Restoring Deserts: The Grasslands Story

Using the capital markets to further conservation through holistic ranching.

The Grasslands Story

…by Jim Howell

Grasslands LLC is a for profit ranch/farm management company. Our company was originally a part of the Savory Institute, founded in 2009 by myself and my wife, Daniela, Tony Malmberg, Allan Savory, Jody Butterfield, Shannon Horst, and Zach Jones. Soon after our inception, we realized that we (the owners and founders of SI) wanted to pursue multiple enterprises, some of which were more potentially profitable than others. We eventually elected to create a non-profit arm of our project, which became SavoryInstitute.org, and this is where all of the activity tied to the SI Network/Hub project, consulting and training endeavors, removing market and policy barriers, etc. lies. Daniela currently leads SI.org.

We simultaneously created Grasslands LLC (in early 2010) to exclusively focus on the acquisition and management of grassland assets. Zach and I were given that job. We elected to partner with two impact investors, John Fullerton and Larry Lunt, who appeared just exactly when we needed them. They agreed to both provide operating capital in the Grasslands start-up phase, as well as invest in our first ranches.

Our original “pitch” to John and Larry centered on a land investment model based in New Zealand. I had been working in Southland, NZ with a large consulting client in 2008-09, where we were engaged in the conversion of a substantial sheep, beef, and deer property into a “dairy support” property. Dairy support refers to the contract grazing of young dairy heifers (from weaning at just 100 kg live weight, to 23 months, bred and ready to calve and begin milking), as well as wintering dry dairy cows. Most Kiwi dairy farmers elect to contract out this growing phase of their replacements, and wintering of their dry stock, preferring to focus on the business of actually milking cows. I realized there was significant potential in finding run down sheep and beef farms (with the potential to be dairy support properties), buying them at sheep and beef prices, and then converting them to dairy support grazing. We anticipated that the resulting return on investment (ROI) would be attractive to potential investors.

In that original pitch, we also included a South Dakota ranch investment alternative. I had located (on the internet) a handful of (what seemed to be) very undervalued ranches in western South Dakota—Butte County, to be exact. In December of 2009, Zach and I made a trip out to inspect these places. We actually were a little giddy when we realized how productive that country was, how flat it was and easy to manage it would be, how much water it had, and how cheap it was, on a stock unit basis, relative to any other ranchland we were aware of in North America.

That first pitch, both the NZ and SD propositions, intrigued both John and Larry, but they didn’t know us yet and were reluctant to dive into a foreign country. But, they were comfortable with getting started in South Dakota, and Grasslands was off to the races.

Amazingly, we managed to actually get those first two ranches (which are now our BR and Horse Creek properties) purchased in March and April of 2010, and a few weeks later were turning out several thousand head of yearlings. We had to scramble to find the cattle. We were in a new “neck of the prairie” and nobody knew us yet. Zach did a great job of finding a handful of local large-scale ranchers still looking for grass, and negotiated the deals.

This all happened very quickly and our luck felt a little too good to be true, but reality quickly set in. Suddenly we needed to rapidly find some competent cowboys—somebody to actually get the work done. Our first call was to Brandon Dalton—not to try to hire Brandon, but to inquire about a former goat herder of Brandon’s who we knew had a good reputation, and who we suspected was looking for a job. We didn’t expect Brandon’s reaction—he said he actually might want that job. We said great, meet us out there next week. We came to terms with Brandon, he moved his in-law’s travel trailer out to Horse Creek, and we were suddenly ranching in the Northern Great Plains.

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We had a solid first year on the BR and Horse Creek (14,200 acres total, and collectively owned within an entity we named Belle Fourche Land and Livestock, LLC—BFLL for short), and John and Larry were keen to expand. We did so in Feb. of 2011, when we closed on the Cinch Buckle Ranch (also with Larry and John as investors), near Broadus, Montana—39,000 acres of beautiful and diverse short grass prairie.

Of course, now we needed another solid crew. Brandon told us Ron Goddard and family were at the point of considering a transition into a new ranching situation, and we came along at the opportune moment (Brandon had previously wintered goats on the ranch Ron used to manage). Ron and Kathleen cowboyed in the early 1980s on the Mountain Island Ranch in western Colorado, under the leadership of Miles Keogh, one of the first holistic management educators in the US. So, Ron and Kathleen cut their teeth in large landscape planned grazing with one of the best. Daniela and I also worked with Miles in the mid-90s at the High Lonesome Ranch in southwestern New Mexico, so our common connection back to Miles was a good start. Zach and I met Ron at a coffee shop in Billings, MT, on the morning of the day we were scheduled to close the Cinch Buckle deal, and made him an offer. That night Ron called us and said, “If your deal didn’t fall apart today, I guess we’re in.” They’ve been in ever since, and now they’re in deep, big time, up to their armpits in scrub cattle and alligators in the swamps of southern Florida (more on that below).

That first year, we took over the management of the cattle belonging to the Cinch Buckle seller, Tom Pezarrossi (he elected not to sell his cattle), and added 900 yearling replacement heifers from Jim Bode Scott of the S Ranch—great, long time friends of the Goddards. We’ve since evolved a solid relationship with the Padlock Ranch, based outside of Sheridan, WY, and custom graze both cow/calf pairs on a year round basis, and seasonal yearling replacement heifers from late summer through early winter on the Cinch Buckle. BFLL remains a summer grazing operation, focusing on “grass yearlings” from May through Aug./Sept./Oct. (depending on the year), in addition to a few hundred pairs that we graze into the fall. The BFLL managers have included Brandon (2010-12), Mae Rose Petrehn (2013), Sam Fyler (2014), and Buck Highberger (2015). Nolan and Eva Reil now manage the Cinch Buckle, with strong support from Timber and Cassie Holmquist.

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We’ve had multiple ups and downs on both BFLL and Cinch Buckle to date, but overall are on a positive triple bottom line trend. The downs included the 2012 drought (which especially impacted BFLL, both in 2012 and 2013), toxic water issues on all ranches (but especially Cinch Buckle), maladapted Texan cattle on the Cinch Buckle one winter, Crow Creek (aka Cow Eating Creek) on the Cinch Buckle, hailstorms, etc. But, we’ve learned from all that, adjusted accordingly, and we’re essentially performing close to our original projections, and the BR, Horse Creek, and Cinch Buckle have proven themselves as great ranches.

We continued our northern plains expansion in early 2012 with the acquisition of the 53,000 acre Antelope Springs Ranch, near Cohagen, MT—once again with Larry and John. We leased the ranch back to the seller, Terry Todd, over that first growing season, and took over day-to-day management in Nov. of 2012, when Brandon and Brandy (and boys) made the move from their wind-pummeled, gumbo-laden campsite to the relatively luxurious and spacious digs of our new Antelope Springs headquarters house. We also made them the new AS managers, and added Ryan and Bethany White and family soon thereafter, along with stints by Tyler Westhoff, Mae Rose, and Brent Nixon. Our first year of actually managing the ranch, 2013, ended up wet and grassy. That fall we brought on Trevor and Amber Smith and family, who moved into the Brooks place as assistant managers.

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That winter started early and stayed cold. We had a lot of young cows on AS (mostly owned by the Donald Family’s Cayuse Cattle Company, based near Melville, MT) that were naïve to the vegetation, wind, topography, extreme cold, and murky water of eastern MT, and they were set back that winter. Even though they largely healed up by early summer, and even though we had another decent grass year, we had a bad breed up on those cows in the fall of 2014, and we’ve been trying to make sense of it since. In addition to a year round herd of cows, we’ve been bringing on big numbers of grass yearlings from May to Sept., also custom grazed for Cayuse.

The growing season of 2015 also proved to be challenging. AS ended up being in the middle of a fairly isolated droughty patch of Montana, and we estimate that we only grew 50% of the forage produced in 2014. The AS crew had to undertake some significant re-planning. With the guidance of Tony Malmberg (founder and board member of Grasslands, and as of the fall of 2014, also the NGP Senior Regional Manager) and execution oversight of Trevor, our adjustments worked. Performance on yearlings was very good at 1.6 lb. daily gain, and breed up on the cow herd was back up in the low 90s, so we pulled through in good shape, all things considered. We started to supplement with protein much earlier (in the winter of 2014-15) than the previous year, making sure those cows didn’t drop off appreciably in condition. That seemed to be the difference, given the very solid performance over the following (and even though much sparser) growing season.

In the fall of 2014, Brandon and Brandy made the move to their new post in NZ (keep reading), and Trevor and Amber were promoted to the leadership role at AS. They’ve done a great job. Kelly and Sherry Brink came on at this time also, rounding out the AS crew. Despite the challenges posed by this tough patch of Montana, we nonetheless love this ranch and are excited by the prospect of figuring it out and
making it work.

While all this Northern Great Plains work was going on, we were also in the process of trying to expand our portfolio of managed properties in New Zealand. Beginning in the fall of 2011, when we were having a tough time finding investable opportunities in the northern plains, I started to beat the bushes in New Zealand again. My efforts led me to Lees Valley Station, in the province of Canterbury on the South Island.

Lees Valley takes in close to 70,000 acres of flats, hills, mountains, rivers, and forests, encompassing nearly the entire catchment basin of the Ashley River and associated tributaries. The first time I drove into the valley, I knew we somehow had to figure out how to bring this place on board as a Grasslands project. It took us two years, but eventually we got it done—this time with Thomas Peterffy as our investor. We “settled” (closed) in early Sept. of 2013.

Zach and his girls moved to the southern hemisphere to lead this project, initially for one year, but looks like their stint will stretch out to at least 3 years. They’re still there anyway, in Nov. of 2015.

Lees Valley Station is one of the world’s most diverse grazing operations. We are carrying close to 16,000 sheep, a thousand mother beef cows plus yearlings (replacement heifers and steers), nearly 800 European red deer, and several thousand dairy heifers and dairy bulls, both calves and yearlings. We graze the dairy cattle on contract for their dairy farming owners. This “dairy support” enterprise is the original business idea that kicked off Grasslands, and we are now engaged in this activity in a big way at Lees Valley. We’re currently heading into our third growing season, and unfortunately, both last year and this year have experienced very dry springs/summers (the growing season of 2014-15 being the driest in 60 years), but we’ve kept our heads above water and are operating solidly in the black, as we are on all ranches.

Mike Jones (along with wife, Pip) is now our station manager at Lees Valley. As a longtime Kiwi high country farmer, Mike brings years of credibility to our team. Brandon is our lead grazing planning coordinator (we call him the “herbivorist”), orchestrating the planning and oversight of movements of thousands and thousands of livestock, on one of the world’s most topographically diverse grazing properties. Rebecca Cresswell is our NZ “Senior Operations Manager”, handling all legal and administrative matters that keep the wheels turning. She is incredible. Other key personnel at Lees Valley include Rapha Meier, Ross Saunders, Brian Thompson, Grant and Barb Plaisted, Ian Doody, Deb Hopewell, and Daniel Rossiter.

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In May of 2015, we added another South Island property—Gleneyre, a 900-acre mostly irrigated farm just over the mountain from Lees Valley, on the Canterbury Plain. We are using Gleneyre as a complementary property to Lees Valley Station, where we can fatten lambs and beef cattle, start dairy heifer and bull calves, winter dry dairy cows, etc.

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In January 2014, we took on a contract to manage the livestock operations of the Hana Ranch, a 4300-acre cattle ranch on the eastern tip of Maui. The Denver-based firm, Biological Capital, negotiated the Hana Ranch purchase. We served on the due diligence team, and then subcontracted with BLC to take on the management of the cow herd once the deal closed.

This has been a great opportunity to expand our grazing management skills in one of the world’s most unique ranching settings. We’ve carried both a 1000-head herd of mother cows, and depending on the time of year, a 300-600 head herd of young growing and finishing stock. Most of the ranch’s progeny has been marketed as grass finished beef through Maui Cattle Company, a locally owned cooperative. Tyler and Leilani Westhoff have stewarded this project, which is winding up as we come to the end of 2015, when BLC will take over the management of the cattle operations. It was great while it lasted and we’ll miss the incredible landscape, and unbelievable forage base, of the Hana Ranch. This is one of the few places in the world where it’s possible to actually see the grass growing, from one day to the next, year round.

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And finally, the Grasslands journey has led us to the Florida peninsula, where we’re now immersed in the bahia grass, palmettos, and wetlands of one of America’s most beef cattle-dense regions. We closed on the Blue Head (31,300 acres between the towns of Arcadia and Lake Placid), also with Peterffy, in November of 2014, but the existing lessee’s terms gave him till August of 2015 to wind up his affairs and vacate the property.

This is a huge operation, with the capacity to eventually run close to 8,000 year round cows, so we needed a seasoned, highly competent manager who we knew was up to the task. Zach and I figured the Goddard clan might be keen to take it on, but also weren’t sure they could tear themselves away from their beloved Montana. It took some deep thinking and soul searching, but eventually Ron, along with Kathleen and sons Jason (and wife Tiffany and kids) and Jake, decided that they’d give Florida ranching a go.

They moved on-site in July of 2015 and spent a couple months acquiring equipment, meeting neighbors, visiting other ranchers, and acclimating to the heat and humidity. Their investigations led to the conclusion that the massive brahman-influenced cows of southern FL are not the ideal match for this environment. Instead, they developed an appreciation for Cracker cattle—descendants of the original bovines brought to the New World by the Spanish in the early 1500s. These cattle went feral and eventually became naturalized across northern Mexico and the southern edge of the US. After 400 years of natural selection, they became supremely adapted to the heat, humidity, parasites, and forage base of their new North American home.

The problem is that there aren’t many FL Cracker cattle left, but there are still many of their Texas cousins—both the diminutive Corriente, and the slightly larger Longhorn (locally lumped together and referred to as “scrub” cattle). Along with a handful of buyers, Ron was able to put together our first 4000 head over the course of the past couple months, which brings us to the present day. As we move into
2016, we plan to continue adding to our scrub herd, potentially building to 8000 cows.

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These cattle are small (800-1000 lb.), tough, frequently produce a calf till they’re 20, prefer to graze/browse on native grasses and brush (of which we have copious quantities at Blue Head), are resistant to internal and external parasites, and are docile and handle well. On the Blue Head, they are currently in one giant herd. It just might be the largest herd in the US, and very likely the largest herd in the world being managed according to a holistic grazing plan.

We’re excited about what the future holds at Blue Head, which is not only a fantastic grazing resource, but also a wildlife-dense gem of nature. Hundreds of bird species, including Osceola turkeys, along with FL whitetails, wild hogs, and countless alligators make their home on Blue Head. It also supports extensive habitat for some of Florida’s threatened and endangered species, including the gopher tortoise, indigo snake, scrub jay, and grasshopper sparrow. We operate an extensive hunting lease enterprise at Blue Head also, which is led by Florida native Rowdy Sullivan—a wealth of knowledge on all things Floridian.

Last but certainly not least, we’ve developed an office of super-humans in Bozeman, Montana, where Jen Tanner, Mark Blackford, and Trace Klein run a tight, hyper-efficient administrative hub. They keep the money flowing, create all the monthly financial reports for our North American operations, and attend to any number of details, from insurance claims to internet queries to map making to party- organizing. They have become the indispensable beating heart of Grasslands.

Posted by Chris Gill

  1. James McAllen Jr May 3, 2016 at 2:59 pm

    Your article on Grasslands LLC was really interesting. After cutting through some of the business jargon and lingo, I finally figured out that they are a custom grazing outfit. Custom grazing can be very profitable, especially if you have a good client base. It’s a much better scenario than owning the cows, that’s for sure.
    I still can’t comprehend the amount of work, detail, and risk that is involved with a world wide operation like this. I mean, I have trouble just keeping up with my own ranch, and I live on it! Maybe there are still some things I don’t understand…
    Regardless, I’m very impressed. Please update this article when you can. I’m interested to know how the “Cracker” or Longhorn cattle work out in Florida. Good stuff!

    Reply

    1. Hello James,

      Actually the own the land and animals.

      Thanks,
      Chris

      Reply

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