Donald and Sarah Nordby

Ranching and marketing AVS Artificial Insemination services to area beef and dairy cattlemen near the Enchanted Highway in western ND.

Prairie Public
What kind of an operation do you have here?

Donald
Well we pretty much just run a beef cow/calf operation, and we’ve kinda got our herd split into 2 different herds. We run a spring calving herd which calves the first part of April through mid May, and we run about 75% of our cows in that system, and then we have a fall calving herd that calves mid August to September. And we that just to kind of spread out our cash flow.

Prairie Public
And you Sarah also have a side business?

Sarah
Yeah, we have an artificial insemination business—AVS. We’re independent reps. The AVS meant Donald could get out of farming. We’re really busy in the spring working with our customers. Then also in the winter with the training and visiting with the customers and getting a feel for what would fit their program, what particular bull. And then year round is more the nitrogen which I do and also the dairy business which I handle too.

Prairie Public
You run dairy cattle?

Donald
We sell beef and dairy semen for artificial insemination. We market that, AVS’s product, to customers in our area. We’ve got a fairly large area. We’ve got the 2 northwestern counties of South Dakota, and then we go to the Montana line all the way north of Beach and then basically straight east to Beulah, I guess drawing a line south to Beulah to the South Dakota state line. So we cover a lot of miles for that business.

Prairie Public
And the semen comes from where?

Sarah
They collect it in Madison, Wisconsin.

Donald
And we just work for a corporation as an independent rep and market their product for them.

Prairie Public
Why did you want to get out of farming?

Donald
Well it just looks to me that you know if you’re going to farm and that’s going to be your business, you’ve got to cover a lot of acres and make a lot of investment, and you’ve got to be willing to use the farm program--the farm program’s very important in a farming operation. And so you’re kinda at the whims of the politicians on what kind of farm bill they’re gonna give you because certainly commodity wheat, a guy hasn’t been able to make much money just selling wheat without some kind of a subsidy. And I don’t know, I don’t like sitting on the tractor going round and round the field as much. Now I do it to raise feed for the livestock. You know we raise some feed grains here and some corn and stuff that we utilize in our beef operation.

Prairie Public
So the AVS is part of your diversification then?

Donald
Right. Yeah it is. If it wasn’t for AVS, we probably couldn’t stay here. I mean, that income provides a family living for our operation.

Prairie Public
Say that again…if it wasn’t for AVS…

Donald
Well if it wasn’t for AVS, I don’t know if Sarah and I could afford to stay here because you know our beef operation, we’ve had to trade up equipment and renew some older equipment—those kinds of things. And so we’ve had pretty good cattle prices the last few years, but it’s basically allowed us to trade up our equipment and then make those payments. And so from the ranching, just the ranching business, it’s been a break-even deal even with the good prices that we’ve had, and so the sideline, the extra job that we have is selling for AVS. If we didn’t have that, then Sarah would probably, either her or I would have to probably find employment off the ranch. And you’ll see that on all the farms around here, what I call family farms. It’s a husband/wife kind of operation is the husband’s farming and ranching or doing both, and the wife has got a job somewhere.

Prairie Public
Is it pretty hard to just ranch today? Is it impossible to just ranch?

Donald
Well it’s not impossible. Obviously my Dad has given us a decent break to get started here. It’s pretty tough for a young guy to come out with nothing and buy cows, buy land or rent land and make any kind of a living, and so you need some kind of a start to get going just because the margins are so tight.

All of our ground is rented ground. My dad hasn’t decided yet to sell any land to us, but we rent from a lot of different people—one out of state and another out of a land trust that really is—the people that are in the trust are out of state. And so in any one-year we could lose both rents either escalation of the costs where it wouldn’t be profitable to run on ‘em anymore or even the possibility to break even and then what do you do.

Prairie Public
So today you can’t just take Dad’s ranch and ranch it?

Donald
I grew up here, and this ranch basically ran—the deeded ground that my father owns—would run between 60 to 80 cows and about 300 acres of wheat. And Dad through the late ‘50s, ‘60s, and ‘70s raised 3 kids and college-educated all of us on that. Today, 60 cows and 300 acres of wheat we’d be on food stamps. We wouldn’t be here—we’re not really a big operation per se. If we were running 300 cows and 1500 acres of wheat, we would probably have enough work to do where we might not need an additional job.

Prairie Public
But if you’re gonna have a job, it’s a pretty good to have one that gives you flexibility.

Donald
Well this ones fits in too, and we’ve kinda changed—I’ve taken a lot of our farm ground and planted it back to grass or hay land because we’re so busy with the AI business. May and June you’re gone everyday. If you’re a farmer, if you’re not planting, you’re spraying, and there’s all that stuff is when you’re really busy, and so we’ve tried to set this place up that it frees us up during that time period where we can be away from the place to do that business. But now I don’t want to run AVS all my life either. My goal in life is to build a cowherd to a point where we don’t need that extra income.

Prairie Public
So you’ve been involved in alternative things, other ways to do this business, for a long time. Can you tell me about some of those things?

Donald
And this would be true for ranchers or farmers. We’ve got to get our business to selling commodities, and you know that’s probably not real popular because there’s a lot of middleman businesses. Take for instance cattle, your auction barns and your order buyers that buy beef calves and maybe some of your backgrounders that are set up to eliminate those steps. I say, let’s own our calves all the way to finish and then have an end market. In other words, the closer I can get to the consumer with my cattle before I run into a middle man or someone else that handles the product, to me it makes it more efficient, and the money we save, I as a rancher am probably not going to get all of it. Maybe the consumer gets a break on what he pays for the product also. But it just makes that system more efficient, and with those savings it either allows you to sell your product cheaper which means you can move more product or it allows you to get more margin or net at your end. And so you know since ’95, I had pursued a number of different projects trying to do that. It’s kind of frustrating though that one guy can’t build a packing plant of any size and scale.

Prairie Public
Why has it been hard?

Donald
I don’t know. I’ve been on 3 or 4 equity drives trying to raise money from ranches to build a producer-owned processing plant. The closed co-op thing has been pretty popular in North Dakota, and a lot of projects have been built. Some have been successful, but probably a lion’s share of them have failed. Ranchers are strapped right now in terms of trying to make ends meet, provide for our families, and now all of a sudden we’ve got to come up with extra capital and then take all the risk. And then if the thing goes south or the business fails, well then you’ve lost that capital too. And a lot of the people that we’ve talked to are actually—and us included, would have to borrow money from the bank to invest in a cooperative.

We probably have had more opposition from the traditional livestock industry against that kind of an idea. When people that are the elected leaders of the beef industry start talking it down, and ranchers will listen to some of that, and it puts a question mark in their mind, and then pretty soon you get a negative thing going, and it’s pretty tough to get everyone on board and say this is the right thing to do, and we gotta get that way.

Prairie Public
And what happened with the equity drives?

Donald
We all fell short to raise enough money to meet our escrow to be able to do the project. And it seemed like every time we fail, the next time you come out, it just adds ammunition to the naysayer that says well see I told you it wasn’t going to work. Like I think the first drive we ended up with—we thought we needed at least 200,000 head of cattle to make it work, and we ended up with 119,000. We went back and rehashed, and it looked like with some different technology that we found in New Zealand where we could actually build a plant and be efficient at 100,000 head. We went out and did an equity drive, and we raised 30,000 head of cattle. I mean we weren’t even close enough to try to make it work.

Then a guy called me and said well we just can’t do nothing Donald, and so him and I and 12 other ranchers got together. I had some cattle on feed, and we had some cattle killed, and we tried to do a branded beef product to where we were having it custom processed and actually did the test market in the Bismarck-Mandan area. Our surveys when we were all done, had like a 92% approval rating of the product; 98% of the people said that they would recommend it to a friend. And the price was within reason. But our processing was costing us double what the industry did and transportation was double what the industry was paying. We just couldn’t pay those extra costs without raising our price up so high that you hit a choke level with the consumer who is just going to say "I’m not going to buy this everyday at that kind of price" because they’re limited on what they can spend on their food. We were all over the country trying to find a processor that would be reasonable in his costs, and we never really found anyone that could do that. And so that project sits there. We’re got a defined, branded product labeled, ready to go right now. If we could ever find a processor that would take us on, we could be up and running in a year. We learned a lot though standing in a grocery story selling meat. I mean we learned a lot about what you have to do in developing a product.

And then the last one was actually a processor we had found and another beef group had found, and so we kind of let them take the lead on it, and they went out—and again we’re trying to come up with a plan with 100,000 head, and I think they got like 19,000 raised in that equity drive.

Prairie Public
The reason that the processors and the transporters, a lot of that was so high is because you didn’t have the volume?

Donald
Some of it was volume, and the other thing is that we weren’t going to the great mega corporation beefpackers because they didn’t even want to talk to you on that small project like we were talkin’, 10,000 head when they process 10,000 head in the span of 3 days from one of their big plants. And so to that kind of a processor we were a big headache. And the small guy, he just didn’t have the volume and the scale to capture the true value of the hide and other credits. Those things when you add them up is a $90.00 bill. If you don’t get that value, now all of a sudden, you’ve got to add $90.00 to every steer you kill in the end product to stay even with the packers. So it’s kind of a catch 22.

Prairie Public
So what are you hoping for now?

Donald
Well I still believe that—I have hopes that we can build a beef business that my son or daughter can run. It’s hard work. You’re not going to live fancy. You’re not going to have a lot of money. I mean ranching or farming, you’re always cash poor. People see the total dollars that we generate, but in terms of cash flow and actually having cash available, all of our money is tied up in those tractors and equipment and livestock and in the land. I mean it’s all tied up in that so you kind of live day to day on a cash flow basis. I believe for agriculture in North Dakota to survive, we have got to have more success stories like Dakota Pasta Company. We’ve got to be able to have ownership of our product and catch more of the retail dollar and bring it back to the ranch or the farm. And I think that will happen over time. It’s not going to happen as fast as I would like to see it happen, unfortunately.

Prairie Public
What would you say to someone who’s invested before for the next thing that comes along?

Donald
Well it’s hard to say. I’ve got a good friend, they invested in one of these value-added ventures, and they’ve never told me how much they lost, but I get the impression it was 6 figures of investment. And like with this Dakota Heritage Beef, a small company out of South Dakota took that on and tried doing what we were doing, and each of those guys put in $10,000, and the thing was bankrupt in 6 months. It’s pretty tough to go back and talk to that guy and say well now this is for real. This will work. And that’s one of the things that’s happened. Since ’95 there’s been a lot of these projects come forward, and people have put their money in them, and they’ve lost it. And it’s pretty tough to convince someone who can say "I already tried that. I took a $10,000 hickey; I’m not gonna take another one." And so you get that distrust. It’s almost to the point now to where I think for it to happen there’s gotta be additional involvement other than the ranch to reduce the risk enough for the rancher that he can get in and see it working or at least a demonstration of it working to where then it can be commercialized and move forward from there. But it’s to the point now I think to really get something going, you’re going to have to show me—that attitude, show me it works, then I’m in.

Prairie Public
What’s going to make it work?

Donald
We can look and say "I like the freedom that I have here," but in the end the consumer tells us what we need to do. You know if the consumer says he doesn’t want implants in his beef products, which is a fairly common practice in the ranching business, we’re not gonna put in implants. You’ll hear the feedlot and the university research say you can’t afford not to put a growth implant in that calf because of the gains in feed efficiencies. I go with the attitude if the consumer doesn’t want it in, we don’t put it in. Even though it costs us some money, we’re gonna take it out. But then the consumer also needs to understand that if we stop that practice, it’s gonna cost more for the product. And so education and everyone’s understanding what’s going on needs to happen. I believe in the future of ranching, but I think some drastic things have got to change for it to be sustainable.

Prairie Public
Drastic things like…

Donald
Well I mean like owning your product all the way to a consumer. Capturing more of that retail dollar and bringing it back. That still doesn’t take the weight off me as a manager of this branch to be more efficient, lower my costs, and try to get a product cheaper to a consumer, but we certainly have got to open up that opportunity a lot more.

Prairie Public
Do you think that opportunity might be smaller than what we’ve been trying to do, physically doing your own stuff rather than going together as a group?

Donald
Yeah, if we give up AVS we could probably go to a brand of product and just use our own cattle and probably make it work. There’s two guys in North Dakota that have been doing it. I was always raised that community was important too—so what if I’m making all this money if all my neighbors are going broke, and pretty soon here I’m sittin’ out here and I don’t have any neighbors. Well now have I really won? Now if you measure winning on number of cattle and how much money you got in the bank, yeah I suppose, but the way I value it is that I would like to see all my neighbors not have to struggle, and maybe that’s kind of wishful thinking, but that’s one of the reasons I moved home here is that you had friends and neighbors around too - a community. The way it’s going now just in the last 4 or 5 years, we’ve lost 3 young guys who came home to farm or ranch and after a few years just said I can’t make it and quit.. And then the bigger operator has moved in and taken over those operations, but they’re not a neighbor anymore.

Prairie Public
Do you see yourself as ever making that choice to quit?

Donald
No I don’t think so unless the bank shuts me down. But I ain’t gonna let myself get in that predicament. And if that were ever to happen, I could go get another job. I’ve got a lot of friends that never went to college—went right out of high school onto their Dad’s places, and so they probably don’t have the same opportunities I would have if they had to quit and go do something else.

You here all this talk about family farms and saving the family farm, and I just don’t think that’s how the government and the economic development people in the state of North Dakota look at development. Economic development may provide labor, but most of us here we have enough work to do. We don’t have time to go do another job. To me economic development in rural areas is different than say a Bismarck or a Dickinson where you’re going to build a business. Out here most of my friends, we got enough to do. We’re pretty much busy year round. We don’t need more work. What we need is more value for what we do.

Prairie Public
And you’re probably not going to get that out of the big industries.

Donald
Well why would they want to give it to us? They don’t think like I think. They’re not as benevolent as me you know.

Prairie Public
So you think it’s you if you were to do your own brand that would be fine, but it would leave the rest of your neighbors behind?

Donald
I don’t know, I was raised in a Christian home, and you should look after your neighbor too. And maybe that, some of my friends will say that, "Oh Nordby, that’s a bunch of hogwash what you’re sayin", but I really do believe that. I’ve spent a lot of my own money and a lot of my time pursuing this thing, and it’s to try to build something that helps everyone that wants to get involved. And what I’m talking about may not be for everyone, but for the people that really need it—and that’s the problem is the people that really need it, that it would help, they’re the ones that don’t have the money to invest so you’re in a catch 22. How do you help them? I’ll leave that up to the politicians to figure that one out, but I mean if they really want to save rural America, what they’re doing isn’t working. A government program is not going to save rural America in my opinion.

Prairie Public
What about alliances?

Donald
Well I’ve looked at a lot of alliances in beef, and for what they pay I don’t know if it’s worth getting tied in—if it’s only going to make me $20.00, $30.00 a head to be involved in an Alliance. I think there’s a lot more money on the table than that. I know with a brand of beef product I think there’s a $100.000 bill on the table. Now how much of that I capture and bring home, I don’t know. I think you’re gonna have to give some of that to a consumer. Or if you own your processing plant, you’re going to have to take some of that money and pay for that facility. So, in the short term, it’s not going to be very advantageous. But I look at trying to build a better beef business than what my Dad handed me…to my kids…to where they want to come home and say I gotta work hard but I get rewarded fairly for what I do. And if I don’t raise good beef, then I don’t expect to get paid for it is my attitude. But if I do things like branding of cattle…you know we quit branding our calves a few years back, and I’ve yet to ever get paid for that. But that adds 30% to 40% more to a value of a hide because all of a sudden now I don’t have a scar on the side of the hide. A lot of people around here believe that branding is an ownership thing.

Prairie Public
Do you have an answer for how you’re going to create that situation? An idea of here’s what I think the answer might be?

Donald
Bill Petrie come to me in ’95 and said we’ve got a vision to build a producer-owner, vertically integrated processing plant so we can build a beef product that consumers want and yet return more to the rancher than what he’s currently getting. I still believe in that vision. You ask me how do we get there? I’ve tried 4 different ways, and maybe the way of building a plant isn’t the first step. You know they built a feedlot south of me, and I was involved in that for awhile, and when it got to the point when it didn’t look like we were going to get a processing plant built up here, they went ahead and did it anyways, and I just stepped back and said I don’t want to be involved with this unless I’m involved with a market at the other end. And as I look at it, and the more I know it’s market, market, market. We as producers we just can’t sit on these ranches anymore and let someone else do our marketing. We’ve got to put on the dollar for every calf we sell that goes toward marketing. I think that’s good for the beef industry. The problem is that the rancher’s paying for the marketing of the big processor, and he’s the first one to take the cut out of that calf or the retailer, he’s the first one that gets the cut, and the last guy to get the cut is the rancher, and you know how that works. It’s just like a floodgate. Alright I’m going to dam the river here and then here and then here and here, and when you get down here, there’s not much left, and so you get this trickle down effect. I don’t think we can afford not to give the dollar away, but in the same token they’re really not benefiting us that much out here on the ranch as it is farther up the scale.

Prairie Public
You’re the one getting the trickle?

Donald
And somewhere along the way we gotta remove some of the dams on the river and just say alright. You’re still gonna get the first cut, but maybe that next cut…we’re in the line for the next cut. Now you know the last 5 years we said we’ve gotta own processing to get that. I think it’s an alliance with a retailer that’s committed and honest enough to work with the ranch and say now alright here’s my books, this is what I’m making, and we’re honest enough to say this alright now let’s split the money equitably. In other words, here’s the investment, those kind of things, and let’s sit down. But now Wall Street and big corporations don’t think that way. They’re first, and rightfully so I suppose—they’re hired to take care of their investors. They’re not hired to take care of Rancher Joe. They’re hired to get the product from me as cheap as they can and sell it as high as they can to Joe Retailer. I think just the structure of corporate America probably hurts the family farmers more than anything. I don’t know if we’ll ever change that other than that the ranch has gotta move forward into that system more.

Prairie Public
So a producer-owned processing plant would be something that could work, but it’s getting it up and getting it going and everything else. It’s how you get to that point.

Donald
I don’t think we need to own processing because actually the processing of a beef animal is a very margin business, like 1% or 2%. There isn’t much money. What I’m saying is that we always argued that owning processing was the bottleneck. How do you go through a major processor without having him charge double to get it killed, and to get your product over to the market end. And then once you get to the retailer, you fight the same thing. He’s gonna protect his margins, and so if you could find a large-scale processor that would work with you and where there’d be a trust level where you know that no one’s jabbing the other guy, then yeah you wouldn’t have to put investment into processing. We’ve always argued that we need to do that ‘cause we can’t find someone big enough to do it for us. But then as I’ve come along in all these projects, I’ve really come down—it’s market, market, market It’s telling the consumer why our beef is better than the next guy’s beef. It’s putting as much time as I spend on working cattle and running this operation and on selecting bulls for the next breeding season—I should put that much time and money into a marketing system to market my product. And as ranchers, we’ve pretty much said well we’re gonna take it to a calf, you take it from there. I think if expect we’re gonna get a bigger piece of the pie, we’re gonna have to do more than what we’re doing right now.

Prairie Public
How do you like ranch life?

Sarah
I moved out here in the end of ’94. It’s very flexible. You kinda set your own pace. You can and you can’t. It depends on the weather and a lot of other things.

Prairie Public
So when your husband’s been working on some of these value-added things, you’ve been running the ranch and the family and everything, right?

Sarah
Yeah, I’m pretty much the stay home person.

Prairie Public
What do you see as the future for your ranch here? What do you think’s going to happen with ranching in general? What are you hoping for?

Sarah
That’s what keeps a person going—that next year is going to be better, and you kinda see the light at the end of the tunnel. Okay we’re gonna get these things paid off, and then you can go onto the next project or the next phase, and you kinda want to build to that situation like Donald said, where you don’t have to have an off-farm income. But I don’t know. I have friends--they say for every 100 cows, you need an off-farm job. It’s with tongue in cheek of course.

Prairie Public
Do you do the books for your family?

Sarah
I used to, and then we thought it would be better if Donald would do ‘em. I do the taxes. I’m kind of the check, you know the double checker.

Prairie Public
It’s better for him to do him so he can see what’s going into the ranch?

Sarah
Yeah, ‘cause if I would end up doing ‘em, he’d never check in on what’s going on ‘cause he gets so busy. That way you’re more in touch with everything.

Prairie Public
What’s the hardest thing about trying to run this type of a business?

Sarah
The hardest thing…well it’s pretty slim making do. Then you kind of figure out how to get along, and then you’re always juggling stuff. You know you think oh yeah I can do this little job or make this fit in, and then it takes a little while to figure out to make it fit in. And then, of course, your kids grow up—you’re waiting for your kids to turn into help. I usually have one or 2 kids with me when I’m going on these runs which canbe close to 200 miles a day maybe, 100 miles. And then you figure out how to make it more fun and make it something to do with your kid instead of a business venture. So you take the enchanted highway, and you stop and have your picnics. And the dairies are lots of fun because they all have about 3 or 5 kids running around, and there’s always stuff to do…play with their fish or their turtles. So actually you sort of turn work into play. Yeah you just kind of learn to say well this isn’t stressful, make it fun. And once you get that figured out, then it’s alright.

Prairie Public
Is the ranching that way for you guys too? Is it fun for Donald? Is it fun for you when you need to succeed?

Sarah
Yeah. These last years haven’t been too bad as far as rain is concerned. But when there’s no grass, well then that takes a lot of the fun out of it. But having the cattle and being set up for it, you know especially for a winter storm or whatever. And we’re very lucky we’re next to a refuge that provides grazing—we ended up grazing their Canada thistle, and it gives us a lot of spring grass so that gives a time for our own grass to grow so that’s very helpful. That’s been a real key thing in helping our grass get started and keeping ahead of our grass.