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Corralling pasture brush: A systems approach

Robert Fears for Progressive Forage Published on 29 May 2018
burning brush

Brush and trees are beneficial as shade for livestock and cover for wildlife, but dense infestations from fence to fence erode ranch profits due to limited forage production. Brush control is an expense against income in a changing economy, so its potential impact on ranch profits needs to be carefully and thoroughly analyzed.

To reduce risk of economic loss, it is wise to employ a systems approach for making brush control decisions, which involves predictions of future economic, environmental and management trends; cost comparisons of various brush control options; and an estimation of increased revenue due to the practice.

Ryan Rhoades, Colorado State University extension specialist, however, suggested possible trends for the industry and for the ranch. Industry-wide, rangelands will continue to support a majority of the world’s livestock production, non-native brush is becoming dominant, business regulations and complexity will continue to increase, and overgrazing is more prevalent, which is a major cause of production losses. At the ranch, climate variation may continue to increase, which could affect the amount of available forage. Predicted increases are cattle prices and ranch profits, wildlife income, land values and brush treatment options and effectiveness. These predicted trends are worth consideration in using a systems approach.

“Systems thinking approach is often a difficult concept to grasp because it challenges our traditional thinking,” said Dan Milberg, senior manager at Conversant Inc. “The concept is a way of looking at the world as a hierarchy of systems that all connect in some way. Rather than isolating a problem and solving it through a traditional approach, systems thinking widens the view or area surrounding a problem. It reviews an entire system when all parts are functioning and considers how every part interacts with each other. Through this approach, causal effects are identified, and a problem space is mapped.”

“A systems approach is an effective way to see the big picture, deal with complex situations and create effective long-term management alternatives for the ranch,” Rhoades said. “Managers may be required to think more systemically to determine leverage points that can create greater flexibility. Leverage points are long-lasting and self-sustaining, and are capable of changing long-term performance patterns. They may require stopping or doing less of something, or they may require starting or doing more of something. Leverage points often involve entrenched mental models.”

“As individuals, we have our own set of mental models concerning the world and people around us which serve as our comparison points,” explained Mike Haberman, co-founder of Omega HR Solutions Inc. “Unfortunately, when the world changes at a rapid pace, and we don’t re-examine our mental models, we may soon find ourselves non-adaptive.”

Economic considerations of brush control

“The objective of brush control in a livestock operation is to increase forage production and carrying capacity. Increased forage production usually results in increased conception rates and weaning weights, which have a monetary value,” Rhoades said. “Two major questions to answer are: Should I invest in brush control and, if so, which control practice will yield the best economic returns? Answers to the questions are obtained by subtracting costs of various brush control methods from the amount of revenue that can result from the practice.”

Anticipated revenue is evaluated in several different ways including net present value (NPV), internal rate of return, return on investment and payback period. NPV is defined by the Business Dictionary as the difference between present value of future cash flows from an investment and the amount of investment. For example, an investment of $10,000 today at a desired 10 percent return will yield $11,000 at the end of the year; therefore, the present value of $11,000 at the desired return rate is $1,000. Subtracting the amount of investment ($1,000) from the return rate ($1,000) provides a NPV of zero, which means the project pays the original investment plus required rate of return. A positive NPV means a better return, and a negative NPV means a lesser return.

R.A. Brown Ranch

NPV is one of the two discounted cash flow techniques. The other is internal rate of return used in comparative appraisal of investment proposals where income flow varies over time. Income flow can vary in ranching operations due to weather, livestock markets and many other factors. To account for variability, internal rate of return is the average annual income earned through the investment life.

Return on investment is defined in the Business Dictionary as the earning power of assets measured as the ratio of net income (profit less depreciation) to the capital employed in a project. It is usually expressed as a percentage and is a measure of profitability that indicates whether a ranch is using its resources in an efficient manner.

The payback period method is the evaluation of investment opportunities on the basis of time required to recoup the investment. In contrast to return on investment and NPV methods, cash inflows occurring after the payback period are not included. The formula for calculation is: payback period in years = initial capital investment ÷ annual cash flow from the investment.

“In estimating revenue from a brush control practice, look closely at grazing history and management, soil type and condition, anticipated weather patterns, existing grass species, size and density of the brush, and size of the area being considered for treatment. Consider the following factors in selecting brush control methods: environmental impacts, efficacy, treatment longevity, type and timing of required follow-up treatment, available budget and ranch resources. Size, brush density and accessibility of the pasture are also factors to consider when selecting a brush control method. Once anticipated revenue and cost of the selected control method are calculated, a range improvement analysis is prepared,” Rhoades said (Table 1).

Table 1 Range improvement analysis

Management style

Adoption of a systems thinking approach to ranching may require a major shift in management style. The advantage in making this shift is apparent in descriptions of management presented by Rhoades. “Good managers make a multitude of small decisions to collectively keep costs low relative to the value of what they produce. Excellent managers do the same but also understand and find leverage in the production system that have long-standing systematic benefit to the operation. All managers need a clear view of the financial position of the ranch and the drivers of net income and return on assets.”

“Profit-minded managers should seek practical, high-leverage interventions to the production system,” Rhoades concluded. “They should focus on strategic benefits such as carrying capacity, drought mitigation, water conservation, land value, improvement of wildlife habitat and the next generation.”  end mark

Robert Fears is a freelance writer based in Georgetown, Texas. Email Robert Fears.

PHOTO 1: Prescribed fire is a good brush control method when used properly.

PHOTO 2: R.A. Brown at the R.A. Brown Ranch in Throckmorten, Texas, shows beneficial effects of mesquite grubbing. Photos provided by Robert Fears.

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