Moving on in the third part of my series “the real numbers” this blog is the beginning to an overview of our grass-fed beef enterprise. I am a little torn over whether grass-fed beef is really viable for most ranch businesses. To be honest with you I haven’t made up my mind yet, so I will do my best to present the facts and you can decide for yourself. Before we start talking about the numbers of the enterprise there are some really important factors to consider before jumping on the band wagon:

1) Is their a viable market for your beef? I see way too many people getting into the grass-fed beef business for the wrong reasons. Most producers typically producing the calf from birth or purchase a weaned calf and take that animal all the way to finish. A lot of people own a few acres, enjoy eating grass-fed beef and think they can make a viable business selling grass-fed calves. It gets producers excited when they see high prices at the farmer’s market and the vendor has a line of people. Their wheels are spinning thinking with the mentality that “I have cows and grass, thus I could be getting these prices for my cattle.” I am here to tell you that it’s a long shot at best. First and foremost, there may be other ranches nearby that have long established their market dominance in the grass-fed marketplace. Or perhaps you live in a rural area where most folks don’t really care for grass-fed beef. From my experience the real buyers are located in large, urban environments. If your more than an hour from a large city or metroplex then your should consider other marketing avenues. How far is your farm from the market? Location and travelling distance are really important factors that effect your bottom line. Also, consider that every Wal-Mart, HEB or whatever grocery store is in your area carries grass-fed beef these days and their prices and convenience are awfully hard to compete with. Can you sell your ground beef for $6.59 per lb and make a profit? Most folks will probably say yes, but they have no idea in actuality.

2) Is your land suited for grass-fed beef production? Most of the rangeland in the United States simply isn’t suited for finishing cattle on pasture. What do I mean by finishing? I’m talking about taking a weaned calf to finish. During the stocker/grower phase mediocre forages aren’t a concerns, but during the finishing phase high quality forage is vital. The finishing phase is at minimum the last 90 days of it’s life. To produce exceptional quality and marbling in your grass-fed steaks and other cuts the animal needs to be finished on high quality, high energy forages. If your grazing native or “improved” rangeland without irrigation this will most likely only be achieved during the Spring and Fall depending on where you live in the continental United States. Here in South Texas the rangeland is only suitable for finishing in the Spring from March to June and in the Fall from October to December. This is a tiny window and entirely dependent on rainfall that often doesn’t come. The Summer heat is too harsh for animals to perform, regardless of genetics. Early Winter forages are too washy and don’t have the nutrition. I’m honestly beginning to believe that the Eastern half of our country and a few other small regions are the only places suitable for finishing high quality grass-fed beef (without irrigation). I’m not even going to get into whether or not irrigating cattle is economically viable. Regardless, I just don’t believe it’s the best use of water. Why is finishing so important? Folks, if you can’t marble a ribeye steak and put a proper finish on your calves by 24 months old then you are going to have a hard time selling your product and making a profit. If your in the grass-fed beef business either producing or buying calves at weaning and taking them all the way to finish (which can take 24 to 30 months) you have to be selling steaks. It can’t just be ground beef because there simply isn’t enough margin in that animal. I will break down the real value of a grass-fed carcass in one of the next blogs. If your ranch in the more arid Western part of the country then the landscape is honestly more suited for cow/calf production. There is some opportunity in the grass-fed business in general, just not selling finished beef. To summarize, if you live in a area where rainfall is less than 18” per year and sporadic, prolonged droughts plague you then it’s best to consider a different enterprise. I know there are folks out there who will argue with me all day long about that statement, but from my ten years of experience in the grass-fed business it’s simply not worth the investment and the financial risk it too great. The enterprise must match your land and climate.

3) Do you have the capital to start a grass-fed and finished beef enterprise? I’m talking about either producing your own calves or purchasing weaned calves and taking them all the way to finishing. Finishing a high-quality grass-fed animal can take 24 to 30 months. I have not seen too many folks achieve a finished animal in less time. Genetics play a large role in that calves ability to grow and finish on grass. Do you have the genetics or access to them? Do you know how much money is tied up in a calf from weaning at 8 to 10 months old all the way to finish at 24 to 30 months? It is well over $1000 per head and you haven’t even processed, sold and distributed the animal yet. Do you have the capital or access to it to scale up to level that is financially viable and sustainable? I’m talking 100 head or more sold each year. Don’t forget you have weaned calves, stockers and finishers. To put it simply, it takes a shit load of capital to be in the grass-fed beef business. You better be ready to sit on that investment for a considerable amount of time (14 to 20 months) before you recoup that capital. Most banks won’t touch that kind of investment and you will be hard pressed to find other institutions to loan you money as well.

There are other important factors to consider, but these three really stand out to me. I don’t mean to be on a cynical note or discourage people from exploring the enterprise. I simply want people to understand the realities of the business. In my context, it is a business and businesses must make a healthy profit to be viable. These are things that we just don’t hear people talk about enough. In the next blog I will go over the expenses and income associated with our grass-fed beef enterprise. Remember folks that this is simply my experience. Your experience or context may be very different. Questions or comments please feel free to post them below or e-mail me directly at: mail@parkercreekranch.com

Thanks for reading,

Travis Krause

NOTE: Edited 2-27-2020. I apologize for the earlier grammatical and spelling errors. I was in a hurry to get this one published and I am my own editor.