Tap Your Resources
Adding nontraditional revenue streams to supplement grazing cattle can keep ranches afloat in times of hardship.
by Sara Gugelmeyer
In today’s marketplace, cattlemen face more and more challenges — price volatility, tax hikes and unpredictable weather to name a few. We all have to think outside the box to make ends meet at times. Being innovative has helped ranchers make it through a lot of lean years.
The R.A. Brown Ranch is no different. The historic operation knows the value of diversification. The Brown family has been raising cattle and Quarter Horses near Throckmorton, Texas, since 1895.
One might think they have it made, but even a ranch as old and successful as it is has to be innovative in ways to add revenue, especially as those of the next generation return home and want to be a part of the family business.
Donnell and Kelli Brown represent the fifth generation of Browns, and their two sons are back working on the ranch full-time, as well.
“We laugh about this,” Kelli says, “but it’s true. Donnell’s dad said years and years ago his banker encouraged him to diversify his portfolio, so he added more breeds of cattle.”
The R.A. Brown Ranch produces Angus, Red Angus, SimAngus and Hotlander seedstock. Besides the diversity in cattle breeds, the ranch markets top-quality American Quarter Horses. Plus, they use the wildlife already on the ranch as a revenue stream through hunting leases. Most recently they added a bed-and-breakfast to the list of enterprises.
The Lee House
The Browns recently purchased The Lee House, a 90-year-old two-story ranch home in Throckmorton. “It was a God thing,” says Kelli, who was ranch-raised in Nebraska. About 15 years ago, her mother came to Texas to run a bed-and-breakfast. She enjoyed it, but had to return to Nebraska to care for Kelli’s ailing grandmother.
“I was literally driving home after my grandmother’s funeral when I got a text from the people who owned The Lee House, looking to sell. They knew we always liked it and wanted to offer it to us first,” Kelli explains. “I felt like it was a sign from God. He delivered it into our lap.”
The home hadn’t been really lived in for more than 50 years, but it was a beautiful place at one time, and big, with six bedrooms. “It had good bones, but we had to put in more bathrooms and do a lot of work,” Kelli says. Now, her mom lives in part of the house. There are four bedrooms, each with its own bathroom, available to rent.
“Mom does all the cooking, and we all feel like it was a total blessing to us all,” Kelli says.
Throckmorton isn’t a huge tourist site, but Kelli says it’s a great getaway for those who want a quiet country vacation. The bed-and-breakfast is also a great place for customers from out of town to stay when they come to view bulls or horses, so it complements their seedstock operation well.
“When you are in the seedstock business, your place is always on display,” Kelli explains. “Whether it’s during the sale or any other time of year, people are stopping in to look and check us out.” She adds, “The bed-and-breakfast seemed to be another arm of the experience. Outside of marketing the cattle, we feel like it’s really important for us personally to market the experience of coming here. Through all of our advertising, we want our ranch to be a destination and a place people want to see.” Kelli points out the horse business is another side of that. “People are just amazed that there’s these guys working cattle horseback. There’s a lot of old tradition here coupled with cutting-edge genetics.”
A tool and a business
The American Quarter Horse Association (AQHA) was formed in 1940. Donnell’s granddad R.A. Brown, Sr. was one of the original founders. Since then, the family has continuously bred a band of mares and been involved with the horses.
Originally it was just about raising the tool they needed for the cowboys to handle cattle. The Browns strived to breed a horse that was versatile.
“The horses needed to be able to go a long ways and cut a cow when they got there, have good feet and legs, and hold up to a long day’s work,” Kelli explains. “We are still very interested in that because our landscape and business requires it. We still do a lot of things the old-fashioned way.”
Now returning to the ranch, the sixth generation of Browns is adding show horses to the string. The younger generation is showing in AQHA and National Reined Cow Horse Association competitions to showcase the Browns’ horses. In this way, too, the ranch is diversifying. The Brown families, which would include Donnell’s brother and two sisters and their families, sell about 20 head of colts each year and two or three ranch-broke, ready-to-go-to-work riding horses.
“So we’re now offering horses and cattle with cutting-edge genetics,” Kelli points out. “The Lee House is just adding another arm of the hospitality we hope to provide to people when they come here.”
Wildlife as a revenue source
Wildlife is an important resource on the R.A. Brown Ranch, as well. For decades the Brown family has leased parts of the ranch to different groups of hunters.
The lessees can come and go year-round to hunt and fish for a per-acre price. Most of the hunters have a long-term agreement with the family and have become real partners in managing the wildlife and livestock, Kelli says.
“They have little camps set up, and if they see a calf that’s sick or something wrong, they will let us know,” she says. “They are such good people.”
Most of the hunting is for whitetail deer, and the family has parameters on how many bucks they can kill. There is also turkey, quail, dove and predators to hunt, as well as bass fishing and, of course, wild hogs. Tucker Brown, Kelli’s eldest son, has a wildlife biology degree and has an interest in growing the hunting side of the operation.
Last year the family dabbled in doing a few guided hunts with lodging and meals provided at The Lee House, and they are considering expanding that part of the business. “Honestly, the hunting is a bit like gravy for us,” Kelli says. “It’s a resource we have and, if well-managed, it provides additional income.” Wildlife resources are something Whitetail Properties CEO Dan Perez knows a lot about.
“We deal in everything land,” says Perez, “whether it’s cattle-grazing land, timber, recreational use, hunting, minerals, every aspect.” Hunting land is where Whitetail Properties got its start and its name. The brand has become synonymous with helping hunters purchase or lease some of the best hunting properties in the United States.
Highest and best use
For cattlemen, viewing hunting as a revenue resource can be a bit of a stretch. “In the real-estate profession, we use the term ‘highest and best use’ a lot,” Perez points out, noting cattlemen probably consider grazing the highest and best use for the largest part of their property. The pond or slough on the south 40 may seem worthless.
“But it’s a duck hunter’s dream,” Perez says. “Per acre, that waterfowl property may pay far, far more than the prime grazing land. That’s the highest and best use.” Perez adds most cattle-grazing operations also have heavily wooded areas that make great deer habitat. A deer hunter is likely to be very interested in that area. The big thing though, Perez emphasizes, the duck hunter might lease the duck hunting rights on the slough, and the deer hunter might lease the brush and woodland area, but in reality they aren’t just leasing a portion of the property.
“My per-acre price to each hunter is on 300 acres,” he explains. “Even though the remaining pasture or crop ground doesn’t offer much for hunting, it gives the hunter a buffer between them and the neighboring property that another deer hunter is using. It gives them more area so that no one imposes on them.” So the 300-acre property the cattleman owns or is interested in buying for grazing land now has three sources of revenue, he points out. The investment in the land is now about to increase or start turning a profit. “For an investor, for example, he can turn a land investment from 2% return on investment to 4% or 5% very easily with land a cattleman wouldn’t be using anyway,” Perez says.
Proceed with caution
Leasing land to hunters is not without risk, though. Perez emphasizes the importance of the hunter having a minimum of a $2 million liability policy to protect himself and the landowner.
“Nowadays, a $2 million policy doesn’t cost that much, really, and it will protect the landowner should a hunter get hurt on the property,” Perez says.
Another thing important to consider from a potential lessee is references.
“I would also get a list of references from the potential lessee and call them,” he advises. “Ask if the person was respectful. Ask, ‘Did he do anything you were unhappy with?’” And then, depending on if they have good references, Perez suggests doing a background check.
“It doesn’t cost that much; you can do it online,” he says. “If this person has a history of breaking laws, I would steer clear of him. I would take all precautions as though you were having this person over to stay in your house. It’s important to be very careful.” Finally, he says, it’s critical to have an official contract prepared by an attorney.
“The document needs to include a list of dos and don’ts,” Perez says. “Be clear on where they can or can’t drive, which gates need to be locked, etc. Everything needs to be in writing.”
Consider a professional
Sometimes the landowner doesn’t want to deal with all the headaches of finding and then checking in on hunting lessees. There are leasing agents and outfitters who can handle the specifics for the landowner.
Perez points out, “This is another liability protection for you, as the landowner, to have a professional between you and the consumer.”
With Whitetail Properties it works no different than if you had a rental property on the beach. The leasing agent is the one responsible for making sure the tenants pay on time and treat the property properly.
An outfitter works much the same way and includes an extra layer of management. Typically the outfitter will spend a lot of time on the property scouting for wildlife and putting out feeders, trail cameras, hunting blinds and more. Usually outfitters offer guided hunts, so hunters are always accompanied by a professional when on the property.
Again, it’s critical to have a detailed contract outlining everyone’s expectations and responsibilities so there are no misunderstandings. Check with your state’s game and fish department to learn more about the rules and regulations to avoid costly violations.
Where can it lead
As cattlemen first, the Brown family understands it can sometimes be hard to step outside the cattle business. But it can be important, Kelli says.
She recalls a college course in resource management that taught students to assess what they have and the need to market it.
“My father-in-law at one time was selling broomweeds to flower shops,” she says with a chuckle. “Literally, he even got them to come out and gather them. He also harvested mesquite brush for firewood.”
It’s important for ranchers to look for innovative resources to stay viable in this business climate. Whether the hardship is drought or flood, coronavirus or animal rights extremists, the list of challenges seems never-ending. Don’t be afraid to look for additional revenue sources and seek help from professionals in those fields.
“I don’t know what the future is, but I think with all the talk of sustainability there’s a lot more there than we’ve ever done before,” Kelli says. “We are going to have to get outside the box, though. And hopefully that allows some ranchers some more steady income, and just adds to what we are all already doing well — taking care of the land and the livestock.”
Editor’s note: Sara Gugelmeyer is a freelance writer from Lakin, Kan.
About Whitetail Properties
Whitetail Properties was established in Illinois in 2006 and became a full-service real-estate company in 2007. Now the company is involved in every aspect of land — grazing, timber, recreational use, hunting, minerals, etc. — and operates in 34 states with 250 land specialists.
The company is based on a shared passion for wildlife and rural land management. Rather than trying to teach licensed real-estate agents about the complexities of land management in each individual area, Whitetail Properties seeks out local “land specialists” who are already familiar with the unique needs and advantages of the area and trains them in the necessary real-estate skills.
“We strive to be a household name in every state so that if you’re interested in a property in, say Illinois, but you live in Florida we are a natural fit,” says Dan Perez, Whitetail Properties CEO and founding partner.
“To us a brand is more than logo colors and fonts,” he adds. “It’s our service to the customer. Name recognition might get our phone to ring, but what we hang our hat on is the experience customers get when doing business with us even long after the transaction, whether it’s a lease, purchase or sale.”