PHARO CATTLE COMPANY CHEYENNE WELLS, COLORADO PHONE

PHARO CATTLE COMPANY CHEYENNE WELLS, COLORADO PHONE 1-800-311-0995 Buy your bulls from someone who raises cattle the way you ought to. May / June 2007 NEWSLETTER Increasing Production Can Be a Good Thing For the past forty years, the North American beef industry has been so focused on increasing production that it has basically ignored everything else including profit. For the past twenty years, I have been advising ranchers to make the change from being production-driven to being profit-driven. Management decisions that are production-driven will increase your weaning weights and bragging rights but they will seldom increase your profits. Why? Because every increase in production comes with a cost. It s nearly impossible to get something for nothing. Every increase in weaning weight, for example, requires an energy input which has a cost of some sort associated with it. Let s take a look at production from a little different angle. Forget about increasing your individual weaning weights unless you can figure out a way to make more profit by increasing weaning weights. What if we can increase total beef production per acre without increasing our inputs? That would be like getting something for nothing, wouldn t it? What if we can increase total beef production per acre by 50% to 400%, without increasing our inputs? That would be like getting a whole lot of something for nothing, wouldn t it? Is that possible? This is exciting! From my very limited experience, I know it s possible to substantially increase grass production on most ranches with very few extra inputs. This, however, does require the use of some grass management practices that enable the rangeland to make better use of the solar energy and the rain that falls upon it. We have been practicing some rotational grazing here at Pharo Cattle Company for the past twelve years. All things considered, I think it is safe to say that we have been able to increase total grass production by 50%. In an attempt to get your undivided attention, I will compare this to increasing our weaning weights from 500 pounds to 750 pounds. We rotational graze our cows year-round with no grain, no protein supplementation, and no hay except in rare cases when the snow is too deep for the cows to get to the grass that has been stockpiled for winter grazing. For most of the past twelve years, we have also dealt with major drought conditions. We have come to the realization that the amount of rain we receive is not nearly as important as the amount of rain we are able to hold on to and put to use. Wait a minute. Before you attempt to build your first cross fence, you need to find out how and why a rotational grazing system works. If you do not have a basic understanding, you are almost guaranteed to fail. If you are too busy to take a course and/or to read some books about rotational grazing, then you are too busy. Pushing the limits. Is it possible to increase grass and beef production by 400%? When Ian Mitchell-Innes, a holistic rancher from South Africa, spoke at our pre-sale meeting in the fall of 2005, he said he thought it was possible for most ranches to increase grass production by well over 400%. Of course, most of the ranchers there (including me) immediately went into brain-shutdown mode. Ian was attempting to shatter one of our paradigms and we didn t like it. We said, Well, he may be able to do that in South Africa blah, blah, blah, but we would never be able to do that here blah, blah, blah. Fortunately, a couple of PCC customers who attended that meeting did not go into brain-shutdown mode. Their incredible experiences with mob grazing is shared on pages 4 and 5. Folks, this is BIG! 1

Great minds discuss ideas. Average minds discuss events. Small minds discuss other people. 400 BULLS Fall Bull Sale th Tuesday, November 6 Our bulls are 100% Forage-Raised and Forage-Tested on Grass. Our bulls won t melt and fall apart when you take them home. Our bulls will service More Cows for More Years than most bulls. FREE Delivery to many central locations. Call or email for a Sale Catalog. THE PHARO CATTLE COMPANY NEWSLETTER Published bimonthly by: Pharo Cattle Company 44017 County Road Z Cheyenne Wells, CO 80810 Editor: Kit Pharo Phone: 1-800-311-0995 Email: Kit@PharoCattle.com Website: www.pharocattle.com Our Mission: To help ranchers put more fun and profit into their business. Call or Email for a Free Subscription 2 No Shortage of Critics... People who are not afraid to take a stand or to openly state their opinions are going to be criticized. This is especially true if that person s stand and/or opinions are a little contrary to the so-called norm or status quo. If that person happens to be successful at what he or she does, then the criticism will be greatly magnified. If Pharo Cattle Company is not being criticized, I get a little nervous and wonder if we are still on the right track. I had absolutely no reason for concern this past winter. We were lambasted from every angle imaginable. People will sometimes call or email with the latest PCC gossip but the best source for PCC gossip and criticism is internet discussion sites. There are several to choose from. A few people belong to more than one group only their secret-code nicknames have been changed. For the most part, these discussions are civil, entertaining and educational. Unfortunately, they can quickly turn ugly if the right subject comes up. At that point, the participants become like a pack of wild dogs ripping apart a piece of meat. This type of discussion will usually feed on itself and get uglier and uglier. It s as though the participants believe they can elevate themselves by tearing down someone else. Ironically, the opposite will usually happen. Much of the PCC gossip and criticism is off base and as wrong as wrong can be. That, however, does not diminish the enthusiasm. I do not have time to respond or retaliate every time a false statement is made about me or about PCC. Every now and then, someone who actually knows what he is talking about will set things straight. I appreciate that. I really got a kick out of one response to a discussion that was bashing me and PCC. He said, I have been reading this forum since it s inception, and I have a question. Why the hate for Kit Pharo? Has he kicked your dog? If you don't like his cattle, don't buy them. If you don't like the way he ranches, don't listen to him. I have a motto that says, Ignore the critic, but learn from the criticism. Although some criticism is so personal and hateful that there is nothing to learn from it, most criticism can provide valuable insight and information on how PCC is perceived by outsiders.

AI Help or Hindrance... Many progressive cow/calf producers have been using artificial insemination (AI) in an attempt to improve the profitability and the PCC genetic base of their cowherd. Unfortunately, AI has taken most commercial ranchers in the opposite direction. The more they AI, the less profitable and less efficient their cowherd becomes. Does this mean that AI has no value and won t work? Absolutely not, but AI will never be any better than the bulls you are using. There are bulls that can help you meet your breeding objectives and there are bulls that will actually hinder your breeding program. It is up to you to select the right bulls. A word of caution, though don t be misled by pretty, four-color pictures and big numbers. Although most of the bulls available through the major AI companies take pretty side-view pictures and have impressive EPD numbers, very few have what the commercial cow/calf producer needs. For the most part, they are tall, slab-sided bulls with too much birth weight, too much growth, too much milk, and not near enough guts, muscle and fleshing ability. They were produced by highmaintenance, pampered cows in high-input, artificial environments. So, unless you want to produce high-maintenance, hard-keeping cows that weigh 1250 to 1600 pounds, these bulls simply won t work for you. We suggest you use bulls whose mothers and sisters and daughters are proving themselves in real-world ranch environments. The bulls you use should be coming from cowherds that are treated as tough as or tougher than your own. That is the only possible way they will be able to move your cowherd in the right direction. Where are you going? If you are still trying to increase frame and cow size, then you won t be interested in any of the bulls we have to offer. However, if you are serious about reducing frame and cow size, and if you are serious about increasing thickness and fleshing ability, and if you are serious about calving ease and cow efficiency, then Pharo Cattle Company is your semen source. In fact, we may be your only source for this type of genetics. We have 50 bulls to choose from. Idaho Magua Déjà vu Colorado Hobo Night Man 137Y Trailblazer Kava 123 Emancipate Short Cut Machine To receive our 2007 AI Sire Directory Call 1-800-311-0995 or Email Bulls@PharoCattle.com 3

Mob Grazing to Increase Production and Profit While most cattlemen continue to be blindly focused on increasing individual weaning weights, a few forward-thinking cattlemen are taking a completely different approach to ranching. Their focus is on improving profit, sustainability and quality of life. I think it is safe to say that most Pharo Cattle Company customers fall into this category. Within this group, you will find a handful of cattlemen who are not afraid to push the limits. They are doing what most say can t be done. Greg Judy, a Missouri cattleman, has always been ranching on, or very near, the edge. His latest passion is something he calls mob grazing. This is very intensive rotational grazing with extremely high stock densities. Bubbling with excitement, Greg says, The results have been mind boggling! We have already increased annual forage production by close to 400%! The grass roots are deeper, thicker and healthier. We have improved the diversity of our grasses and legumes, while eliminating most of our weed problems. The soil is coming alive with earthworms, microbial activity and dung beetles. Manure distribution is unbelievable. Since we catch and utilize every drop of rain, droughts are no longer a problem. For years, Greg ran stock densities of 16 to 20 cows per acre with two-day grazing periods, followed by 30 to 35 day rest periods. With mob grazing, Greg s stock density ranges from 150 to 400 cows per acre with daily or twice daily moves to fresh strips of fully regrown forages, followed by 60 to 90 day rest periods. Greg says, We use no purchased fertilizer, no seed, no herbicides, no grain, no mowing, and no tractor. No hay is baled on our farms. Greg continues by saying, The truly neat thing about this whole process is that not only is it very sustainable and profitable, but the cattle do all the hard work for us. For improving pasture forage, there is no better piece of equipment than a properly managed mob of cows. Greg s only investment has been in some 3:1-geared poly-wire reels and some step-in posts (see picture). You can t do that here. I know many western ranchers are thinking, Well, you may be able to do something like that in Missouri, but it will never work on a large ranch in one of the more arid states of the west. Allow me to introduce you to Zachary Jones from south-central Montana (13 inch annual rainfall at an elevation of 4700 feet). Zachary is reluctant to tell people about his new grazing practices, because he knows they will find the results extremely hard to believe. Although he is aware of the fact that some of his neighbors are mocking him and waiting for him to fall on his face, Zach continues to be one of the most optimistic, excited and profitable ranchers that I know of. Zachary s father, Bill Jones, got involved with Holistic Resource Management (HRM) in the mid 1980's. He was tired of the old ways of doing things feeding hay all winter, shortages of grass, maintaining a large labor force, high inputs, and no apparent focus on the future. When Bill started implementing an HRM management style, many changes started occurring. The cows didn't need as much hay. Through some electric fencing, he had more grass than ever before. The ranch s labor force was also reduced. Zachary said, When I came back six years ago, I operated the ranch for a year or so the way it had been operated haying, several employees, etc. Then I changed my calving season to May, I started running my heifer calves out on grass year-round, I stopped hiring extra help, and I started liquidating our equipment. I became obsessed with eliminating our dependency on fossil fuel technology, as well as with increasing our stocking rates and stock density. 4 Greg Judy with grazing equipment

Twenty years ago, Zach s father and uncle ran 700 cows and 600 yearlings on their 25,000 acre ranch. The cows grazed from May to December and were fed homegrown hay from December to May. The yearlings were fed hay from November to May and were on grass from May to October. This calculates out to about 25 acres per animal unit. The ranch had eight employees. Zachary says, The ranch has since been split in two. One half is managed by my uncle and his son, while the other half is managed by my dad and me. Our half is now running 500 cows year-round on grass with the possibility of feeding hay for two to three weeks during extremely adverse weather conditions. We are also running 2,200 yearlings on grass from May to September. This calculates out to about 11 acres per animal unit. Zachary and Shannon Jones with their weed eaters Zach is a stickler for data and details. He says, We are now harvesting 113% of the animal days we used to harvest from the whole ranch on just half of the original acres. That translates into a 226% increase in animal days (2.26 times as many cattle). We are doing this with only two employees, which is 50% of the original labor force. Zachary does not know what his mob grazing potential is. However, based on some experimentation, he thinks that within the next five years he could easily be running 750 cows on grass year-round, along with 4,000 yearlings. In addition to more water development, this will require a constant stream of creative and outside-the-box thinking. This will result in an amazing 350% increase in production. Folks, this is MOST impressive! To my knowledge, there isn t anything else a rancher can do to increase his total beef production by 200% to 400% with so little input. Let me put this in terms that might be easier for you to understand. Let s assume you are weaning 100 calves every year that weigh 500 pounds each. Your total production is 50,000 pounds of beef. At $1.20 per pound, your gross income is $60,000. If you increase your total beef production by 200%, you will be producing 100,000 pounds of beef and your gross income will be $120,000. If you increase your total beef production by 400%, you will be producing 200,000 pounds of beef and your gross income will be a whopping $240,000. While most ranchers will stay busy thinking of all the reasons mob grazing would never work for them, I hope some of you will consider learning more about this unique management concept. Unfortunately, as Allan Nation says, Most people would rather fail conventionally than succeed unconventionally. In other words, It s hard to do what your neighbors aren t doing. The Email Advantage... Ranchers who have and use email have a distinct advantage over those who don t especially if they have sent us their email address. Those who receive our FREE weekly emails receive at least 10 times more news, more ideas and more information than those who only receive our bimonthly newsletters. DON T WORRY... we will continue mailing you a hard copy of our newsletter. You can have your cake and eat it too. I have talked to hundreds of people who were disappointed because they did not know about something until it was too late. Much is shared in our weekly emails that you will never know about if you don t receive them. Send an email with your name to Kit@PharoCattle.com. 5

A Letter to Jody... Our son, Jody Pharo, just graduated from high school. Jody came to live with us when he was five years old. Three years later, we adopted Jody and his little sister, Jessica. At 6 4, Jody is by far the tallest Pharo that I know of. Jody has a job building and repairing fence for Pharo Cattle Company until the middle of August. At that time he is scheduled to go to Fort Leonard Wood in Missouri for Army boot camp training. Dear Jody, Life isn t always fair. Your life had a tough beginning, but you overcame. You very brilliantly played the cards life dealt you without complaining. Life hasn t always been easy for you, but there was seldom a time that you were not up for the challenge. As a result of the struggles you have overcome, you are a better person. Jody, as you look forward to life after high school, we would like to pass on a few words of advice and encouragement. As you know, Mom and Dad are not perfect. We have made more than our share of mistakes. Eventually, though, we start learning from our mistakes. This is our attempt to share a few tidbits we have learned the hard way. 1. You will never have a second chance to make a first impression. 2. Honesty and integrity must never be compromised. 3. The best way to predict the future is to create it. Dream BIG! 4. Commit to the Lord whatever you do and your plans will succeed (Proverbs 16:3). 5. Doing what is right may not always be popular, and doing what is popular may not always be right. 6. Every dark cloud has a silver lining. Always look for hidden opportunities within every problem you encounter. 7. Tough times won t last, but tough people will. 8. When you get to the end of your rope, tie a knot in it and HANG ON! 9. God will NEVER leave you or forsake you (Hebrews 13:5). 10. Failing to plan is the same as planning to fail. Take time for strategic thinking, planning and goal setting. 11. Lazy hands make a man poor, but hard-working hands bring wealth (Proverbs 10:4). 12. If you worry, don t pray. If you pray, don t worry (1 Peter 5:7). Jody, do your best to keep things in perspective. Most of the things you will worry about and work so hard at won t matter 100 years from now. The ONLY thing that will matter 100 years from now is whether or not you have a personal and saving relationship with Jesus Christ. It has been a pleasure watching you grow up. We are very proud of the young man you have become. With God s help, there is absolutely nothing you can t do if you set your mind to it (Philippians 4:13). Don t be afraid to take on any challenge that comes your way. Remember, when the going gets tough, the tough get going. Jody, you have proven that you are as tough as they come. Love, Mom and Dad 6

Not Enough Bulls... We didn t have enough bulls in our 17 th Annual Spring Bull Sale to meet the increasing demand for our bulls. We needed the 100 fallborn, forage-tested bulls that had to be pulled from the sale. Things don t always work out the way you want them to. As it was, we sold 208 top-sort bulls, via our unique cowboy auction, in three hours. Our average price was just over $4000, with a range of $1250 to $8500. Individual prices have been posted in our online sale catalog which can be accessed from our website. Cattlemen across North America are coming to the realization that our program and our bulls are "Different for all the Right Reasons. Happy and satisfied repeat customers continue to be the driving force behind our program. More Bulls in the Fall. We currently have 370 spring-born, forage-tested bulls out on short native grass in preparation for our fall bull sale. We have also decided to offer most of the fall-born, forage-tested bulls in our fall sale as two-year-olds. Therefore, it looks like we will have more than enough bulls in our Fall Bull Sale to meet the demand and to moderate our sale prices. Your bulls are moving us toward our goals. Duncan Blair Arizona The biggest problem with owning Pharo bulls is they make our other bulls look bad. Peggy Espy Wyoming Fall Bull and Heifer Sale Don t forget about our Fall Bull and Heifer Sale. This will take place on November 5th and 6th. We will be selling around 400 forage-tested bulls. These bulls have never been shut up in a corral and have never been fed any grain. Their thickness and fleshing ability have been bred in not fed in! Along with our Fall Bull Sale, we will be selling some PCC-Influenced Heifers. If you have heifers that were sired by PCC bulls and/or bred to PCC bulls that you would like to consign to this sale, please let us know by August 1st. We may have to limit the number of heifers in this sale. If so, preference will be shown to the early consignors. Left Behind... He who procrastinates often gets left behind. I hate to say it, but cattlemen seem to be among the worst about putting things off. If you have never sent us your email address, do it NOW. If you need help, ask your wife or your kids. Twenty-Five Cents... What does a quarter buy? Not nearly as much as it used to. When I was going to college in the early 1970 s, there were several times that I could buy gasoline for 25 per gallon at the local Gas-O-Mat. You could fill up your car or pickup for $5. I remember, though, that $5 seemed like a whole lot more money then than it does now.. During that same time period, I could also buy a can of Copenhagen for 25. At the time, I thought chewing tobacco was cool. It s not cool! However, it is very addictive. With God s help, I have been tobacco free since 1993. Today, a gallon of gasoline sells for well over $3 per gallon and it is going up. I m afraid that within five years we will consider $3 per gallon as cheap. I ve been told that a can of Copenhagen now sells for more than $5. 7

PHARO CATTLE CO. PRSRT STD 44017 County Road Z US POSTAGE PAID CHEYENNE WELLS, CO. 80810 PERMIT NO. 28 Grand Island, NE PHONE 1-800-311-0995 E-MAIL Kit@PharoCattle.com Deanna@PharoCattle.com WEBSITE www.pharocattle.com ADDRESS SERVICE REQUESTED Cowboy Logic: Two heads are better than one, even if one is a knucklehead." Bad Apples Although many things in life are totally out of our control, we can choose the people and the type of people we associate with. Choose your friends and associates with great care. Bad company corrupts good character. 1 Corinthians 15:33 Some people will try to justify their questionable companions by saying, Maybe I can change them. Maybe they can, but what happens when you put a good apple in a basket full of rotten apples? Will the good apple cause the rotten apples to be made good or will the rotten apples cause the good apple to go bad? More often than not, bad company corrupts good character. I'm very thankful for all the great people I know and work with. In fact, the best thing about the business I am in is the quality and the caliber of the people we work with. He who walks with the wise grows wise, but a companion of fools suffers harm. Proverbs 13:20 8 " I attended your bull sale with a friend. I was very impressed by what I saw. We were surrounded by people who had a very positive outlook on the future in the midst of a falling calf market! Kyle Marshall Nebraska