Clayton Ferguson Ag Econ Paper 1

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Clayton Ferguson
R. Jones
AG ECON 1113
27 January 2015
Written Assignment I
The type of agricultural business that I would like to share, is the ranch I
grew up on which is owned and operated by dad, and myself. We have a stocker
steer operation, which utilizes both wheat pasture, and grass. This type of
operation has proved to be very successful over the past 35 years its been in
operation. We strive to make as much profit as possible, and use risk
management techniques such as contracts and hedges in order to secure
monetary investments within the operation.
Our ranch does not have a formal name, nor is it an LLC. But if asked, we
call it Ferguson Livestock. We are located in southwest Oklahoma near the tiny
community of Randlett. We typically run approximately 2500 head of weaned
yearling steers on wheat pasture in the fall through late spring, and on native and
bluestem grasses in late spring through the early fall. Other than grazing
yearlings, we also make use of excess wheat pasture by harvesting the grain in
early May through June. We will typically harvest 800 acres of Hard Red Winter
Wheat, and 400-600 acres of soft variety wheat as soft wheat yields best grazing
potential. Soft wheat is typically beardless and enables cattle to eat the heads of
the plant without causing any kind of digestion complications due to bearded
heads.
In our operation, we strive to operate on a low stress level. Meaning that
our cattle handling skills are kept at the highest standards, and maintain a
healthy stocking rate per pasture. By maintaining an appropriate stocking rate,
you make use of the full potential of the pasture by allowing each individual
steer to graze as much needed in order obtain a high growth rate. The faster the
growth rate means the shorter amount of time the animal is grazing on one
pasture, and enables the producer to yield high profits due having less expense
per animal. For example, a steer on wheat that gains 3 pounds per day will be
kept in one pasture a shorter amount of time than a steer that gains 1.5 pounds
per day, which enables more wheat growth. With more pasture to spare, you can
replace the fast growing steers with another load once the first group reaches the
shipping weight. By doing this, you have enough pasture to run two loads of
cattle on one place instead of just one. This year our average stocking rate is 1
steer for every 2 acres. Currently we have approximately 1320 head turned out
on 2640 acres of wheat.
On our wheat production side of our business, we expect to harvest
roughly 1200 acres this year. An average wheat yield for Cotton County is 31
bushels per acre. On a good year we have the ability to produce upwards of 50
bushels, but with the ongoing drought, it is an extremely difficult feat, which is
why we run cattle to offset any losses you may have in crop farming. We expect
roughly 35-40 bushels per acre wheat this year, as our pasture thus far, has been
outstanding.
We make use with the best methods of technology as we see fit in order to
return a high net profit. When I say technology, Im more or less talking about
the advancements in the medical field of technology on our cattle. We make use
of the newest and most advanced medicines and vaccines, which help eliminate
health losses. The higher the health loss is, the lower amount of return you are
getting. Using the best drugs out there may well create high input costs, but if
you contract your cattle high it offsets the input costs and also lowers the loss
rate. On our wheat side we use the newest and latest varieties that in turn will
have high yields in both grain production and pasture production. We have
machinery that is fairly new for example, John Deere four-wheel drive 9330
tractors, that pull 40 chisel plows. This enables us to cover many acres of farm
ground, while using less labor and less hour time on each individual tractor.
In order to run this operation, you must first look at all the inputs needed
to operate. On our cattle side our main inputs are, buying the cattle and the cost
to truck them in, health bills (vaccines, wormer, fly tags, antibiotics, etc.), feed
costs, labor (typically day labor during gathering and branding season at $125
per person per day), fertilizer costs on grass, and trucking costs to feedyards. On
our wheat side, fuel is our biggest expense, as machinery is needed to plow,
fertilize, sow, and harvest. This also falls under the category of yearly machinery
maintenance. More costs associated with wheat production are, fertilizer (typical
Nitrogen, and Urea), seed (we mainly use our own), custom harvesting bills, and
of course labor.
One main advantage of our business over most Agricultural businesses, is
that most farmers and ranchers rarely have any sort of competition. Granted the
biggest competition we have is for land. Land is by far the number one interest.
In most places the price of land has skyrocketed in the past few years. Farmers
and ranchers compete with each other on who can get the best piece of land and
the lowest price possible.
Our type of operation has the potential of making a significant difference
of the global and national economy, being in the way we produce both grain and
beef. The beef market is the highest its ever been in history at the moment as
cattle numbers are low, and demand is high. Also with being wheat producers
we impact the price of wheat. If several businesses similar to ours were to go
under, then the price of wheat and the price of beef will increase tremendously,
and in turn cause higher food costs all over the world

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