The Idea of a Stockshare – Managing Together for Better Pastures and Better Profits

This is the third in a series of articles looking at how ranchers in Texas might work together to manage a landscape as a whole. Read Part 1 here, and Part 2, here.

In my last two articles, I wrote about how a “Stockshare” program could help livestock raisers in the Gulf Coast region of Texas protect themselves from drought and return some of the elements of a grassland that suppress brush. Most importantly, I described how a continuous or low-intensity pasture rotation creates the conditions for an uphill battle against both brush and drought, and how they contribute to this situation. In addition, I described how land fragmentation has driven the economies of scale to the point that most producers cannot invest the time and resources to combat this problem on their own, even with the aid of Natural Resources Conservation Service, TPWD, and other landowner incentive programs. I wrote these articles because I wanted to propose a production model that reverses these trends, while continuing to preserve the livelihood, ownership, and heritage of ranching in Texas. Therefore, in this article I’d like to describe how an actual Stockshare might function with the right combination of landowners, with a specific emphasis on my own experiences grazing cattle in the upper Gulf Coast region and how the economics of this model might actually square between landowners of different stripes who represent the diversity of landowners in Texas.

The bedrock of any arrangement between landowners to pool cattle would be to determine a base stocking rate for their land. Stocking rate is a complicated economic determination, based on the history and method of cattle production unique to an operation. However, a base stocking rate could be defined as the number of cattle a piece of land can support year-round with minimal outside feed, and these numbers are readily available with help from NRCS and local agricultural extension stations. Consider the following property map:

In this situation, there are 1,250 acres of property total. All of these owners have decided to pool their cattle together in order to obtain the benefits I outlined in the last two articles. They decide that this land, which is marginal, can support a base stocking rate of 9%, or nine acres to the Animal Unit, which is approximately 113 animals. By pooling their cattle together, they are able to add to the pastures available to each landowner for rotation, and add flexibility to their management goals of fighting brush, fostering plant diversity, and increasing the available forage for their cattle. Let’s talk about each landowner in turn:

Sue is retired from the city. She needs cattle on her property to meet the requirements for agricultural exemption, so she decides to lease the property to the stockshare at the rate of 9%, or 9 acres to the Animal Unit. She contributes two pastures, each roughly 75 acres in size, and Bill, who leases the available pasture, pays her around $2430 a year.

George used to own cattle, but sold them a few years ago. He would like to own cattle again, but no longer has workable pens, a tractor, or any of the other equipment that go along with owning and working cattle. Because of this, he reaches an agreement with Bill. He will purchase enough cattle to stock his land, but will pay Bill for the management. Bill agrees to provide care for the cattle and incorporate them into the herd at a cost of $15 per head/month minus the cost of veterinary and supplementary care. At a 9% stocking rate, this comes out to $1620 a year for 9 cows. In a decent year, he clears $3000 in profit, and maintains his agricultural exemption without having to do much work. Bill, on the other hand, receives a little steady income to do the work of managing a herd of cattle, which he would be doing anyway.

Helen runs 100 head of cattle on improved pastures. Her stocking rate is quite a bit higher than the 9% agreed upon base stocking rate. But a local ag extension officer agrees that her soils, which form part of a river bottom, can handle a significantly increased stocking rate of 20%. Therefore, she enters the stock share on equal terms. However, Helen is nearly 65 years old and is thinking about retiring. Bill cannot afford to buy land at current prices, and Helen no longer feels able to do the heavy lifting. She agrees to pay bill $9 per head/month to provide some of the care for her cattle, while agreeing to oversee the paperwork associated with the stockshare. She therefore enters the stockshare as something of a secretary, contributing to the financial and fertility programs of the herd, including her cattle, and Bill receives an extra $900 dollars per month in income for providing care.

Bill is a young man who would like to get his start in agriculture. The income he receives from providing care, leasing, and owning his own land and cattle allow him to make a living in the area, and he feels proud of the fact that he does his job well. Because there is thick brush on their properties, Bill uses a combination of feed, horses, and dogs to herd the cattle to the new pastures. After a “breaking in” period, the cattle get used to the rotation. During the winter months, Bill is able to seed one pasture a year with a combination of crimson clover and winter rye. These cover crops contribute to the overall soil health, and after five years the ag extension agent agrees that the base stocking rate of his land can be increased to 12%. He is now free to add 15 more cattle to his property.

These landowners are a rare group. They all believe in and share in the value of ranching heritage. Helen, in particular, loves to work cattle on horseback and remembers the days when neighbors helped each other gather, brand, and work each other’s herds. She and Bill agree to organize a roundup once a year with friends and family. Everybody contributes to the branding and afterwards they eat barbecue and have a few beers. Over time, they discover that it is much easier to do prescribed burns on their properties without putting their available forage reserves at risk and also that the grassland bounces back stronger after they do mechanical brush clearing. Over time, these factors lead to an overall increase in the health of the soil and together, the landowners decide to raise the base stocking rate to 12%. They have learned that in agriculture the best way to take care of your wallet is to take care of your soil. In addition, they have figured out that the ranch as “island” method of production has drawbacks. They are all able to materially participate in the ownership of the Stockshare in a way that represents the true diversity of their ownership and available commitment.

The most important thing is that they can promote more competitive grazing and denser concentrations of cattle with little to no capital outlays such as the construction of additional cross fences or maintenance-intensive electric fencing. Overall, in its purest form a stockshare pairs economic efficiency with ecological resiliency.

My prediction is that Helen, keeping track of the herd financials, would learn that over a ten year period they would be able to increase their stocking rate from 9% to 15% depending on rainfall. And yet, their per animal cost would only rise by a fraction of a percent. I predict that what she would observe is a classic economy of scale. By that I mean that if the stockshare ran a herd composed of 100 head, and they added ten cows, or 10% of the total, their costs would not go up by 10%, but rather some figure below that, perhaps only 7.5%. Assuming, that is, they can all agree that the benefits of cooperation outweigh the frustrations–by no means a guarantee.

But that’s just a prediction, based on a “perfect world” scenario. I can think of a thousand reasons why many producers would not want to engage in this kind of cooperative grazing. It is easy to think of criticisms, harder to think of solutions. Still, I like to think that if a rancher, an ecologist, and an economist sat down and had a beer together–this is the sort of thing they might dream up.

Read Part 4 here.

Several members of the On Pasture community have already expressed interest in having a cup of coffee with Will to explore this idea further. If you’re interested, and especially if you’re in Texas, feel free to email us and we’ll put you in contact with the group.