Beginning ranchers face many challenges, and Wyatt and Christie Prescott are meeting them with ingenuity. The Picabo, Idaho, couple forewent the traditional cow-calf herd and began their ranch operation by backgrounding stocker cattle.
“My wife and I do both run some cows with my parents’ stock,” says Wyatt. “But the family ranch is not of the size that it can support a whole other family with the cow-calf operation. Backgrounding is a way for my wife and I to participate full time in the industry without having to outlay the money to buy a ranch priced on its aesthetic values and not its cash flow.”
The most important help from Wyatt's parents is the shove they gave him. “I’ve been talking about doing a backgrounding operation for years,” Wyatt explains. “Finally, they told me, ‘Just jump in.’ Sometimes when I’m looking at cattle to purchase, I do the same thing: I stay on the fence too long. I just need to jump in and purchase that pen of cattle, and try my best with them.
“It takes a lot of confidence to purchase cattle with the purpose of profit, and buy them on borrowed money.”
How to start backgrounding
Prescott purchases high-risk calves, many as pens of 20 cattle. He often doesn’t know the cattle’s health or vaccine history. In their five years of backgrounding, the Prescotts tested several vaccine and mineral programs. “We’ve figured out the whole secret is a clean environment for them to cool out,” Wyatt explains. “We give them clean water and fresh feed before we truck them out to pasture.”
Heifers and steers from the same load lot perform differently in the background yard and feedlot. “One time, we sent the heifers straight to the commercial feed yard where we lease space,” Wyatt recalls. “We brought the steers home to the backgrounding yard. We didn’t doctor one steer, and we lost six heifers in the feedlot. That’s why I think the secret really is attention and care.”
He carefully tracks his profit margin throughout the process and may decide to sell a pen of cattle before finishing. “We don't sit on cattle and wait to make a pot of money from them,” Wyatt explains. “We just want consistency and to meet our set profit goal. We do this by giving the cattle hands-on care and hedge them as soon as an opportunity is available.”
The Prescotts’ goal is to finish 90% of their background cattle and stockers. Some of the cattle are backgrounded for a minimum of 60 days, and then sent to the commercial feedlot. Other cattle are in the background yard for 30 to 60 days, and then moved to leased pastures of grass or cover crops.
He finds cattle maintain performance on a variety of cover crops, including turnips, peas, winter wheat, oats and canola. Wyatt cautions farmers to first review needed soil amendments when deciding which cover crops to plant, and to not choose cover crops based on grazeability. “It’s my job to see if my cattle can graze it in a way beneficial to both of us,” he says.
Ownership to the finish
The Prescotts retain ownership of their cattle from the backgrounding yard to the processing plant. Space in a commercial feedlot is leased to finish the Prescott cattle to access the feedlot’s contract with the processing plant. By doing this, Wyatt shoulders the full risk of the cattle’s performance.
“I don’t like to market feeder cattle to feedlot buyers,” he explains, “because high-risk cattle often don’t perform as well as the top end of the market. As I purchased the cattle, I should be the one to take that risk and advantage of the profit I believe is there.”
From the Prescotts’ first five years of backgrounding stocker cattle, the main lesson learned is to take the time to provide a clean environment, water and feed. Vaccines and minerals alone will not increase cattle performance. Wyatt also now watches the cattle market closely.
“I’ve found it's always better to make a little money,” he says, “than waiting to make a lot of money. Waiting comes with the potential to lose a lot of money.”
It is important to be a good partner with the landowners from whom pasture is leased, and with feedlot operators as well. “To do so we stay flexible,” Wyatt says. “We only send healthy cattle, set reasonable performance expectations and negotiate fair agreements. When we first started out, a large Wyoming stocker told me that for this business to work, everybody has to make some money. I keep that in my lessons learned to this day.”
Set your profit margin
Prescott figures out a profit margin for each pen of cattle he purchases. A way to do this is to base the marginal value of calf weight gain on the price slide between weight breaks of cattle recently sold. To find the marginal value, the nonprofit grazing and livestock research group onpasture.com first calculates the value per head of each weight class. Next, calculate the values between animals in the weight groups of interest to you. Then adjust this value per pound by dividing by the difference in weight per head between weight groups.
For a handy spreadsheet, prepopulated with the equation to calculate the marginal value of cattle weight gain, visit onpasture.com's Figuring the marginal value on calf weights.
Hemken writes from Lander, Wyo.