Andy Rahn: 0:03
I am Andrew Ron. I’m an accredited rural appraiser and I am president of the Montana chapter of the ASFMRA.
Colter DeVries: 0:10
I’m Colter DeVries, owner of Ranch Investor Advisory and Brokerage Services.
The Ranch Investor podcast is the most downloaded and informative industry-specific content that intrigues while entertains.
Colter DeVries: 0:24
So you’re Alex, you were truck driving and actually we’ve had some boot strappers on here before and Alex absolutely bootstrapped from nothing to get into what is a dynamic operation that’s very critically thought through. I mean, he takes into consideration the genetics, of course, the profits inputs, the landscape and the grazing methods, and we’ll get into that, but he’s got quite the bootstrap story. It’s impressive what him and his longtime girlfriend were able to accomplish from nothing. Neither one of them had a background in agriculture, I mean, other than helping out the neighbor, right yeah. And now you have what we call multi-species cattle and sheep. And so you’re driving truck and was there a point where, kind of like Afghanistan, you’re like this ain’t going to work for me, I got to do something else.
Alex Johnston: 1:27
Yeah, it was very quickly apparent that it was a dead-end job. You know, I was earning a lot of money as a truck driver, but I was never going to be anything more than a truck driver. Not that there’s anything wrong with me as a truck driver, it just it wasn’t good for me and the nature of the employment was short-term taskings and lots of late nights, early mornings or night working, and it started to affect my mental health quite badly. When I went to work I didn’t know how long the shift was going to be, because it’s holiday or almost all day work, but I could be there for eight hours or I could be there for 15 hours. It became very difficult to plan anything and I used to prefer driving at night because there was less traffic and I interact with less people. But then also constantly switching shift patterns and sleep deprivations really not very good for anyone. So I was looking for a way to make a living outside of that industry. I attempted to work in the office within Horwich and it didn’t agree with me very well. I did a little bit of Horwich consultancy and I kept driving in my spare time. But I put an advert on social media because I’d read a magazine article and said if you want to be a sheep farmer and that’s the most low-capital means of entry into UK agriculture you don’t need to rush out and buy sheep because they can be quite expensive. You can contract with a sheep farmer, take his U-Lams at Weaning and you keep them for 12 months and in that 12-month period you would mate them and lamb them and then you would retain the progeny and you’d return to him a more valuable female then because she’s got a motherhood behind her. We would call them two-tooth or a shearing or a save. There’s lots of different regional names for that age class of sheep. In a cattle context, you basically take somebody’s heffa calves at Weaning, keep them until they wean their calves, so you’d return to him a one cropped animal which is more valuable than the heffa calf we call those replacements.
Colter DeVries: 3:34
Yeah, so they are outsourcing the most expensive and difficult aspect of creating good maternal cows. So how much of the risk do you bear in that situation?
Alex Johnston: 3:46
Well, I didn’t actually do it. I couldn’t find year-round grazing, but somebody introduced me to a sheep farmer and he explained the concept of custom winter grazing to me, and at the time I was living in the south-west UK which is a big dairy area. So in October, late September, depending on whether all those dairy cows would be going into a shed where they would be housed for the winter and they’d be all there grazing ground and silage ground that the dairy farmers would want cleaned up with sheep, so sheep would come in and graze that grass and then in the new year they’d get lost spring growth.
Andy Rahn: 4:20
So it sounds like rotating grazers is kind of common practice.
Alex Johnston: 4:26
In specific operations? Yeah, I wouldn’t suggest it’s an industry widespread practice.
Andy Rahn: 4:34
It kind of seems like that’s a practice that’s maybe in the past. It’s been, it was more common. But it’s kind of coming back people appreciating because, well, montana was really strong in sheep 100 years ago but then really went more to cattle and it seems like sheep were somewhat making a comeback here. Lamb has gotten more popular but like when. I was a kid, I mean my association with sheep, with lamb, was mud and you know, that greasy mass that felt very popular. Yeah, yeah, and actually I’ve had an opportunity to. I took a ranch tour this summer on a sheep ranch and then we actually have a big wool processor here and billings Right. Yeah, and back in the day I think wool used to be a lot more valuable. I’m trying to remember what that’s right.
Alex Johnston: 5:32
Yeah, from the stuff I’ve read, there used to be some legislation whereby as much US military equipment was sourced within the US as possible and tripped wool, wool uniforms, so that compulsory purchase of wool really underpinned the US sheep industry. And then I can’t remember now if it was a repeal, maybe after the Second World War. Right right, and also with the rise of synthetic clothing, there’s much less demand for wool, particularly strong wool, which is the sort of 30 micron blister.
Colter DeVries: 6:07
So, alex, I want to hear about the story again. You and your longtime girlfriend, you wanted to do this and of course you couldn’t just quit your job. So you needed to keep the truck driving job to help bootstrap and cash flow. And we have a lot of first time first gen producers that tune in and they really loved the Sage Askin two episodes because Sage was a phenom, but much like Sage, alex, you had to kind of keep a job to cash flow but you had to have the lowest cost entry right, which was custom grazing. But then land access is always someone’s number one issue. You can get the stock, but the land access is tough. Tell me about the story of how you and your girlfriend went about finding land in the UK.
Alex Johnston: 7:08
Well, initially I was in Gloucestershire in this dairy area and this farmer, marcus, had explained to me about custom grazing for winter, so I needed to find some land. I got a phone book and found loads of farmers addresses and wrote letters to 100 saying who I was and what I wanted to do and this is what I can offer. And then I was working about an hour from home at the time and I got some business card printed and every time I drove home, I would just take a slightly different route and knock on doors that looks like a bit of grass there, or leave a business card or try and have conversations with people. 90% of success in life is interpersonal relationships, so it’s about establishing those relationships and I was quite lucky in the first year. One farmer responded to my letter and one farmer responded to my business card, so I had a really poor conversion rate. I think about 0.5%. Sounds like 2% 2 out of 100. But I got my foot in the door and then I put an advert on social media about offering custom grazing. Really, I got this land available. I can fence them and move them, and I don’t know what I’m reading. There’s a great free resource called the Nuffield Scholar Reports.
Colter DeVries: 8:21
What is it?
Alex Johnston: 8:21
called the Nuffield Scholar Reports. So the Nuffield Trust gives scholarships to a number of farmers every year from Australia, New Zealand, the States and the UK and there’s a big conference in the States and then people travel around and visit whatever aspect of agriculture they’re interested in genetics or welfare or grazing techniques and it covers all enterprises beef, dairy sheep cropping and they’re all free to read online.
Colter DeVries: 8:51
Alex Johnston: 8:51
Nuffield, Yep. Nuffield Scholar Reports. I’ll send you a what’s up after Nuffield Scholar.
Colter DeVries: 8:56
Reports. You can put it in the show now. We need to put that in the show notes for sure. So did you get a scholarship?
Alex Johnston: 9:03
No, I didn’t apply, it’s just a good means of reading and acknowledging the research that’s produced. And there’s one called Mike Lange, called the farming ladder, and it details his sort of journey from nothing to you know how to farm tenancy and works full time in agriculture.
Colter DeVries: 9:20
The farming ladder.
Alex Johnston: 9:21
Yeah, I’ll put that in the show notes as well. So I got this two parcels of land and I put them out a little on social media and people that had never met me were sending the sheep to Sheppard for the winter and I started with a wrapper push along barrow. So it’s a manual drive machine that rolls up the electric fencing for you, because for sheep you need to have three strands of electric, not one like for cattle, and a couple of energizers and I ran 400 head and two different mobs that first winter.
Andy Rahn: 9:51
And I was moving every three days. What kind of size parcels are we talking about?
Alex Johnston: 9:57
Maybe 80 acres or more than 100 on the other 400 sheep. Yeah.
Colter DeVries: 10:04
Well, and so that’s a different stocking rate than we’re used to, right and so how many moves, rotations a day are you doing? How big?
Alex Johnston: 10:12
are your parents, we’re moving every three days. So I was aimed to feed 3% of dry matter by body weight per day. Okay, but we’re quite a lot more productive there. Where I am now in Scotland. You know I have a drain force 32 to 34 inches. Down in Gloucestershire, where I was, it was more like 40 inches.
Andy Rahn: 10:33
And stubble or triple what we get.
Colter DeVries: 10:35
Oh, yeah, definitely.
Alex Johnston: 10:37
Yeah, triple for sure. And with a temperate maritime climate as well, or grass growing here, it’ll be a lot longer.
Colter DeVries: 10:43
But what you were telling me last night at dinner is you still have the old traditional model. Andy is intensive winter feed costs. People take their stock into a covered area, or at least with the dairy replacements that you’re running with dairy with beef, with Sheep, people, all has all of those stock classes.
Alex Johnston: 11:04
they house them and put straw under them and we’ll feed them bailage and feed them purchase concentrate, which is normally a sour burst, protein pellet and grain fiber and things as well. So it can be quite expensive. But I never had the capital for any of that. So I very quickly had to learn to. I went to stock as cheaply as possible and that first year I did it with a little push long barrow and a Labrador, a Labrador prime stock animal, that’s right.
Andy Rahn: 11:37
Premier Hooning Dog.
Alex Johnston: 11:40
And I got quite sick of pushing that barrow around through the mud. So I bought a cord bike on finance and I fitted that with the necessary machinery to move the electric fencing and then realised, well, as I’ve invested in that machinery, I need to grow this enterprise to be able to pay for it. So year one was 400 heads, year two was 2,000 heads and I quickly acquired more land because you know, landowners talk to each other. And if you do a good job for people you move? the stock regularly so you don’t cause soil damage to their fields If you pick the fences up, if you respond rapidly to sheep getting it out, if you collect dead stock quite quickly and you were saying initially this was largely dairy ground and you were essentially improving that ground over the winter. I wasn’t improving the soil itself, but I was definitely assisting them and taking off their excess grass Because if you’ve got too long a grass cover in the winter you’ll get winter frost kill and that can really impinge on your spring growth for the next year. And some of these dairy boys, they have quite high input operations so they’ll be producing £16,000 to £18,000 an acre of dry matter on an annual basis on that grass and they really need to max that out, so the sheep cleaned it up the sheep improved the forage basically that’s right, interesting it could be done mechanically, but that would be the cost yeah.
Andy Rahn: 13:10
I was saying earlier that that’s become a little more vogue here, although I think maybe the focus is really more about weeds. Yes, you know, leafy spherge has been a long time deal here in Montana, where sheep will eat at work cattle really well, and goats and sheep being used for weed control is much the same thing. I guess a little bit of talk about just overall improvement of forage and species mix and stuff like that. So yeah, interesting.
Alex Johnston: 13:43
Yeah, there’s a lot of commonalities. Like some of the producers I’ve visited have had a little bit of sagebrush encroachment or greasy wood or hairy vetch, and these are all things that cattle maybe don’t quite support at the moment. Another species would. I visited Brady Howard Howard’s sheep, goat and cattle in Oklahoma and he was telling me that you can run a cow and then a sheep and a goat and you can keep the same number of each of those species on the same acreage because they all eat different diets, they’ve all got different grazing heights or browsing or whatever and they don’t compete with each other. And that seemed to be really well put together. Integrated operation.
Andy Rahn: 14:26
There’s kind of a saying that’s been going around in Montana because, like I mentioned earlier, sheep kind of fell out of a cattle really came in and yeah, it was almost like an insult or something to call someone a sheep rancher. But the common observations have been made many times that some of the biggest, best, oldest ranch ownerships in Montana were bought by sheep.
Alex Johnston: 14:49
That’s right. Yeah, there’s an Australian that I follow on social media. He’s got a saying saying cattle for show, sheep for day.
Andy Rahn: 14:59
Alex Johnston: 15:02
Well interesting, so that’s how you got started, yeah and I would do the custom grazing from the autumn through to the spring, so from about Oak Tail, but through to March. And that was quite challenging at times because I had up to up to 10 different customers who all had their own little groups of sheep, and up to 21 landlords Wow, because the dairy farmers wanted me off their grass after Christmas. Someone, let me stay until the end of January, but not past that, and then I would have to find, you know, alternative feed sources for these animals. I used to have an Excel spreadsheet and just call it a sync matrix of the months across the top and then the groups of sheep down the side, and just plot out where I was going to graze each animal for each week of the year. Wow, and that took a bit of planning.
Andy Rahn: 16:00
Was that more complicated than managing shipping and trucking it?
Alex Johnston: 16:05
was a similar sort of logistics. Yeah, it was a similar sort of problem solving. It was just more spread out. You know, with trucking we’re talking hours where the sheep were talking months. But I learned a lot. There was a lot of education there on measuring pasture quality and measuring pasture quantity so I could assess how long that group of sheep would be able to eat on that piece of ground for. But I was operating over an area of about 40 miles from one side to the other. So I got a van and used to put my four wheeler and dogs in the back of that and I was quite efficient at that. But I reached the limit of efficiency and I wasn’t as profitable as I should have been because of all those road miles.
Andy Rahn: 16:55
And then how do you move the sheep from locational location?
Alex Johnston: 16:58
Walk them wherever possible? I would. Yeah, I would walk them wherever possible, but sometimes they would have to go on the back of a Lorena in a haulage Contractor would do that. Once or twice I shuttled large numbers of sheep in a small box behind the pickup, but that was a complete time sink and not very efficient. Right right. The secret was to try and get as large a group of sheep on as large a piece of land as possible, because that was paid by the head.
Andy Rahn: 17:29
So the whole start of your outfit was you were contracting the animals and up renting ground.
Alex Johnston: 17:38
Yeah, other people’s livestock on other people’s ground. Yeah, so you didn’t own anything, just my equipment. Yeah, and it was pretty good cash flow as well, because I would get paid weekly and I would pay out for the land weekly. Or, to make things a little easier, what I would do is I would take 10 weeks payment up front from the sheep owner. And then that would give me enough money to run the enterprise and ensure I could pay all my landowners, and then at the end of the grazing contract I would get a balance from the sheep owner and that would be my profit effectively. But, like I said, the profit wasn’t as good as it maybe could have been because of the inefficiencies in the dispersed land holding and having to travel around between them.
Andy Rahn: 18:23
So then that evolved into something else.
Alex Johnston: 18:26
Well, I used to go day working as well, and that was really good because I would have customers across the country and I could see all of their different operations and learn from them what I wanted to do and, more importantly, what I didn’t want to do. And I used to go contract lambing as well for a three month period. In April my custom race sheep would go home and I would go and stay with the producer for 21 days to help through there. Yeah.
Andy Rahn: 18:54
Is that a 24 hour?
Alex Johnston: 18:56
No, it was all outside pasture lambing. Some people would put sheep in a shed and it would be a 24 hour enterprise. I think that’s pretty common here. Yeah, that didn’t appeal to me. I would rather be outside at grass. Low input material livestock.
Andy Rahn: 19:11
Always be my interest. Do you get lower success when you’re less hands on? That way, sheep outside rather than managed.
Alex Johnston: 19:19
It depends on the management and the genetics. There’s a producer I follow one Twitter in Australia, tim Leaming, who’s pioneering some really interesting techniques for outside pasture lambing and he’s achieving phenomenal results that would be pleasing to anyone that was lambing in the shed, but he’s doing so with much lower costs and less labour. It’s all about having the right genetics, having the sheep in the correct body condition at point of lambing, having the right feed on offer in the paddock and having the right size more than females, so you want about. If you’ve got twin or triple bearing use, there will be no more than 50 in a group. Singles you can stock in larger groups because they only got one lamb to worry about. The two major factors for mortality is if lambs at lambing are mis-mothering and distirky at difficulty lambing, because you can sometimes have lambs dying because they don’t get born quick enough. Or if a lamb’s been stuck and is then born, it might not have enough vigor about it to get up and suck quickly, which means it’s more prone to exposure.
Andy Rahn: 20:33
And mis-lamming. That’s rejection.
Alex Johnston: 20:35
That’s the mother rejecting lamb Not necessarily rejecting more, the lamb losing its mother. That maternal bond, that first 24-hour maternal bond, is so important and if possible you want minimum disturbance because it really allows that you and lamb to bond with each other, and that’s particularly important with multiple births. You need a highly maternal you that can keep track of more than one lamb. If you have too many sheep in a group and they all want a lamb in the preferred lambing sport, you can end up with three or four youths there and eight lambs and nobody’s quite sure whose lamb is whose. So some youths will take one lamb and leave and other youths will try and have all the lambs themselves. That’s why the genetics is so important.
Colter DeVries: 21:23
So Alex is. He flew into Houston, texas, and he’s touring regenerative branches and the Clay Center in Nebraska research probably one of the premier USDA research stations in the United States and then he went up to NDSU Is that Dickinson the research station? Yeah, just south of Dickinson, north Dakota, south of Dickinson, north Dakota, and so he’s taking it all in and I don’t know if any of your research you’ve heard this, alex, but there’s no. He was asking why is there not as many sheep out west anymore? He just rarely see sheep driving across the US and I don’t know if anyone has told you but there’s an old rule of thumb that you never, ever run more sheep than your wife can lamb. Excellent.
Andy Rahn: 22:20
Hence there’s not very sheep.
Colter DeVries: 22:27
So now I want to jump back. You mentioned these four pillars to good lambing, or these four pillars, but last night at dinner you talked about these four pillars of the Venn diagram to your model of production. Tell me about this the Venn diagram to profitable production.
Alex Johnston: 22:49
Yeah, success in any sort of life. The corporation, you know, matter what, the species, or the environment, or the paradigm. Really, I think it’s a Venn diagram with four circles. You’ve got genetics, labor, infrastructure and then bought in inputs, and the overlap of all four of those circles is where the profit and the success lies. And if you want to reduce or take away one of those circles, then you need more of the other circle.
Colter DeVries: 23:19
Which we always go for inputs. Yeah, we want to be low input producers, yeah, so naturally, the first you’re going to say I’m going to take away from inputs and labor and labor. You know, we’d like to take away from labor too.
Alex Johnston: 23:30
Yeah, it’s expensive, but then that means you’re putting more pressure on your genetics and you need to have the infrastructure in place to mitigate that lack of labor.
Colter DeVries: 23:41
So how do you navigate the infrastructure when you don’t own the land? This is the problem.
Alex Johnston: 23:51
This is where we’ve quickly run into issues with labor efficiencies. Mainly it’s by not using anything that I can’t run up with the cobweb I can take away again. So all my fencing internally was done with three-strand electric fencing, just polywire and wooden posts that we could bang in by hand. And if we had use of a grassland for a summer then we weren’t shy of putting in those semi-permanent electric fences. You know, you can buy that quite cheaply I think Six cents a yard for polywire. So I could put a three-strand fence up materials only mine, but a three-strand fence up for about 25 cents a yard and then that’s an asset I can take away again if need be and drop out on another piece of land and then all the water troughs would just poly pipe laid on the surface.
Colter DeVries: 24:45
And Alex and I were talking about how I lost my ass and I went broke trying to produce wagyu cattle, and you just made me reflect on. One of my problems was I come from a family land owning legacy, so to me any operating asset or improvement was going to be a permanent capital improvement, and so I should have never approached that like that, because I think about sage Askin on his leases he will roll out three inch pipe for water on top of the ground and to me that’s like unfathomable. Like you know, I would want to buried six feet deep, so it’s below the frost line, which is extremely expensive. But for me it’s because I wrongly attached my family’s ownership of the land to my obligation, and that wasn’t. I was a lessy, I was a tenant. I should have never. I did five wire bar wire fence, cross fencing, and you know that’s not mine today. Not wasn’t 25 cents a yard.
Andy Rahn: 25:57
It was not 25 cents a yard.
Colter DeVries: 26:02
And yeah, that’s not mine today.
Andy Rahn: 26:05
You know I had aspirations to be a producer when I was young too, and I didn’t come from a family place, but I had that built into the success model. Myself was securing and owning land you know to be sustainable, to be you know all these things. It had to involve purchasing land and I couldn’t pencil it at all. You know it didn’t make any sense. And yeah, at the at the tail end of that experience and well in the end, yeah, gathering information stuff, I had to have a couple guys say to me you know, look at leasing, look at you know, and at the time I think that was a little bit offensive. I had a, you know, I had a young family we wanted a home you know we had the vision of a home where we lived and you know, produced and anything other than that was a little hard to swallow but made no sense.
Colter DeVries: 26:56
So in my mind, alex, I’m looking at this Venn diagram of labor inputs, capital improvements and genetics and it sounds like infrastructure rather than capital improvements. So you’re definitely going to take, you’re going to move inputs further from the center, they’re going to move out of the circle. Capital improvements infrastructure is going to stay static because you don’t own the land. So of course that means genetics and labor have to move further into the circle. So this is requiring a huge amount of labor from you and your girlfriend.
Alex Johnston: 27:40
Yeah, but we can mitigate that as much as possible by having alternative cash flow. So I was working on farm, driving a truck when necessary, and Rosie used to do some social media marketing and she worked for a remote agri tech firm for a while as well. But we were quite lucky in that when we came to buy our own sheep, we knew that we were going to start with the sheep equivalent Corientes.
Colter DeVries: 28:10
So wiry smaller frame hardy cheap.
Alex Johnston: 28:19
We had quite a small capital investment initially and maybe rightly or wrongly, we decided that volume was our most important choice Because 100 years we’re going to be just as time wise as 600 years. But the production potential like the auto that 600 years was far greater. You know, even if you went and spent $250 a head on the mule use, which is the sort of premier terminal crossing you read in the UK, she’s only ever going to produce at most two lambs or weaned two lambs, whereas with my Shetland draft use they can produce about 1.2 lambs each. But because they’re 70 pounds versus 150 pounds I can stop my Shetland use much higher and they’re also much cheaper. And the means of acquiring those low input functional genetics is going to be quite painful. There’s going to be a lot of losses along the way. You know there’s going to be fallout. You’ve got to be in a position financially to enable those animals to fail those genetics, because that’s how you identify what works, you can identify what fails. You would set your system and as long as you can keep that system relatively constant, obviously you’re going to be subject to the vagaries of weather, but as long as you keep it on a grass based, frequent move system outwintered the animals working in, foraging and eating off the ground. The stuff that succeeds will rise to the top and the stuff that doesn’t, you can identify and cope, and I will emphasize that we’re not, you know, letting animals die in the particle stuff. If an animal required additional feeding or medical treatment or whatever, it got it, but we would then notched that animal to ensure that we didn’t breathe from it again.
Colter DeVries: 30:20
Were you disciplined about your, your trucking? Your off farm income should not be subsidizing this enterprise.
Alex Johnston: 30:28
No, because we couldn’t. We weren’t in a position yet to make that happen.
Colter DeVries: 30:35
Well, you can take your first couple of years, the income that you have saved can be the seed investment, but then your continual cash flow should not be subsidized by the trucking enterprise right?
Alex Johnston: 30:50
It would be nice if that was the case, but we were subsidizing the sheep with free labor initially. You’re always going to have to subsidize with something to get an enterprise off the ground.
Colter DeVries: 31:01
Well, that’s how ranches family ranches in the US are welfare ranches because they’re subsidized by cheap labor a family labor generational ownership, usually junior who’s 35 years old, but one day soon, this will all be yours. I promise you, I promise when I’m, when I’m 86, maybe 96, this will be yours. We’ll start talking.
Andy Rahn: 31:27
They’ll get some input when you’re 67.
Alex Johnston: 31:29
Yes, Decide what kind of truck. Do you want to go?
Colter DeVries: 31:33
Yeah, as long as it’s red or green.
Alex Johnston: 31:39
The way we sort of looked at it initially was that off farm income was what we would live off. And then the the sheep enterprise with our means of building wealth for longer term. Because, although, yeah, we are leasing at the minute and all the rest of it maybe unrealistic, but we still have an aspiration of land ownership.
Colter DeVries: 31:58
Is that possible in?
Alex Johnston: 31:59
the UK. No, not on a viable acreage. 30 acres, yeah, potentially so. The average price for acre land in the UK is about $12,000.
Colter DeVries: 32:10
Okay, so it’s like Nebraska. Yeah.
Alex Johnston: 32:14
And you could put, if you found it really well, you could put six sheep on that. So the total production not profit, the total production turnover from that acre would be you’d be doing well to do with $1,000.
Andy Rahn: 32:27
And you were saying that the animal unit value of this ground is about $20,000 in animal unit, which is anti, comparable to our recreation ranches I mean they use that number of course has evolved over time, but, like you know, I remember it hit $10,000, right, if you could, if you could buy land for $10,000 in animal unit. That was viable. Ish, not really viable at all.
Colter DeVries: 32:53
Really but on a 30 year payback. Yeah.
Andy Rahn: 32:57
Yeah. And I don’t know yeah, on a recreational land, we’re far above. Yeah we’re probably in that range absolutely for some of our recreational land. So, same dynamic that land value has outstrip production value.
Alex Johnston: 33:11
Andy Rahn: 33:11
Alex Johnston: 33:13
Interesting, yeah, and it’s got more intense recently because the lower productive hillground and upland grounds would be similar to sort of the range land out here. It’s massively increased in value because of the carbon trading potential of it. Really, yeah, and the only, as far as I’m aware, the only recognized means of creating carbon credits within the UK at the minute is planting trees. So venture capital and investment firms are buying this cheaper upland grounds to plant with trees.
Andy Rahn: 33:48
And is there a credit market? Is there?
Alex Johnston: 33:51
a functional credit market. It’s still in its embryonic stages, but there are schemes available now. Yeah. I was at a beef event recently and there was a presentation given by a forestry firm and they were just detailing the steps and all the payments and what you would need to do to unlock it. And I think they had this diagram that showed inspection at year five, thinning at year eight, etc to 25 years. And I asked well, how is it going? We’ve got clients that are on this pathway and she said, yes, but we’re only in year six with our most junior, sorry, with our most senior client. So it’s still new market and it’s still emerging.
Andy Rahn: 34:30
Same here. And what about? I mean what’s been? Of course we’re in the in. Central Eastern Montana. Here we’re in more of the rangeland grassland area, but that perennial grasslands have emerged as a real opportunity for carbon sequestration even more so than trees, if I understand.
Alex Johnston: 34:53
Not quite got the recognition on a carbon trading level for that yet in the UK but there is starting to be some scientific research into that area and Rosie’s just done a research master’s on the carbon sequestration potentially different cattle grazing methods. So I think that’s a really exciting market that might emerge in the future.
Andy Rahn: 35:13
But that is actually driving land prices? I don’t think, you know, we can’t a lot of people are excited, getting excited out here about carbon markets and carbon trading, but it’s not driving the market.
Alex Johnston: 35:24
No, it’s not driving the market on grassland yet, because we haven’t got the market infrastructure in place to recognize and trade those grazing generated carbon credits.
Andy Rahn: 35:34
So what’s caused the bump in values? You know outpricing production value in the UK Like? Is it recreational, like out here, is it?
Alex Johnston: 35:44
It’s. There’s some amenity value in that. You know city money wants somewhere to come and have a little piece of England, particularly on the back of COVID.
Andy Rahn: 35:54
Yeah, there are holiday home.
Alex Johnston: 35:56
We had some of that. Yeah, there’s tax advantages to land ownership in the UK agriculturally. If you own and operate agricultural land, you don’t pay any inheritance tax on it.
Colter DeVries: 36:06
And that is. That is that because the, the gentry, the House of Lords were, were the landowners, and then they voted themselves benefits.
Alex Johnston: 36:18
I’m not really sure on where that originated from. I don’t think so because I don’t think the House of Lords have got the constitutional infrastructure to be able to propose new law themselves. That only comes from the House of Commons. The House of Lords can only sort of delay legislation coming from the lower houses they call it.
Andy Rahn: 36:40
I think, there’s a Venn diagram there and genetics player player role. Absolutely what comes to my mind too about the UK and Europe in general is how much smaller and how much less land base there is scarcity.
Alex Johnston: 36:55
So the UK is in its entirety is one third of the size of Texas. Yeah. And we have 70 million people as opposed to Texas, three times bigger than any 31 million.
Colter DeVries: 37:05
Well, that’s why I find it surprising that 12,000 an acre for this 40 inch pre-sib zone, which you know is better than Eastern Nebraska 12,000 acre, your pound, is worth more than our dollars 10,000 pounds, 12,000 dollars. Okay, yeah, so I find that surprising. I was expecting, because of the scarcity and the population density, that you know they would be up for $100,000 an acre.
Alex Johnston: 37:46
No, for sort of our proportional landlust. That’s generally where it’s at. There’ll be some variation regionally. So yes, there might be up at sort of $25,000 and some might be up in less desirable quantities at $6,000.
Colter DeVries: 38:02
And so, Andy, on this new farm that Alex is on, you’re running 1,500 use and about just under 200.
Alex Johnston: 38:13
Yeah, we’ve not got the 1,500 use yet. So what happened was we? So I was custom grazing in Gloucestershire. Then we went up to Lincolnshire and we managed to secure some longer term land still only 364 days or less up there, but that gave us the opportunity to purchase our own livestock. And then we moved up to Scotland 12 months ago to take up this position. It’s a 3,500 acre mixed farming estate, so they have beef cattle and cropping and it’s roughly 50-50 on land area for grass versus cropping and they were moving towards this regenerative grazing, low-input livestock model. There wasn’t a lot of stuff by and I don’t think on the cattle side they’ve had a bit of turnover of stuff. The cropping boys are well into it. They’ve been doing that for a few years now and through our social media networks we became aware of it and we were looking for somewhere with a bit more security on the ground. So the arrangement is we contract, manage the cattle herd in line with their objectives and soil health values and as part of the package we get a monthly management fee. We have a house to live in and then we get to run our sheep on the ground as well. We turned up there 12 months ago with 700 females, but half of them were U-Lams and they’ve had a bit of a rough summer. They were custom grazing with the contractor last summer and there was a bit of a tri-spell so they weren’t as grown as they should be. We had about a 50% breed-up rate, but I retained everything for the summer and we’ve lammed and we weaned lambs a month ago. And then I listened to a lot of podcasts and Wally Olson’s a real favourite. I think he’s a great character.
Colter DeVries: 39:58
Who is that? Wally Olson, yes, wally Olson.
Alex Johnston: 40:01
Sell-by marketing Yep Sell-by, and using those principles we’ve identified that a lot of our breeding sheep were fairly overvalued. You know there’s an Australian that said, as you’re driving the paddock you want to look at your livestock and think about what they’re worth at the sale barn today and if you wouldn’t pay that for them, well, you can’t afford to earn them to get them sold. So we’ve sold out half of them, which you’re breeding females. So our breeding inventory in the minute is about $200, sorry, $400, but that money that I’ve generated from selling those breeding females will put back into the draft Shetland use. You know the broken-mouth, coriente equivalent and I’ve got a buyer. I’ve got an agent up in the north that’ll sort that for me. So towards the end of this month we’ll have about another 1,100 use arriving.
Colter DeVries: 40:47
When you capitalise on a profit like that, do you take 30% and put it into a savings for future land? We’re rolling profits into another enterprise Back into the sheep.
Alex Johnston: 40:59
We’ve increased our. You know we’ve tripled the number of head that we’re going to breed this year. Okay, so your investing in your investment is back into yourself, yeah, back into the livestock Once we reach a ceiling of capacity, because we’re not going to be able to exponentially grow the sheep flock forever. You know we’re going to hit barriers on the land area that we can access we’ll then start trying to draw that money out and invest in other things. We haven’t diversified at the minute because we’ve been so focused on growing the sheep flock, but this is so is land ownership in the goals. Yeah eventually.
Andy Rahn: 41:38
So that is in the crosshairs for a while. Yeah, long-term proposition?
Alex Johnston: 41:45
Yeah, but I don’t know where. Yet. It doesn’t have to be in the UK, so we could look internationally if we could find some good value on it in the right area.
Colter DeVries: 41:55
Northern Michigan, Maine. Staying on the land topic is Andy’s here, so last night at dinner I’d asked him about this. 3,000, is it hectares? Acres 3,500 acres, 3,500, which we’d say 3,500 acres, so you’re 35. Regional dialects yeah, 3,500. 3,500. 3,500. 3,500.
Andy Rahn: 42:22
Colter DeVries: 42:30
So I asked him. I was like, okay, these capital improvements on, so he’s got this team around him who buy. They were buying into regenerative and improving the genetics. You said you were taking the Semitall frame.
Alex Johnston: 42:44
You’re bringing that down to more men At the moment the cows are mainly a Cemental cross, a beef animal, and traditionally they would be put to a Chareley Terminal soya and then at weaning that calf would go into a shed, into a feedlot and be fed grain and it would be finished at about 13 months of age with a 850, 900 pound carcass. So really impressive production, but from what the farm manager tells me, financially it wasn’t quite so flash.
Andy Rahn: 43:12
You put too much input.
Alex Johnston: 43:13
Yeah, so you’re not going to be able to do that, especially on a true cost accounting model when you think about the machinery hours and the labor and all the rest of it.
Colter DeVries: 43:20
So that’s Wait, wait true cost accounting.
Andy Rahn: 43:22
There’s no opportunity cost in agriculture.
Colter DeVries: 43:24
That’s a pair of them. That’s blown my mind. I’m not sure we were talking about. There’s no depreciation expense in agriculture unless it takes your tax burden down. Then you maximize that thing. So I was like the water facilities, because he said that they ran into a water capacity issue for these mobs, these larger, denser mobs on more aggressive rotations. And I was like, oh, what was drilling a well, like in your area, or a bore? I don’t know if you guys call it a borehole. And he’s like no, no well. And I was like, oh, where’d he get your water from the water main? They can tie their farm into the municipality water main. And think about that. At $12,000 an acre, that’s a huge value, yeah.
Alex Johnston: 44:15
But that’s only for watering livestock. We can’t use that water main for irrigation.
Colter DeVries: 44:20
Andy Rahn: 44:20
Alex Johnston: 44:22
Is there a?
Andy Rahn: 44:23
cost, and there must be a cost oh yeah, the pay per liter.
Alex Johnston: 44:26
Is it high? I don’t think so. We spoke when the management team were talking of putting in this watering system and I suggested a borehole and they said they’d done the figures on it and for the estimated cost of the borehole and then the maintenance cost and the rest of it, they could run 40 years of municipality water.
Andy Rahn: 44:51
And what’s the actual source of the municipal water? Is that a big borehole or is there a reservoir? We have reservoirs.
Alex Johnston: 44:59
Yeah, we have private companies that do a very bad job of managing our water supply. Oh yeah, it’s on a national level. Oh yeah, it’s a nationalised thing, and then I can’t remember which government it was decided they would balance their budget by selling off this asset. So the family’s here again, really, yeah, so a lot of stuff that really should be nationalised is now privatised, and they do quite a good job of doing it, but in general it’s a plentiful resource.
Andy Rahn: 45:25
I mean you get a lot of. There’s a lot of rain, there’s a lot of.
Alex Johnston: 45:28
Where we are in South East Scotland, yeah, yeah, and we think down in the south west of England, around London, and that area is one of the most water stressed populations in the world in terms of available millimetres of water per head of population. Wow, because there’s been a lack of investment in the last few years and the population is so dense and increasing so rapidly. Yeah.
Andy Rahn: 45:55
I mean obviously water is a pretty big issue out here in the arid west.
Alex Johnston: 45:58
Yeah, that’s right.
Andy Rahn: 45:59
And what’s the saying? Whiskies for drinking and waters for fighting. So yeah, water. But that’s my association with Scotland and the UK in general, is it? Water’s pretty plentiful.
Alex Johnston: 46:14
Yeah, high-priced rainfall, lots of water and generally it is but that brings with it certain problems, because people have a paradigm that it’s always going to rain and so their farming system is based around it raining, and then if we get two or three or five weeks with no rain, people think they’re in a drought and they can run out of feed quite quickly.
Andy Rahn: 46:37
And so you hit a production capacity, though due to water.
Alex Johnston: 46:40
Due to water was your limiting factor For the capital grazing that the estate were wanting? Yeah, that we didn’t have a high enough flow rate on the existing water drops to be able to water the number of capital we were having.
Andy Rahn: 46:54
Yeah, I think one of the big limitations for more intensive grazing rotational grazing out here on some of our ranches is water. We get old, vast acreages limited water. So you just can’t without trucking water or infrastructure. But there’s like there’s cost share, for example, with government programs and stuff, and water development is a common one. Getting more water points out there so you can spread out grazing. There’s lots of under, essentially underutilized grass, underutilized grazing. You just can’t do the intensive grazing because of lack of water.
Alex Johnston: 47:36
Yeah, and I had a great couple of days with Gage Ibison up at Dovetail before I came to the Billings and he gave me, you know, very generously this time and he gave me two of his ranch and he was showing me things and I was saying like, yeah, you could do a lot of good here with more animal impact. But he was saying exactly the same thing. Water was an issue. But the interesting point that he made was he was referencing some writing when the army came through a couple of centuries ago and they said they could water their horse every half mile, tie grass over the top of the withers, and there’s an interesting discussion to be had there on the existing water cycle and how improvements to that might improve natural water sources and enable more aggressive rotations and better utilization of this grass. But I definitely don’t have the experience or knowledge to contribute to that discussion in any meaningful way.
Andy Rahn: 48:26
So what was the change that would enable that? What was that was saying that? How could that be brought back? What would be the mechanism for?
Alex Johnston: 48:35
that I don’t know. Yeah, it’s a short answer. I could hypothesize that maybe beavers or dams or something I know that’s not very popular with some producers. Well, I don’t know. Beavers on the land it actually is getting more popular.
Andy Rahn: 48:50
There’s more recognition that, especially because we have high mountain valleys, you know headwaters, headwaters and water retention and headwaters.
Colter DeVries: 49:01
Beaver dam analogs. Yeah, they’re gaining in popularity from the conservation groups and I definitely think if you don’t have irrigation ditches, they would be great for the landscape. I mean, they definitely slow down the water, they increase the sub irrigated grounds, the drought resistance in a pretty localized area. But then there comes, like you know, if you have culverts and bridges, small bridges over streams, they’re a nuisance in the past in that sense. But coming from a person who’s had to tear out a lot of beaver dams on cricks or, sorry, on irrigation ditches, it’s not that big of an issue.
Andy Rahn: 49:46
I mean, it is for an irrigation ditch, but well, actually my understanding of this is really interesting because, yeah, and there’s been efforts to try to figure out how to live with beavers and manage beavers and live with them, when my understanding is what they figured out, because it’s classic right, you try to build some structure that allows you to let, to control water but still live with the beavers, and the beavers, of course, are constantly damming up your stuff. But what triggers beavers to build and block water is the sound, and so that they have been working on culverts and whatnot that, like you, could actually put in a beaver dam.
Alex Johnston: 50:25
Andy Rahn: 50:26
And it’s the sound of water flow that triggers, and so there’s been some research and they’re working on this like a specialized culvert that sounds right to the beavers so that they don’t plug it up.
Colter DeVries: 50:38
Well, this gets into. Am I allowed to take a tangent here, or do you guys have a topic to stay on?
Alex Johnston: 50:44
Well, just to talk about similarly sort of restoring water cycles. There’s a consultant in the UK who says if you can get quarter of a million acres under sort of regent management, you can actually start to affect where the ponds Localized. Localized where the ponds.
Colter DeVries: 51:01
Yeah, very localized. So with that train of thought, a lot of the maybe the issues I have concerns I have about regent is that it’s getting into this niche or this corner of almost environmentalism and environmental extremism to a point and it seems like the audience who is receptive to regent is more of the idealistic, organic, all natural kind of very conflicting with traditional ranchers. And I’m not going to put a value judgment on either side, but what I’ve seen in what’s been presented to me on YouTube. So my only knowledge of the UK and your extensive scientific research, in. Scotland. Is that there were? You have the literature peer reviews journals by a trusted government source, the movement in Scotland for rewilding and is that, and it seems like rewilding might play a part of Regen or vice versa, and you as a producer who own lambs, and you’re like, oh, we’re going to start rewilding with the natural Puma of the UK and this giant seven foot wingspan Osprey Sea Eagle that’s going to that might take care of your genetic selections. Yeah, the Sea Eagle that’s going to take three lambs a day of mine, so you’re a Regen practitioner. Where are you at with rewilding as part of that?
Alex Johnston: 52:41
I wear boots, not sandals, not a sandal wearing.
Colter DeVries: 52:46
So you know that you know the audience I was describing.
Alex Johnston: 52:50
My interest in this Regen and all the rest of it is financial. When I began farming my own livestock, we were on a limited budget and reading literature and consuming knowledge you know, podcasts or YouTube or wherever. It became quite apparent that if you could follow these grazing models you were able to make more profit because you could draw out other inputs. You know you could get rid of other inputs. So I’ve got a longer rotation, which helps break my worm cycle so I don’t use as many worms as all my lambs. I can meet the nutritional needs of my livestock through grazing alone, which means I’m going to spend cash on buying in concentrate feed and grain feeding, and that’s why I’m interested in it. Rewilding it’s not something I’m going to be able to benefit from because I don’t only land. The people that will benefit from rewilding will be landowners because they will draw funding for that rewilding, be it from private or state sources. I think we should recognize that the UK is not the same country that it was three, four, eight hundred years ago when the ancestors did wipe out these apex predators. It may well be possible to farm with these animals around, but that’s going to have to and that’s going to require. It’s going to necessitate a paradigm shift, both from me as a producer but also from other land users. So we’ve not touched on it. But in Scotland we have something called the right responsible access. The use of the public can walk pretty much where they want across grassland and Moorland private property includes, so they can’t walk through a growing crop. But I was moving a hundred pairs the week before I flew out here and as I went around the corner into a new field there was a couple of people walking, four dogs off the lead and we had a fairly robust exchange of views With my cows. That were about a minute behind me. We’re not going to appreciate their four dogs charging around their calves, so you might want to put them on leads and go somewhere else. But I think I could successfully run a sheep enterprise within a predator within a heavier predator environment than we have currently. But that would require livestock guardian dogs and those livestock guardian dogs are not going to interact very positively with members of the public and their little pets off lead.
Colter DeVries: 55:30
What are you doing for dogs now? Because I mean your email, your business. Are you breeding dogs as well?
Alex Johnston: 55:35
Yeah, we run a few dogs as well. Got to have that Labrador. No, colleagues.
Colter DeVries: 55:44
So that enterprise seems like a lot of guys who are getting into more aggressive means of sheep grazing. They also are breeding some dogs, and that is an enterprise that has a value and it’s part of the whole matrix, the mix.
Alex Johnston: 56:05
Rosie’s got her own line of colleague and she’s on the fourth generation now and they’re breeding true to type and they’re becoming quite predictable in their training outcomes and their working abilities and that’s quite interesting. She’s breeding them quite close, which is not that common in the UK. People seem to take genetics from everywhere and put it together and expect to get something and you can get a real wide variation in letters with that approach. I’ve been less successful in breeding and training my own line of dogs. I’ve got one dog I’ve got part trained and she’s pretty decent. She sort of carried the enterprise for me for the last few years but she’s eight and a half now and has not got many years left before she draws a pension.
Andy Rahn: 56:49
I’ve tried sourcing Dogs get pensions in the UK too, doesn’t it?
Colter DeVries: 56:53
Where do dogs on a farm, go to retire.
Alex Johnston: 56:56
Yeah, farm upstates, because in the city they go to a farm. Yeah go to the farm upstate, see a farm upstate, but I’ve tried buying in a few dogs as well and I’ve not yet, particularly now that we run cattle and we work the dogs on the cattle, I’ve not found something that’ll work for that and that was part of the driving force behind my desire to go and see Randall. You know he’s got a very successful line of colleagues that breed through to type and he trains and sells to other dogs and has got a lot of success in cattle trials and also, more importantly, in work. The big money dogs in the UK now are for trials and that’s almost become a dog sport in and of itself which is separate from working farm dogs, right.
Andy Rahn: 57:42
I think it’s kind of the same everywhere, isn’t it? I mean even horses here, and what, matt, right? I mean you kind of have the true working class horses. But you know, I’m sure you’ve heard of the Yellowstone Shoals and all that kind of stuff, and you know there’s three million dollar cutting horses.
Alex Johnston: 57:57
They’re not going to be roping many cars at a branding. You know they’re almost too valuable, aren’t they?
Andy Rahn: 58:03
So, whether it’s livestock or dogs or horses, or there’s always this kind of upper echelon of breeding and training and showing, and that’s all its own industry.
Alex Johnston: 58:14
Yes A little bit divorced from on the ground, definitely, and I’ve got the pockets to get into that in the UK whether it be dogs or sheep or anything really.
Andy Rahn: 58:24
But working dogs at a certain quality you see as a part of your operation Absolutely and invest, you know so are you? Got infrastructure in your. I mean, isn’t there an infrastructure in your area?
Alex Johnston: 58:39
Yeah, there’s a bit of a blur in between the two, isn’t it really? But you could almost call them labor. Sure, you know the estate’s five miles from one end to the other and it’s not contiguous land. We’ve got a little bit of public road to cross or walk along for a few hundred yards in places. The thought of trying to run any livestock enterprise without a working dog makes me feel quite nauseous, to be honest.
Andy Rahn: 59:03
Alex Johnston: 59:04
But we’ve been able to deliver immediate and consistent savings to the estate, because we can walk cattle around, you know, we can trail them, and so not only has that saved a lot of money, it’s also meant that we can include previously underutilized bits of grassland into our grazing rotation, because they were, you know, on the other side of the freeway, or they were You’re talking about in transit, like while you’re moving, like barrel pits, taking your grazing barrel pits as you move cattle. No, it’s more like there’s a cropping block and then on the corner of that there’s 20 acres. Right. And so now we can trail the cattle over there every now and a half and they can eat that for a couple of days and then come out again, whereas previously taking them there with the cattle float behind the tractor would have taken 15 hours of labor. Because we’ve got this morgue of cattle, you know, yeah, yeah. So traditionally that 20 acres would just get sort of four cows thrown on it and they’d be left there all summer.
Andy Rahn: 1:00:03
So in the UK, so here, livestock has a right of way. Right, you have the right to move livestock down the highway.
Alex Johnston: 1:00:12
Andy Rahn: 1:00:13
And same we are for saying yeah.
Alex Johnston: 1:00:16
It’s not that common, though, because it takes a little bit of work and planning and Right, and there’s the potential for things to go wrong. Like technically, landowners should fence their land from the highway, so they have the responsibility, but it’s quite a cropping area and people aren’t really that keen on putting expensive fences up. We need to have livestock themselves.
Andy Rahn: 1:00:37
Yeah, most of it. We’re mostly fence off up here, but there are open range. You know, wyoming, montana, there are certain areas that are open range and you’ll be driving on the highway and you’ll be science, yeah, livestock and hedge, yeah, yeah, and I think it’s so. I cultured probably no more about this. Like, if you hit a cow on the highway, is that, does the rancher have to pay for your car or does the driver have to pay for the cow?
Colter DeVries: 1:01:06
I’m not a licensed barred attorney. This podcast is not going to give legal advice or investment advice. Please consult your legal advisors before making any yeah. I mean it would be depending on the open range Right and depending on state laws as well. Yeah, I know, when I ran into an issue. Oh, I thought you said when I ran into a cow Well my cows were the issue. When you ran into your own cow.
Andy Rahn: 1:01:35
I treated everything as open range.
Colter DeVries: 1:01:39
And so I was in. You know, montana is supposed to be a fence out state, Right, because and again, I’m not an attorney, so talk to your lawyer but the cattlemen were here first, and it’s harder to control cattle or any livestock, and so farming usually happened on small irrigated parcels in the western part of the state where you could, you know, fence off your hay base for the winter. So we became a fence out state for that reason, kind of free grazing. But then there became grazing districts as part of the homesteader movement. So, like where my cows were in the red lodge area, there was a lot of subdivisions around me and I told them to pound sand when it came to me getting my cows out of their yard.
Andy Rahn: 1:02:35
They have to fence off their yard if they don’t want your cows on it.
Colter DeVries: 1:02:38
Yeah, correct and I was wrong, so that part of that $187,000 loss. That was part of the $187,000. No, for weeks I had calls and pissed off neighbors and I wasn’t a good tenant operator like you, Alex. I had no interest in being neighborly with them and some of that was my fifth generation sense of entitlement.
Alex Johnston: 1:03:04
Like you know, I’m here first we still get plenty of livestock out and then places they shouldn’t be caught in it. We just have to apologize very quickly.
Colter DeVries: 1:03:14
I was more concerned when they got onto Main Street, red Lodge. Then I was pretty nervous about it. But no enough, people called the Sheriff’s Department. And then the Sheriff’s Department called the brand inspector and the Department of Livestock and of course I told those guys to pound sand as well. I said fence out state, don’t call me again. If you want to help the neighbors get my cows back into my place, have at it, but I’m not wasting my time and labor on that. And they said well, actually you are in a grazing district and because this is an old homesteader area, it’s fence in, it’s fence in. And I said, all right, I’ll be up there.
Andy Rahn: 1:03:58
Put my boots on. You know I kind of want to circle back to this wilding. So you know we’re in Montana and Montana is basically a headwater state and has, you know, amazing natural amenities and wildness. You know, we got chrisley bears, we got wolves, we got this kind of stuff. So I think there’s an interesting I mean our land value, our appeal to live here and to buy land here is related to that wildness and that perception of wildness. I mean, last best place is a term used for Montana, like where the lap. You know we’re on the northern border of Canada. We’re kind of a wild. We got more wilderness and wild areas than most other states.
Alex Johnston: 1:04:46
Andy Rahn: 1:04:47
So it’s sort of it’s funny because it ties into the overall value. But of course you know when you actually buy land and you try to run livestock and you’re dealing with wolves and grizzly bears, you know that’s kind of a different issue. So I think there’s kind of a play there an interface between our vision of ourselves and what we value. But you know it’s not easy co-mingling and managing and living wild right Like how do you, you know?
Colter DeVries: 1:05:17
So the question is do you, as part of region, do you have holistic values where you consider the whole wholeism, in that the sea eagle has its place, it’s just not on top of your lands.
Alex Johnston: 1:05:32
Yeah, potentially, but so the sea eagle? It’s very easy for people that advocate for release of these apex predators to present statistics that show them in a very good light. So they say like, oh, the other seagull. They’re responsible for only you know 0.5% of land mortality in Scotland. Well, that’s fine, but they’re not taking half a lamb from every flock. You’ve got the vast majority of flocks, don’t see one. And then some poor bastard’s losing 20% of his crop, you know yeah. And then we’d probably.
Andy Rahn: 1:06:06
How did that for a bastard? No, I’m not, no.
Alex Johnston: 1:06:08
I’m not. I’m very lucky in that we’re the only estate in the county that has a full-time gamekeeper, so my predator pressure is really restricted to protected animals only. We’ve got Eurasian badger appearing in ever-increasing numbers that can cause problems but touch with their See that animal again, eurasian badger, eurasian badger.
Andy Rahn: 1:06:29
Is that native?
Alex Johnston: 1:06:30
Andy Rahn: 1:06:31
And there it’s a predator.
Colter DeVries: 1:06:32
Yeah, it’s a meso-epredator. Badger’s here. Don’t it Pretty on my side, no.
Alex Johnston: 1:06:39
I don’t think they would, normally because we would have larger predators. That would mean that those badger populations were lower and more dispersed. You know wolves and things, but we don’t have them. So the badger populations are increasing. They’re also extremely protected. If you look at one the wrong way, you’ll end up in prison. You can’t touch them, wow, and generally they’re not an issue. But you can get individual animals that will get a taste for lamb and that specific animal will predate lambs and there’s probably nothing we can do about it.
Andy Rahn: 1:07:09
In general, the consumer increasingly wants clean healthy, high quality meat and ag products, and they want apex predators in a certain amount of.
Alex Johnston: 1:07:26
They want the landscape wild to some extent and they want natural and they want to eat there’s been a few studies on that in the UK by farming boys and what the consumer says they want, and then if you check their shop and cart when they come out of the shop, what they’ve actually bought there is a bit of a disconnect going on there.
Colter DeVries: 1:07:47
Yeah, they wanted that, they wanted cheap. Price they can afford yeah.
Andy Rahn: 1:07:53
So I told you I set out to be a producer. 30 years ago, when I was young and I was on the organic sustainable, I started and ran an organic farm that’s still going today in Northern California Yep. So I’ve been involved in this and following in for years. I do like the regenerative movement. It strikes me as more serious and more has more depth to it because it’s funny right. Organic comes up and sustainable comes up, but these terms tend to lose meaning shortly. There’s a fab element always.
Alex Johnston: 1:08:31
Yeah, it’s a real danger that happening with the regenerative movement and larger corporate interests will seek to use regenerative as a greenwashing term to make themselves appear better than they are. I mean, I don’t label myself as regenerative, I don’t sort of trumpet that or anything, but we do graze in a way that we seek to increase soil health and soil carbon content and reduce inputs. That’s what it comes down to. For me, it’s about reducing inputs and increasing profit margins.
Andy Rahn: 1:09:04
Well, and we’ve talked on here before, because of course I’m an appraiser and we focus on the land market here and speculate whether we’ll regen be a significant factor in the market. We’ll outfits that have been practicing regen see a premium in the market or will other factors be more significant? I mean, so far we can’t say that it’s a factor in the market. I don’t think. Sure, there might be buyers that value that and sellers that try to market that. But we can’t but carbon. We talked about carbon a little bit that’s surfacing as a factor in the market, but still the carbon market itself still on its infancy.
Alex Johnston: 1:09:57
Yeah, and there’s been some scary tales coming up Australia because they were more developed carbon market and it’s very easy for producers and landholders to rush into agreements with the promise of some easy money and then the details can be not quite so lucrative. There was a Grazier I can’t remember the exact details of it, I can put it in the show notes again and he’s calling for an investigation into the carbon market because he de-stopped a large amount of his acreage and planted trees and that agreement was based on estimates and by year three he was falling well short of those estimates. Sorry, Bruce, you’re not sinking that carbon. We’re not paying you Because he signed up for that term. He can’t clear that land and re-stock, so he’s stuck with an acreage that’s got trees on it. They’re not providing an income that he can’t remove to try and recoup an income.
Colter DeVries: 1:10:48
And there are contracts where you get a large lump sum up front based on the estimated additionality you’re going to create and if you don’t hit that mark you owe them money back. So we’re starting to see some cracks and the contracts will improve. But first mover advantage is first mover risk too.
Alex Johnston: 1:11:11
Middlemen in shiny suits could take a lot of equity out of people’s runches if they’re not careful.
Colter DeVries: 1:11:16
Why are you looking at me? You’re staring at me. Hardcore right here.
Andy Rahn: 1:11:24
I think it’s a little close to home.
Colter DeVries: 1:11:27
He was looking right across the table. No blink at all.
Alex Johnston: 1:11:30
It was just my lazy eye.
Colter DeVries: 1:11:35
I want to divert this, get off of me and say, andy’s the one who wears Birkenstocks, okay, you and me, the one out there in sandals, as we kind of draw near the end. Alex, what I want to hear about some of your philosophy, what motivates you and drives you, and what the people aspect is so important behind what you’re doing. How do you get buy-in from your girlfriend and from your landlord and your dogs and your dogs and the neighbors? But personally, it starts with you and it’s going to end with you, because you are accountable for everything that happens. So tell me about your philosophy, your motivation, what drives you?
Alex Johnston: 1:12:19
What gets me out of bed in the morning is the ability to earn an income and generate wealth while living this active outdoor lifestyle. We are responsible for our own time. We don’t have a manager who’s clocking us in and clocking us off and we don’t have a set list of tasks. We have a lot of responsibility well, we have total responsibility for our own stock, but we have a lot of responsibility for the capital that we contract manage as well. What really gets me excited is the fulfillment of that vision. So when we started breeding our own sheep, rosie and I sat down and we had a good conversation and we came up with a vision for what sheep we wanted, and that’s a £130 new little up to three lambs off grazed grass. She’ll naturally shed her fleece, she’s got very good feet and teeth and she’ll have a litter size of two or more on average across the floor. Achieving that from what we started with is really exciting, and we’re having to use specific individual genes to achieve that. That we can identify through genomic testing and that’s really exciting to me. And then, with the cattle, again we’ve got a vision of what we’re trying to produce the differential between where we start with these £18, £1900 cement till crosses that need grain finishing and then where we’re going to finish up with these 12 to £1300 angus types that are extremely fertile and can do it all off grass, and they can carve for the first time or two and then re-breed in on time and continue to do that and we have the genetics that will flesh and produce a finished animal purely off grazed grass. That’s what really excites me. And then longer term is well, medium term is achievement of this vision. We’ve got so a number goal in mind. We’re hoping to run 200 cows and 2,000 use with just the two labour units and I think with the correct infrastructure that’s achievable. And if we can hit those goals we should be able to then achieve our financial goals, which is draw and profit out of that production enterprise and using that to invest in real estate. And then, longer term, we can leverage that paid for real estate to buy our own acreage somewhere. So we’ve got a multi-step long-term program here and that’s eventually going to get us to our ultimate goal, the ranch ownership. We might not get there, but we’re having a good time trying.
Colter DeVries: 1:14:56
This isn’t shooting from the hip, do you guys do? Team building and mission, vision and value statements.
Alex Johnston: 1:15:03
Not formally Goal setting. Goal setting, yes, we do, and that we have KPIs for our production. Business Key performance indicators.
Colter DeVries: 1:15:15
Yeah, key performance indicators.
Alex Johnston: 1:15:16
yeah, During this trip and talking to producers, it’s really identified to me how lacking I am in that holistic vision, I don’t take enough account of us, and particularly Roti and our relationship, and we need to do more things off the farm.
Andy Rahn: 1:15:34
I call that the DTI, the domestic tranquility index.
Alex Johnston: 1:15:38
Yeah, very important, underestimated and ours isn’t possibly as high as it should be, because they work a lot and we enjoy working and the dogs and the livestock has brought us together and it’s all keeps us together.
Colter DeVries: 1:15:54
But there’s a limit. Well, my subjective opinion on investing in the relationship outside of the farm or the ranch is getting into this. What I think is a negative influence on life building, dream building and that negative influence is this bullshit called work-life balance. And I actually there was a time where I was in that camp. We got to have work-life balance and got to draw a firm boundary and don’t take work home with me, and now, with a three-year-old and one on the way, I think it’s complete bullshit. Work-life balance, I think if the work is creating a life that you love, you truly value personally, and it’s creating time with your kids, your wife, your meeting people that are new and interesting, just as we’re doing today and some of the immigrant labor work in there, you get to meet people from all over the world. Andy and I were talking about this. This idea of work-life balance is bullshit and I disagree with how much that’s being pressed upon my generation in the United States. No, if you love what you do, if you love what you do and your family has buy-in which your family should have buy-in you should be a visionary leader and you should have these values. Everyone needs to be on board on the same page and write down your goals, your mission, your vision and your values. There’s no need to have a firm, hard separation. You get fun out of work and you get good mental health out of work and you get good physical health out of work. And I’ve been working with the Amish a lot lately and they do it very well. I don’t know where the Amish are on mental health, but they are to me. I think. Their family systems, their structures, they’re awesome and there’s something to be said for the family working together as a team with a shared mission. And this drawing a hard boundary and not taking work home with you, I think is complete bullshit.
Alex Johnston: 1:18:09
Oh yeah, and I’d agree a lot with that. And we do have a shared vision. I’ve spoken to mates over the years that have been farming or trying to get farming and they’ve had horrendous relationship difficulties and I’ve always said to them you need to have a girl that shares your vision and if you don’t, you’ve got to change your vision or you’ve got to change the girl. It’s as simple as that really, because if you’ve got a relationship, which one of those is harder?
Colter DeVries: 1:18:35
I’m thinking Path and least resistant is Tinder. Yeah, that’s right.
Alex Johnston: 1:18:42
Because, like you say, mental health is so tied into work fulfillment and, as we said last night, you spend so much of your waking life actually working and then thinking about it. Like I annoy Rosie somewhat because we’ll be getting into bed at night and I’ll be like, yeah, what do you think about this for Topping Plums 2028? You know, talking about genetics and maybe I need to switch off a little bit more.
Colter DeVries: 1:19:06
I disagree. I disagree. Get with programmers. Charles Bukowski said if you’re going to go, go all the way. Yes. And I firmly believe that. I look back at my childhood and it was a ranch. Mom was a rancher, dad was a rancher, both grandparents sides of the grandparents were ranchers and everything I did could be spun as fun. Today, looking back on it, someone else could call it work or labor or child labor, unpaid child labor. But you can also spin that and say that was incredible fun and what an opportunity. What an experience.
Andy Rahn: 1:19:49
what values I learned and developed from that I remember years ago when I was running that farm in Northern California and I had an assistant, kind of partner assistant, and at the end of the day I handed her an article and printed it off. You know, on Xerox, hey, read this tonight. I think I’d like to. It was a rotation or something. I think it might have been a chicken tractor idea. You know, hey, let’s read this tonight. I want to do this tomorrow. And she looked at me. She says yeah, Andy, I do this, you know, all day, and then go home and read about it and I was embarrassed in the moment and it was like oh yeah, right, who does that? And it was. It was one of those moments right when a spotlight kind of suddenly gets shine on you. But, yeah to Kultr’s point. At that stage in my life, my early 20s, how passionate I was. You know, do it all day long, go home, read about it, get up, do it again, and you know I look at that now you know now I’m 52 years old and sort of different life stage and stuff and have a different I guess, that whole work-life balance changes and evolves. But I look back on that time with a lot of fondness of just unending energy and passion for it. And that was my life and it was great.
Alex Johnston: 1:21:09
And that’s where I am right now. You know we’re having a laugh in the joke now, but I take nothing away from Rosie. She’s got complete buy-in. She shares that goal, that vision, the ranch ownership. You know she’s been with me every step of the way. Like, unusually for the UK, we lived in a single-wide trailer for three years because it was a way to access land that was available and cheap housing. So we had a low cost of living, so we could put more efforts and capital into building our sheep flocks and generating wealth that way. Yeah. You know you can’t do it without the right woman next to you. Yeah, yeah. It becomes 10 times harder.
Andy Rahn: 1:21:46
I was seeking, you know, to be a producer and make that my career and my living, and then bumping up against the challenge of not owning land and all that stuff, and I remember being getting very discouraged and kind of buying into, I mean at the time and I think this is still out there like, oh, you know, it’s just it’s not set up for entry into the marketplace for young people. And sort of like this view, sort of like a big social critique, like, oh, you know, we just don’t have a way for new people to get into farming and it’s stacked against you and you know all this kind of stuff. But I did realize at some point that I was bringing a modern set of values to. So I you know. I wanted to be able to buy land. I wanted it to be a career, you know I wanted a 401k and a time off and travel, and you know my kids to have iPods, you know and. I had to step back and like well it’s never, really been that way, I mean farming has always been a massively consuming enterprise, and it’s not something you you know. Take two weeks off in the summer and take a vacation with your family. It’s a deep lifestyle. And it’s always been low-income. It’s always been high labor, low income kind of you know scenario. A labor of love, if you will, and I think a lot of you know. Times have changed and our expectations for work and work-life balance and like I had a friend that ran a market garden in Western Montana, that’s very hard work, marky Codeman. Yeah yeah, and she talked about, you know, labor and she offered me a job that I didn’t take, but she talked about hiring people and you know yeah, they want to go to yoga retreats and they want to have a work-life balance. And you know market gardening, especially in a place like Montana. Yes, I mean it’s you just work 16, 18 hours, all you know, during the growing season. Yes. And you know. I knew a guy in Northern California, a great local farmer, very successful. Marijuana? No, no, I knew some of those too. But this guy was legit and he was a really interesting guy. He him and his family just worked all summer long but shut the farm down during the winter and he had dozens and dozens of subscriptions that just piled up all summer long and all winter long he sat at his chair by his wood stove and read you know, absorbed, you know. So it was kind of that was his work-life balance.
Alex Johnston: 1:24:19
I mean touching on labor there. It’s an issue in UK agriculture and maybe in future we’ll see more models like ours, where the labor is able to build equities in some way in addition to their salary.
Colter DeVries: 1:24:36
It’s come up a few times in different circles and maybe podcast conversations that yeah, they’re vesting. I mean anytime you take on a venture and there needs to be a succession plan for the value that’s created and someone needs to capitalize on the value, the value that’s created. There should be a vesting schedule.
Andy Rahn: 1:24:57
Capitalizing on that. You mean selling out to the, to the California? Yeah well, fire, yeah.
Colter DeVries: 1:25:04
So there’s got to be a market maker ready, liquidity.
Alex Johnston: 1:25:08
Well then, you see the dairy sector does that very well so you can go over there as it sort of plows dairy assistant and you can very quickly begin to purchase your own cows and they would stay in the hood of your employer and then, when you get to a significant size, you can go and start approaching landowners and get like a share milking contract, so you would provide the cows and the labor they would provide the land and the parlor and you know the grazing infrastructure, the fences and things, and then you would split the milk check accordingly. Wow, of course for that season, and that’s actually got a legal framework in New Zealand for that.
Andy Rahn: 1:25:46
Yeah we don’t really have anything.
Colter DeVries: 1:25:49
No, we have a lot of false promises. Yeah, I think you got into one of those. Yeah, there’s plenty of them about it, definitely.
Andy Rahn: 1:25:56
Like you hit on we have we have the ranch kid program where you can work for that, and still promises. Yeah, maybe have a vote by the time you’re in your 60s.
Colter DeVries: 1:26:06
Well, andy, you have five minutes here to summarize the market as we start autumn, september 2nd 2023. What is the ranch land market doing in Montana?
Andy Rahn: 1:26:19
Well, what I’m hearing is people are talking a lot about the end of the off market thing. It seems like a lot of properties are coming back into the public market space. We had a post COVID you know, we’ve had a lot of off market transactions of just. I guess the market was so hot and whatnot that a lot of properties could trade without ever hitting the market and we’re seeing volume rebuild a little bit, I mean, and higher end ranches seems like the $10 million you know ish range. We’re seeing more of those come up on the market. I think they either weren’t hitting the market or were in that off market status. But I’m hearing people talk about the off market phenomenon, sort of sort of crying out a little bit. And yeah, still in just kind of this correction phase our market was so hot post COVID just exploded for us and we’re kind of in an equalization stage there. There’s still demand, there’s still buyers out there, but we burned through a lot of inventory, right. So you know the inventory has really draw down. I mean that’s what. Montana Land Source. My business does is track the market and the listings and you know, today on the market. I think there’s 370 ranches laying on the market. Pre COVID that was somewhere between 6 and 700 throughout the season, so anyway yeah yeah so, but you know, a little bit of value correction, at least on the mid and lower tier quality properties, but top tier properties are still selling at a premium. Yeah. Is that similar in the UK?
Alex Johnston: 1:28:07
Don’t really follow them up. I think immediately post COVID there was an awful lot of demand for those smaller lifestyle properties, the sort of 30 acre with a house, and maybe that’s slightly cooled. But there’s so much demand for living that rural ideal, you know right.
Andy Rahn: 1:28:29
Alex Johnston: 1:28:29
And getting away from it all and being self sufficient on your own land and all the rest of it, then the reality hits and you don’t actually want to work 16 hours a day to be a peasant. So we’ll keep the remote internet job and just let out the ground to some local farmer Right.
Colter DeVries: 1:28:48
Well, alex Johnston from the United Kingdom, please leave us with your some of your, your vision, your again. What drives you, what gets you out of bed? Because I want you to hit on this again. We had a good talk last night.
Alex Johnston: 1:29:05
Yeah, it’s just. It’s just about making money and building wealth. really, that’s what gets me out of bed and being able to fulfill those breeding visions and living that sort of lifestyle that I want, being able to be outside in all weathers. But I I’d much rather work 80 hours a week for myself than 40 hours a week for somebody else. You know there’s that saying, isn’t there? That you’re always working on a dream and if you’re not working on your own dream, somebody will use you to work on theirs. Well, I want to work on my own dream. That’s what gets me out of bed.
Colter DeVries: 1:29:38
Well, if any of our listeners want to reach you, how do they get in touch with Alex Johnston?
Alex Johnston: 1:29:44
I’ve got WhatsApp, Facebook, Twitter and email. I’ll give you all the details and then we’ll be on the show notes.
Colter DeVries: 1:29:52
All right, put your contact in there. And, of course, montana land source and let’s wrap it up and head to. We’re going to go out to Roger Angelin’s ranch.
Andy Rahn: 1:30:02
Oh yeah, We’ve had this is bulls. This time it’s bull sale.
Colter DeVries: 1:30:06
No, no, December’s is bull sale. Okay, my birthday no. Roger and Betsy have been on the podcast a couple of times, I think. So, oh yeah, they’re great. Yep, alex is going to head out there and keep taking in over the next few months all that the US has to offer. That’s right. Thanks for stopping by Billings Montana, alex, and look forward to staying in touch. Thanks very much for talking to me. It’s been great. I want to take a minute to ask that you join our Discord channel. We have been working on a way to bring everyone in on the discussion and the conversations anonymously, so now you can join our Discord channel and ask questions, make comments that directly go to us and the guest. You want to have an engagement with other listeners. Let’s get on Discord and start the discussion. Thanks.