Rancher Steve Kenyon’s main business, as he describes it, is raising children.
The rest is just details, he said.
“To me it’s really important to realize that’s what my farm business is. Does it matter how I do it? If it’s going to take goats to do that, then that’s what I’m going to do.”
Kenyon’s operation near Barrhead, Alta., consists of 4,000 acres of leased land in summer. He described his business strategy as cheap and lazy.
“I don’t buy fertilizer or chemicals. If I can’t get Mother Nature to do it for me, then I don’t do it,” he said.
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Using a variety of low overhead, environmentally sustainable techniques, ranging from intensive cell grazing in summer to running cattle on swaths and crop residue in winter, the 34-year-old Kenyon, along with his wife, Stacey, and three young children, run Greener Pastures Grazing Management Ltd. without a tractor. They own only 155 acres.
The nuts and bolts of production are the last item on his business planning agenda, because no production system is considered unless it first passes the economics and finance test.
“If I can’t make it work on paper, then I’m not going to do it,” he said.
But human resources trump all. Amid the oil boom in Alberta, even the local KFC is closed at lunchtime for lack of workers, he noted.
“The problem with agriculture is that not only do you have to deal with the people in your business, but half the time they are family,” he said.
“There’s always one person in a family who’s the problem. And if you think your family doesn’t have a problem, it’s probably you.”
Highly developed human resource skills pay off in his operation, since he deals with 18 different landowners through long-term leases, as well as numerous customers, suppliers and truckers.
Few operators realize that a return of around 23 percent per year is needed to stay ahead of inflation, depreciation on cattle and equipment, interest charges, and earn a real wage.
How do you lower the risk on your ranch? Know all the factors that affect your operation, he said, and manage them effectively.
“Anybody can pound a post or drive a tractor. I lower risk on my farm by developing my human resources and watching my economics and finance.”
On the production side, leasing land is one way for a rancher to beat the high cost of land. He noted that in his area, a quarter of land that a year ago would have sold for $130,000 recently brought $250,000.
“I can’t buy that and make it cash flow,” he said.
Kenyon said he is able to beat the competition by positioning himself as a worthy lessee who can improve the condition of the pasture while making rental payments.
Custom grazing is another means of avoiding risk. Apart from six goats and a few horses, he doesn’t own any livestock, having sold off his herd.
“I don’t have any death loss, pregnancy rate losses, depreciation. I save myself that, and I make money every month.”
Owning livestock leaves an operator vulnerable to the vagaries of the cattle cycle, and many get caught “buying high and selling low.”
In 1996, as a college student, he bought a herd of cattle for $950 and arranged to have a custom operator look after them. After seven years, he sold them for $1,500 a pair.
“I have a theory that selling the calves year to year gives you cash flow. But where you can make a profit is in the cattle cycle, retaining heifers when you should and selling them when you should. Downsizing and upsizing at the right time.”
Swath-grazing without a tractor? Kenyon pays farmers to seed a crop, then leave it in the swath for wintering his cattle, paying a per day fee.
“If he grows a bad crop, then I buy a bad crop. If he grows a really good crop, then I buy a really good crop. I don’t have the risk,” he said.
In his custom bale grazing agreements, the owner of the cattle must buy all the hay and put it on his land in the fall. This reduces risk by avoiding a big operating loan.
“Someone else owns the cows, I make them pay for the hay, and they pay me to feed it,” he said. “I’ve actually figured out how to get a Colombian exchange student to do the work for free, and I get all the free fertilizer on my land.”
Yardage cost in Alberta is 70 cents per day, on average. With bale grazing, and no equipment costs, he has slashed it to seven to 10 cents a day, he said.
