If you are looking for a way to make a profit with beef cattle in an arid environment, I highly recommend you learn more about Alejandro Carrillo and the Las Damas Ranch located in Chihuahua, Mexico. The reason for this profitable business model is not access to cheap labor as some people may assume, but because it is a low-input system. How does he do it?
This 25,000-acre ranch was managed conventionally from 1985-2006. But as Alejandro moved to Holistic Management, he added to the original 12 paddocks to create more than 500 paddocks (permanent and temporary fencing being used) and combined his herds into one herd. With these changes he was able to give 10-14 months of recovery to his forage while grazing each paddock one day or less.
This kind of grazing management has resulted in a 221% increase in stocking rate moving from 135 acres/cow to 42 acres/cow. Water infiltration rates are now 18-20 inches/hour versus the neighbor’s land which average two inches/hour.
Alejandro sells most of his beef into commodity markets with a gross profit/cow on the wholesale market is about US $300 per animal, and that represents about 80% of their culled cows. Their gross-profit per steer on the wholesale market is about US $450.
To create the infrastructure to allow for this type of management, Alejandro invested in 21 water reservoirs and 38 gravity-fed water troughs. The total cost for this infrastructure development is $40/acre or $1,000,000 over a 15-year period. This, $66,667/year price tag means they were able to triple the number of cows they ran from the original 200 cows to now 600 cows even with drought and less than average rainfall, increasing their net profit by 350%. They could use part of the profits to pay for that infrastructure each year keeping risks low as they built resilience in their land and their grazing system.
As Alejandro notes: “Many people believe that our costs are low because of cheap labor in Mexico. In reality, the major expense in most ranches in northern Mexico is hay and any inputs for the cows. We give no inputs to our cattle but sea salt, that it is! The second major expense is fuel, but we have been installing solar systems which help reduce fuel expenses. The third major expense is labor. We have one full-time employee for each 500 animals.
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