We were a supporting partner for the 2024 Trust in Beef Sustainable Ranchers Tour, with five educational stops across the U.S., including at Jorgensen Land and Cattle in South Dakota. The ranch’s CEO, Nick Jorgensen, is an elected Director for Farm Credit Services of America (FCSAmerica).
Jorgensen and his financial officer, David Karnopp, a vice president and beef specialist in commercial lending, led a discussion on the tour. Drovers wrote about the conversation -- Managing the Financial Risks of Conservation. Excerpts below from the article underscore how we support producers interested in adopting or expanding sustainable practices.
Jorgensen Land and Cattle, which grows multiple crops, has a registered Angus cow herd and commercial Angus bull operation, and provides guided pheasant hunts, also was featured here as part of our 2022 Sustainability Report.
To be Sustainable, it Must be Profitable
Any operational change to a farm or ranch carries some level of risk. For conservation practice implementation, the risk may be variable, but it’s never zero.
The decision to add to the already increased level of risk that a farm or ranch is carrying is often the culmination of hours of intense planning, research and partnership. Even after that process, the final decision most often hinges on profitability.
Karnopp recommends building in diversity where possible. Diversified operations, like Jorgensen Land and Cattle, can use bumper years to shore up working capital for future conservation improvements.
“We’ve seen depressed prices in corn, wheat and soybeans right now, but cattle have continued to be strong,” Karnopp said. “We’re probably at the end of a 10-year cattle cycle, but the Jorgensens have been able to build up their operations, retain some cash and build up their working capital.”
Patience and Creative Financing from a Lender
Jorgensen and Karnopp agree that conservation investments require an increased amount of patience, and often creativity.
“As a lender, if an operation is wanting to invest in sustainability, we know that return on investment is not going to happen immediately,” Karnopp said. “We might have to put together special loan packages, refer them to government programs or bring in third-party assistance.”
Jorgensen added: “Whether you’re talking about virtual fencing or genomic testing or an extremely vigorous embryo transfer program, all those things require that you’re taking on a certain amount of risk. We try to take smaller, measured risks on smaller portions of our operation. In doing that, I think it creates trust that we’re not coming out there, putting the boat at risk, so to speak.”
Decisions Informed by Data
While the procedures for on-farm accounting systems are different from operation to operation, Karnopp said that having a diligent system in place helps when seeking conservation funding.
“The best operations that we work with have budgets in place,” he said. “Working with a good accounting firm is a huge plus as well.”
Jorgensen said he spends hours with his accounting system, making the operational analysis needed long before his conversation funding request ever gets to his lender.
Build a Business Case for Sustainability
Jorgensen warns against getting caught up in technology and conservation investments as a “shiny new thing.”
“It’s really easy to look at them and think they are cool and want to try them, but there’s got to be a sound business case for it,” he said.
Here are some questions he routinely asks himself when considering an investment:
- What kind of business impact will this have on the ranch?
- ·What kind of people impact will this have?
- ·What is the financial impact?
