Getting into the game
As second-career ranchers, Jim and Carol Thorpe had a lot to learn about managing rangeland and caring for cattle. But coming to ranching from a non-ag background enabled them to embrace the best of 'old' and 'new' ranch management thinking, from applied ecology to Internet livestock auctions. It also helps to have a philosophical outlook and boundless curiosity.

By Courtney White
Posted February 22, 2005

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Cyber cattle

The Thorpe’s education hasn’t stopped with production – it extends to the close of the deal as well. They have become involved with satellite video auctioning – a rapidly growing method of buying and selling cattle, including selling cattle over the Internet.

A video company representative comes to the ranch during the summer to tape the cattle and develop, along with the seller, a description of the animals for the catalog. A video auction follows within two weeks of filming – these are regularly scheduled events, held live on satellite TV (on the RFD channel, for instance - #390 on Direct TV).

If you are a buyer, you can preview upcoming lots of cattle and check out prices of previously sold animals.

If you are a seller, you can remove the cattle from the auction if you don’t like the price and offer them again for sale at a later date. There’s a fine, of course, but it is much less than the cost of taking the cattle home.

Jim Thorpe recommends that people check out the web site of one of the largest video auction houses at www.superiorlivestock.com.

“It’s a true market,” he says. “By being on video, a rancher’s cattle are offered to a larger universe of potential buyers, [and] thus [have] a greater likelihood of receiving ‘fair market value.’ Think of the eBay model.”

There is a variable consignment fee—roughly 2 percent—for the service, but it compares favorably to the costs associated with a traditional auction barn, especially if you add in the costs of transportation and “shrink” (cattle weight loss).

“The key factor that has made this all workable,” Thorpe explains, “is the fact that the marketing company represents the interests of both the seller and buyer and acts in many ways to insure the integrity of the transaction. Not only do they guarantee the seller that they will be paid, but they guarantee to the buyer that they will receive the cattle as they were represented in the contract."

To do this, a video company employee is present on the ranch at the time of shipping in the fall to verify the weight, number, and condition of the cattle. Any animal that does not meet the specifications of the contract can be rejected by the representative – a type of sanction that encourages the rancher to maintain good standards.

For example, a certificate signed by Thorpe guarantees that the cattle sold and delivered have not been: 1) fed or injected with any antibiotics; 2) fed by antibiotic ionophores; 3) implanted with or fed any synthetic hormones, growth promoters or steroids of any kind; and 4) fed any feed containing protein derived from mammalian tissue.

But is video auctioning for everyone?

“This works best for producers who can put together load size lots that are fairly uniform in weight, size, sex, and breed type,” notes Thorpe. “Small producers with ‘odds and ends’ cattle still have few alternatives to the local sale barn.”

Although video auctioning challenges a number of traditional practices in the ranching community, Thorpe thinks its embrace by the industry is inevitable. “The advent of satellite video auctions and the selling of cattle over the Internet will someday, if not already, be among the case studies looked at by management schools.”

 

“Want to know how to make a small fortune? Start with a large one and buy a ranch.”

--Old joke among ranchers

Why did Jim and Carol Thorpe, a middle-aged couple from Santa Fe with no background in agriculture, decide to take the plunge and become cattle ranchers?

Not for the money. It’s a commonplace in the ranching community that 30 years ago it took eight steers to buy a new pickup truck; today it takes 25. Or more. That’s because the traditional profit margin in ranching hovers between one and three percent per year. Or less.

Not for the headaches that come with modern ranching. Public lands in particular have their own set of challenges – not the least of which is intense public scrutiny. But private land ranching is getting tougher too, especially in these dry times. The pressure to grab the brass ring of real estate development and get off the merry-go-round is constant.

But the Thorpes took the plunge anyway. So perhaps the more pertinent questions might be: what did they do to confront these challenges? How were they able to turn obstacles into stepping stones, as the saying goes? And what might other “new ranchers” learn from their experience?

The normally loquacious Jim Thorpe begins his answer with a short definition: “Ranchers have become applied ecologists. Most don’t look at themselves that way, and most don’t like the word ‘ecology’ very much, but nowadays it’s all about stewardship, not just food and fiber.”

“But it’s also about having a passion about what you are doing,” he continues. “Like many, I’m grateful for the privilege of being allowed to take care of a little piece of the planet for whatever short amount of time we have.”

Starting from scratch

The Thorpes’ adventure began in 1998 when Jim's family sold the historic Bishop’s Lodge, a Santa Fe landmark. After two decades in the hotel business, Jim and Carol suddenly found themselves out of work. Casting about for what to do, somewhat distraught and with children preparing to leave the nest, they decided to explore a romantic notion: Buy a ranch.

"I had friends in ranching which meant I had just enough knowledge to be
a little dangerous."

“I had friends in ranching,” explains Jim Thorpe, “which meant I had just enough knowledge to be a little dangerous. I knew, for instance, from a classical economics perspective, ranching wasn’t the most rational way to invest an unexpected windfall. But then humans aren’t terribly rational.”

The Thorpes made their decision to get into ranching without much hesitation. What took longer was finding the right ranch. They wanted a place “in the middle of nowhere, and a couple of hours from everywhere,” as Jim puts it. Eventually they found the ideal location for their adventure in east-central New Mexico, north of the tiny town of Newkirk.

Before taking the plunge, however, Jim Thorpe did his homework. Over a two-year period, he visited the ranches of friends and acquaintances, read a ton of books and articles, went to meetings and workshops, scoured the Internet, and leveraged the business analysis skills he acquired years ago in an “MBA light” course at the University of New Mexico – which helped him think about ranching as a business.

In his pursuit of knowledge, Thorpe joined the Society for Range Management and became a member of the New Mexico Cattle Growers’ Association. He read The Cow-Calf Management Guide, which he describes as a “big, heavy yellow book well worth its price,” among numerous other publications.

Much of this new knowledge was ecological – a term that struck a chord with Jim in ninth grade and resonated all the way through college, including participation in the original Earth Day celebration in 1970. “I soaked up the ideals of the environmental movement,” recalls Thorpe, “but I never thought that I might end up utilizing it to earn a living!”

A recent visit to the Thorpes’ JT Ranch offered ample evidence of their continuing quest for provocation. On the living room table sat a book of Shakespearean plays, a collection of essays on wilderness (heavily underlined), and a large, colorful tome on the sins of cattle ranching in the West.

“I sometimes like to ask myself, ‘What would Socrates do on the ranch?’” Jim says, smiling.

Accessing both old and new information sources

Despite all their preparation, there was nothing quite like the crash course of moving to the ranch itself.

“All cows looked alike and all grass looked alike when I started,”
says Thorpe.

“All cows looked alike and all grass looked alike when I started,” says Thorpe, “which may be why a group of vultures eyed us suspiciously our first night on the ranch. Maybe they thought we looked like easy pickings.”

To avoid the vultures, the Thorpes sought out “old knowledge,” especially from traditional producers and agricultural specialists. For example, they enrolled the ranch in a Texas A & M Cooperative Extension program called Standardized Performance Analysis (SPA), which provides data on cow-calf operations.

SPA gives participating ranchers an opportunity to compare their operation with others of similar size and geographic range.

“It gives new and business-savvy old ranchers meaningful benchmarks to assess their operation’s performance,” Thorpe explains. “What has been especially useful to us is to see improvements over time.”

Thorpe pointed to a list of lessons learned from fellow SPA participants:

  • Attitude – producers must measure and monitor progress toward specific written goals
  • Avoid production of hay; minimize feeding losses. Optimize the grazing system
  • Small producers should buy replacements and use terminal cross bulls
  • Stay away from seedstock production
  • Minimize investment in horses if you expect the cows to pay their expense
  • Reproduction (weaning weight based on exposed females) is the number one production factor producers must focus on
  • Develop a written preventive health program
  • Don’t spend money to reduce IRS taxes if they result in an increase in after-tax equity
  • Non-cattle uses of land are more important than grazing cattle for land appreciation
  • Most ranches have inadequate inventory and management accounting systems to accurately measure and monitor performance

At the same time, the Thorpes extended their quest for knowledge to the “new school” of ranching. They read Allan Savory’s treatise on Holistic Management, for example, and hired Kirk Gadzia, a certified HM instructor, as a ranch consultant.

They subscribed to the monthly alternative ranching newspaper Stockman Grass Farmer and read books by its publisher, Allan Nation, including Knowledge Rich Ranching and Farm Fresh: Direct Marketing Meats and Milk—all of which challenge traditional paradigms about profitability and management.

They attended a low-stress livestock handling clinic sometimes referred to as the 'Bud Williams School' – after the Canadian rancher who pioneered a method of gently moving animals. They put this knowledge to work on the ranch with positive results.

They participated in numerous workshops focused on riparian restoration, monitoring, assessing land health indicators, and learning how to “read” landscapes. They even hosted a workshop on “How to Fix Ranch Roads.”

They volunteered their ranch to become part of an “Ecological Site Description” for their area – a program of the USDA’s Natural Resource Conservation Service that catalogues land according to various attributes. They are even trying to apply the latest ecological thinking, called the ‘State-and-Transition’ model, to their ranch.

And they have maps – lots and lots of GIS maps of their ranch.

“In the Old Ranch, the focus is on the cattle, including how to increase income from beef,” says Thorpe. “In the New Ranch, the focus is on the grass and soil, and on how to diversify the business. Right now I’m trying to coordinate the two. I’m interested in ecological services, for example, but right now I’ve got to focus on beef.”

Thorpe thinks the distinction between old and new knowledge is divisive. "We shouldn’t worry about what is old and what is new. We should focus on what works," he says.

He implemented a grazing system based on Savory’s ideas, for instance, but didn’t go to an intense rotational system, preferring to remain flexible. There’s no sense in tossing out the baby with the bath water, he believes. For example, he currently declines to consider custom grazing, as Allan Nation advocates.

In fact, Thorpe thinks the distinction between old and new knowledge is divisive. “We shouldn’t worry about what is old and what is new. We should focus on what works,” he says.

Seeing results

The blend of old and new knowledge is paying off, literally. Although the ranch has the potential to support 350 AUs (animal units), the Thorpes chose to start with 200, raising it slowly over time through careful management to its current total of 250 – all in the middle of an extended period of drought.

The income from the cattle is covering their expenses and paying the interest on their land debt. Although they aren’t seeing the sort of profit they saw in the hotel business, they have been struck by other parallels.

“Carol’s passion is for the animals,” quips Thorpe, “so she’s in charge of personnel. I’m the facility manager.”

And like all good businesspeople, the Thorpes are sensitive to the needs of their customers, which include their neighbors and colleagues in the ranching industry.

“People are too quick to criticize each other without finding out what’s really happening on the ground,” says Thorpe. “I think the o-word – overgrazing – especially is tossed around too casually. It demeans ranchers who really are trying hard to do the best job they can.”

“There’s been poor grazing management in the past, but ranchers have always watched the land, and now we’re learning new things to see, that’s all.”

Not ones to sit still (and clearly enjoying themselves), the Thorpes keep moving ahead. They participate in a New Mexico State Land Office program that reduces grazing fees 25 percent in return for good management and monitoring. They are enrolled in New Mexico State University’s ‘Ranch to Rail’ program, which provides carcass information, genetic data, and other feedback.

They are even exploring the idea of creating “custom habitat” – which is like custom grazing, but for wildlife. They feel confident they can use cattle as a tool to improve and maintain high quality habitat – and they have the monitoring data to prove it, they believe.

“I feel like sometimes we’re bridging two worlds,” observes Thorpe. “I’m trying to provide values that society wants while placing a traditional cattle operation over it at the same time. It’s tricky, but I think it’s going to work.”

Facing the future

Although admitting to a mid-life crisis of sorts, Thorpe observes that he and his wife also represent a new wave of ranchers in the American West. While many new land owners are principally “ranching the view,” some, such as the Thorpes, are determined to make their operations simultaneously economically viable and ecologically sustainable. And in doing so, they help slow the trend toward increased land fragmentation, a major problem as ranches become ranchettes.

“I feel like sometimes we’re bridging two worlds,” observes Thorpe. “I’m trying to provide values that society wants while placing a traditional cattle operation over it at the same time. It’s tricky, but I think it’s going to work.”

Still, the challenges are daunting. A globalizing economy (in the form of increased beef imports from Brazil, for instance), political disenfranchisement, antagonistic attitudes, even the test of rural isolation can wear down the spirit of many new ranchers fast.

Jim Thorpe’s response is to remain philosophical.

“Everyone wants a sense of purpose, whether they know it outright or not,” he muses. “We must deal with a tragic sense of existence, which compels us to leave the world in as good or better condition than when we got it.”

“It’s all about our moment in the sun, literally,” he goes on. “Ranching is a great combination of mental and physical. Throw in a few philosophical paradoxes and it really gets interesting.”

Socrates, in chaps.

“It’s all about our relationship to nature,” he concludes, smiling again. “Management is an illusion. It’s like working with people, we don’t manage them, we nudge, and hope for the best.”