Ranchers ponder land rental vs. ownership

Cattle producers tell a conference that it’s always preferable to own land, but renting is sometimes the only way to go

Owning land is better than renting when it comes to cattle ranching, even though it’s not always possible.

That was the general consensus among three cattle ranchers who offered their views during an online panel discussion as part of the recent Canadian Beef Industry Conference.

“I’m a farmer at heart and we all want to own our land. Period,” said Andrew Johnson of Johnson Livestock near Peebles, Sask. The family runs purebred Black Angus as well as commercial cattle but has found it isn’t economical to graze their own land. A relationship with the nearby First Nations allows the operation to rent grazing land that pencils out better.

“On my own land, if I consider what asset is there, the return on investment for my cows on my own property, I need about $4 a day to make that work. So I can rent land off First Nations or off my organic neighbour per pair … for between 20 cents to $1.20 a cow. So here’s the thing. Yes, I have a lot of land and I intend to buy more land, but it doesn’t pay for me anymore to graze my own land.”

For Ben Campbell of Grazed Right Ranch near Black Diamond, Alta., good grazing land is cheaper to buy than the hilltops and mountain views that attract wealthy doctors and lawyers to buy acreages in his region close to Calgary.

Campbell said land in his area typically sells for about $1 million per quarter, making it nearly impossible to buy for grazing purposes.

“Fortunately, the good land is the cheap land and the low quality land is the expensive land,” he said.

He paid $1 million for his quarter and is able to make loan payments by boarding horses and renting a shop, storage space and an apartment on the property in addition to his grazing operations.

Dean Sentes of Millington Ranch near Duval, Sask., about 100 kilometres north of Regina, said he’d like to own all the land required for his purebred Simmental operation, but there are few opportunities to buy. Although property in his area is likely cheaper than it is near Peebles or Black Diamond, Sentes said few people are selling, and financing for a big parcel can be problematic.

When it comes to buying or leasing equipment, however, he said leasing works out well for his operation.

“You can write off, basically, a lease. You don’t have to put a big down payment down, which for smaller farmers I guess is huge.”

Johnson said his operation also owns most of its machinery rather than leasing it and often runs older equipment. On a multi-generational farm like his, some people become attached to certain pieces of equipment and that becomes a factor when pondering replacement.

Campbell said he never used to own anything that wasn’t on wheels or skids, and still rents as many things as possible to maintain low overhead costs.

“If you have a tractor that you’re making payments on, it’s a big money loser unless you’re actually using it to make money and you have to use it a certain amount just to break even again.

“I’m not a machinery guy. I’m a grazer and a cattle manager and a business manager. I just don’t like machinery, so we do things with very limited stuff.”

Cost management is key, the three men agreed, and costs tend to keep rising.

“Obviously we do try to do things as cheap as possible, but … I’ll admit it’s horrifying to see the numbers flowing out every day,” said Johnson.

“We’re fortunate that we have access to credit.”

He said changes have to be made to allow payments on land that is now worth 10 times the value it had 10 years ago. Investment is needed in order to expand, which he expects to do so that another generation can eventually take over the operation.

Some expenses pay off in non-monetary ways, he added. Though the old farm shop seemed adequate to him, his father always wanted a new one. A new one was built.

“Now he works in that shop and we’re all proud of that shop. That shop will never pay for itself. Never. But he loves the shop… From a lifestyle perspective, best thing we ever did.”

For Sentes, feed is the biggest cost, especially over the winter, and he is at the point of deciding whether to invest in silage equipment and feed bunks or optimize the use of dry hay, whether making his own or buying it.

Campbell said his engineering background led him to keep spreadsheets for everything, including veterinary bills for the family dog. That keeps a constant check on expenses.

On the revenue side, Sentes said the primary income is sales of seed stock and purebred animals to customers. He is also considering some boxed beef sales from the farm as a way to increase cash flow.

Johnson said the family operation strives to be flexible in its commercial cattle sales to take advantage of markets. As for the purebreds, there are fixed sale dates so there is a plan throughout the year to meet those demands.

Mentorship has played a role for all three ranchers. Sentes set up his own operation after previously working on his family’s 900-head commercial ranch. Johnson farms with his family and said his father and grandfather are a huge influence.

“(As well), I try to spend a fair bit of time with operations that are doing well, and learn from them.”

Johnson also believes in establishing relationships with those who buy the family’s cattle, whether purebred or commercial.

“Even on the commercial side, some guys get better deals at the plants because of who they are, and so align yourself with those people,” he advised.

Campbell said he knew little about ranching until buying his own place, so he had to learn from others.

“I never had a pair of wranglers or anything. I was just a city guy.”

He joined forage associations and the Cattlemen Young Leaders group and attended any educational seminars and meetings that he could find.

“Mentorship has just been absolutely huge to me,” he said.

“I couldn’t have been more lost when I started.”

Though each of the three ranchers recounted some “wrecks” over the years, ranging from calving losses and car accidents in winter to bloat in summer, they see opportunities ahead.

Johnson said working with others will always be key, now and in the future. He values the relationship with First Nations and plans to work with a nearby organic farmer as well.

“The only way I’m going to get ahead is those relationships,” he said.

Sentes and Campbell both noted beef production is often criticized for its environmental impact, but COVID-19 may have opened people’s eyes to its advantages.

“I think we’ve got a lot of good going for us that we can turn and use to show our consumers what we’re doing, and what we’re doing is still good for the world,” said Sentes.

Added Campbell: “I’m not against soybeans or lentils or pigs or anything, but nothing in the agriculture sector has such a shining gem as the beef industry with cattle on grass because that’s the only thing I think that we do with agriculture in Canada that is actually an overall net positive for the environment and is a necessity for a healthy environment.”

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