These ‘best practices’ in land and livestock can help you put your cattle ranch loan to good use.
Running a cattle ranch isn’t an easy endeavor, but there are some practices that can help you to make the most of your cattle ranch loan. Burke Teichart, a cattle ranch consultant and speaker, outlines his seven keys to ranch profitability in a BEEF article. Read a summary of each of these best practices below.
Your Cattle Ranch Loan and Other Land Considerations
The land your ranch is on is an important feature that can help improve your ranch’s bottom line.
- Ranch size. Other than small ranches where the principle income is in off-ranch employment, larger ranches are more profitable.
- Cows per acre. Developing features like water stock, fencing, and grazing management will allow any ranch to increase the number of cows per acre without the added expense of buying more land. If more land is needed, finding a cattle ranch loan with desirable terms is important. AgAmerica Lending’s cattle land loan packages offer customizable terms to fit an array of situations.
- Feed versus grazing. Increasing grazing is a sure way to lower feed needs, and it’s feasible in most situations to increase grazing through good pasture management.
- Employee numbers. Teichart maintains that ranches can easily pair one employee to 800 to 1,200 cows. Employees come with high overhead such as labor, housing, and equipment costs. Lowering the number of employees on your ranch will lower labor-related overhead.
- Keep the ranch’s debt-to-equity ratio low. Keeping debt low is key to having the financial flexibility to make improvements and additions.
- Trim overhead as much as possible. Overhead takes away from the profits of every business. Reduce unnecessary equipment, buildings, and facilities.
- Improve the ranch’s gross margin. Gross margin is total dollar returns minus direct costs. You can improve total dollar returns by selling more or selling higher, and you can reduce direct costs by using inputs wisely. Teichart maintains that an input—such as feed, supplements, and healthcare products—must pay for themselves and then some (which then becomes profit). Good herd management is also a sure method to increase dollar returns and lower direct costs.
As the nation’s premier land lender, AgAmerica Lending offers an array of products from cattle ranch loan packages to debt restructuring. It’s our mission to assist the country’s ranches and farms in finding financial strength and flexibility with our loan products featuring low interest rates, long amortizations, and an outstanding 10-year line of credit.