest effect on profitability; animal efficiency permits the highest stocking rate. The cattle on this ranch are moderate in size, milk, growth and high in efficiency, permitting greater stocking. From an Angus expected progeny difference (EPD) perspective, that is an animal with a Birthing Weight (BW) EPD around 0, a Weaning Weight (WW) below 40, a Milk EPD below 20 and a $EN (efficiency measure) above 15. This is not an animal performance model; this is a performance-per-acre model via higher stocking. The cattle industry has an annual cow cost of around $800; our ranch has a $293 annual cow cost.
Sell unusable, non-contiguous land and buy usable contiguous land. Using a 1031 exchange, it can be tax-free. It is also possible to buy the land first and sell land later in a reverse 1031.
Gas and oil pads, pipeline right of ways, commercial and rental property, and buildings can be used in 1031s. Taxes are an enemy.
Production is measured in total assets used for an economic result. The fewer assets relative to the economic production, the better. Reduce assets by eliminating every piece of equipment not used in a year, converting it to cash. Eliminate every unproductive dog, donkey, horse and employee. Cash is king; assets are queen; expense is an enemy.
Our ranch has 160 acres of water in several lakes. The lakes cost the same money as land and do not produce grass. They can be productive with fish. This ranch has 4,400 paddlefish. They grow to 80 pounds, yield 40% in meat, similar to smoked catfish. The females produce up to 9 pounds of caviar, which sells for $30 to $50 per ounce.
Determine the most optimal size for livestock and females with the most moderately sized and graded in EPDs. Image by James Coffelt.
Manage every animal into production. A German shepherd guards our house and has a litter of puppies each year. They are $4,000 to $8,000 per litter with quality parents. A donkey is with each group of cattle for predator protection. Their offspring is as valuable as a calf.
Eliminate steers as soon as possible. Steers gain better; however, they do not pencil compared to a heifer that gains and has a calf before 30 months. The heifer and calf will outperform the steer in their combined gain and economic performance. Consider harvesting older cattle over 30 months; our favorite for harvest is 5 to 8 years old.
Use land assets for every possible enterprise: gas and oil production, CO2 sequestration, disposal wells, freshwater sales, tourism, hunting, fishing, timber. Capture more of the supply chain, meat sales, manage organically at a premium price, meat shop, store, restaurant and so on.
James Coffelt is the owner of Ohio Land and Cattle in Cadiz, Ohio. The opinions expressed are the author’s own. Contact him via email.
