Zachary Jones Talks About the Financial Payoffs of Holistic Management
“In practice, Holistic Planned Grazing confirmed that our initial stocking rate assumptions were very close to being on target. This changed the "nature" of the business because we are indeed able to run the animals we anticipated, which, when calculated, is resulting in 2 to three times higher stocking rates than historical stocking rates on this land. Also, we have holistically based ecosystem processes monitoring in place, which will allow us to measure longer term trends (looked at objectively every few years). Furthermore holistic management and the decisions we made helped us place a good crew with a high level of ownership on our ranches.
“When you create a Holistic Financial Plan every expense and income decision is made with reference to the ranch’s Holistic Goal. And, profit, or DCF, is withheld after you figure up your gross profit (income minus cost of revenue available to cover overheads) before you determine your expenses. Planning profit before expenses helps prevent expenses from eating away all your profit—simple but difficult!
“The Holistic Financial Planning process allowed us to create an appropriate financial plan for BFLL that only requires 38 percent of gross revenue to cover direct and overhead costs, including management fees. Sixty two percent of gross revenue is therefore available for investment back into the ranches and as distributable cash flow. Expenses to run a ranch hovering at around 37% of gross revenue is very difficult in a "conventionally" managed ranch given high costs of fuel, harvested animal feed, equipment, other repair and maintenance, and labor per unit costs. Holistic management allows us to manage in a financially superior manner.
“What’s more sound holistic management and the hard work of our crew and management team motivated the cattle owners that grazed our ranches last year not only to come back again this year, but also to increase the number of head they brought to us by 50 percent. That's a cumulative, real-world, observable data point.”
Addressing Public Policy Roadblocks with Triple Bottom Line Payoffs
As Grasslands expands further into the Great Plains the business anticipates acquiring leases on more Bureau of Land Management and State School Trust Lands. This is both the nature of the business, given the scale we intend to operate at, but also represents a strategic necessity in order to influence public land management policy. BLM and state land leases come with close restrictions on the number of cattle that can be grazed per acre due to the conventional wisdom that cattle are "the problem" due to over grazing. These strictures inhibit the HM business model, which because it restores biomass so effectively, makes it possible for more head of cattle to be profitably and sustainably grazed per acre, and for ecosystem resilience to actually be enhanced in the process. Happily, Grasslands is already making considerable headway in convincing public authorities of the virtues of Holistic Management, as this story related by Zachary illustrates…
“A group of about 35 Montana School Trust Lands officials came to my family's ranch, Twodot Land and Livestock, south of Harlowton, Montana, at the end of May 2011. Their purpose was to see a holistically managed ranch and observe the effects and ecological benefits said management have on State Lands. They were also curious about the social and financial dynamics. They said there are three types of lessees: (1) really bad ones that hammer the resource and don't respond to communication; (2) decent managers that ebb and flow, some good, some bad, and (3) outstanding ones, good for all dynamics, and role models. From their observation of our family ranches they are seeing Holistic Management, properly practiced, as being able to shift more producers to category number 3.
“What’s more, if holistic management can indeed increase stocking rates while maintaining and paradoxically increasing the ecological integrity of the resource, then increasing stocking rates makes complete sense to Montana State Lands. That’s because the more animals their lands, managed by lessees, can sustainably/regeneratively graze, the more revenue they generate to help pay for the operation of public schools across the state. And, they want hunters, recreationalists, and conservation groups to be happy too. (Good management of the land benefits wildlife populations in a big way. Therefore, there’s more wildlife to hunt and observe. ) And they want to be happy themselves. And, they want the ranchers (the lessees) to be happy too. It's actually a really simple situation-- we have to manage for what all want and in this case we all want the same thing (sound triple bottom line profit); we just need to agree on the means to achieve it, and ranches like Twodot and now Grasslands, with holistic management, can be a unified voice in the dance.”
The Grasslands Ranchers Share Their Stories