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Diversification plays key role in risk management

John Malazzo quips that he has too many cows to be a good farmer and too much cropland to be a good rancher.

An astute observer might disagree. Malazzo, a Burleson County, Texas, cotton, grain and livestock producer, balances his diversified operations to spread risks and take advantage of the Brazos Bottom resources that provide opportunities to grow crops and forage.

“Each year I analyze each enterprise independently of the others,” Malazzo says. “Three years ago, cattle made more money than either cotton or grain. The next year was a good grain crop and I made less money on cattle because prices were down. Two or three years ago, cotton was tremendous and grain was not. If a disaster hits one enterprise often another one does better.”

Malazzo raises cotton, corn, milo and wheat. He also has registered Brahman cattle and breeds cows to Hereford bulls to produce brown baldy or tiger striped F1 crosses, a popular option for Central and South Texas ranchers.

Diversity is part of Malazzo’s overall risk-management strategy that also includes irrigation, technology, and variety selection.

His irrigation systems were stretched this summer. He uses both flexible tubing to furrow irrigate and center pivots. One center pivot unit stretches for three-fourths of a mile and covers 593 acres.

“It takes four and a half days to apply 1.5 inches of water over the circle,” Malazzo says. He needs 3,500 gallons per minute from several wells to apply that much water. “And productivity of the wells has decreased,” he says.

Back in early August he was concerned that non-stop irrigation for cotton would drop levels too far to irrigate efficiently. By that time he had been watering continuously for about seven weeks. He’s also watered with furrow irrigation more than usual. “I usually water furrows two or three times. I’m on my fifth this year.”

Furrow irrigation is difficult, requiring manual labor to turn valves on and off. “The only thing worse than having to irrigate is not being able to irrigate,” he says.

It’s been a challenging growing season for Central Texas. “When we started irrigating, we had 28 pounds of pressure. Now it’s 14,” he said in early August. “Our water table is dropping.”

Malazzo said typical annual rainfall for his Central Texas farm is about 45 inches. This year it’s about half that. “And we’ve had 38 days of 100-degree plus temperatures. It’s the hottest summer I remember and one of the most difficult.”

Technology helps him manage the long center pivot unit’s 22 towers. “I operate it with my cell phone,” he says. “I can stop, start, and change speeds to vary rates all with the phone. It is much more convenient.”

Dividing the circle in half also helps conserve water. He has half the big circle in cotton and the other half in corn.

“Most of our acreage can be irrigated. Our ability to irrigate is the key to being in business.” Between cotton and grain he irrigates some 2,200 acres.

Even with irrigation, he expects yields to be off some this year because of oppressive heat. “Corn yields on the monitor show 160 to 165 bushels per acre. That’s down a little because of the heat. Maximum yield will be about 180 bushels.”

Irrigated cotton will make from 1,300 to 1,400 pounds per acre, most years. His five-year average yield is 1,200 pounds per acre, dryland and irrigated. He’s not certain if he’ll harvest much dryland cotton this year. He says cotton acreage is down a little because of price.

“Cotton used to be the key, when we had mills all over.”

He says rotation helps and tries to maintain a 50/50 balance with grain and cotton. “I had one piece of land in cotton for 50 consecutive years. I rotated it to corn and last year made three bales per acre instead of two. If we farm cotton on some land more than two years we’re going backwards.”

He runs his own cotton variety trials to test new varieties. He says variety innovations may allow farmers to capitalize on cottonseed instead of lint. “We have potential to grow cotton for seed instead of lint. It will be a switch from varieties with more lint and less seed.”

Currently, he plants mostly Deltapine 161, Bt2 and Roundup Ready Flex. “I have done no cultivation in two or three years. The only time I cultivate is to build up furrows to irrigate.”

He says variety technology allows him to “farm more acreage with fewer people.” It also reduces pesticide use. “When I was a boy my dad used to spray cotton 10 to 14 times and everything suffered. Now, we spray twice a season. We have more beneficials. We don’t want to poison our land. We want to farm here for a long time.”

Malazzo says the registered Brahman herd adds to the farm’s diversity. He likes the breed. “These cattle are very protective of their calves against coyotes and wild dogs. They also take heat better than other breeds, even though they are not in top condition this summer because of drought.”

He says a Brahman cow has a long reproductive lifespan; 10 to 15 years is not uncommon. “I have one 14-year old cow that still raises a good calf,” he says.

The Brahman/Hereford cross also does well in Central and South Texas. Malazzo says from 60 percent to 70 percent of the replacement heifers sold in the region are the Brahman/Hereford cross.

“The heterosis between Brahman and Hereford is outstanding. Ranchers in Texas want the tiger stripe calves. Some will be brown with a white face and some will be tiger striped. Ranchers will pay more for the striped calves. At sale, we group brown baldies in one group and tiger stripes in another.”

He says most ranchers will breed their first calf heifers to an Angus or other smaller breed to get a low birth weight. “Then they may stay with Angus or select a continental breed. He says the hybrid vigor diminishes after the F1.

Weaning weight on those F1 calves typically averages 550 pounds, even in a drought year. "I want a 1,200-pound cow, not a 1,300-pound animal. It takes more feed to maintain a larger cow.”

He says another advantage of the Brahman breed is early fertility. “They start cycling at 12 to 13 months. I try to wait to breed them until 15 months and we have to be careful with weaning dates to keep that in check.”

He breeds so cows will calve in late spring and early fall. “A defined calving season makes it easier to manage the herd."

Malazzo sells replacement heifers once a year, at a March special sale on his ranch. Last spring he sold 350 head and averaged better than $1,300 for them. “I sell steers at the auction barn.” He’s hoping for a decent rain before next spring so ranchers will restock herds they’ve thinned.

He turns crop sales over to a marketing service. “It’s difficult to market crops. It’s hard to do day-to-day operations on crops and still watch markets.”

He says his service uses options to set a floor on prices and still take advantage of price movements. “I prefer to have cotton sold by harvest. When it gets to the warehouse I want someone else to own it. If the price is not good, it goes into loan.”

Malazzo says he’s proud that the operation is a true family farm. “My dad was raised on this farm and has farmed all his life. He’s 86 and still active. Today, he’s checking water troughs.”

He says his wife helps with harvest and was running the corn trailer. “My daughter works in the farm office and is interested in agricultural journalism.”

His son graduated from Texas A&M and works full time on the farm.

Malazzo says they are fortunate to farm in the Brazos Bottom. “This is a flood plain that’s very high in potassium. We add some phosphorus and nitrogen and that’s about it. Also, we have water about 40 feet deep.”

He says they have potential to grow several crops, including biofuel crops. “We’d be interested in biofuel production if the economics are right,” he says. ‘I’m confident we can grow anything in the Brazos Bottom.”

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TAGS: Management
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