There’s More Than One Way To Transfer A Working Ranch To A Worthy Successor
By: Troy Smith
Some things are meant to be. That’s how Lily Klase sees it. That’s why her late husband, Don Klase, got along so well with his business partner, Russ Anderson. They ranched together for just shy of eleven years; the veteran acting as mentor and helping the younger, aspiring cowman to put on the mantle of management authority. But theirs is a different kind of ranch transition story. It shows how fair and far-sighted participants, though unrelated by blood or marriage, can arrange for a business to pass smoothly from one generation to the next.
Currently, Russ Anderson and his wife, Cheryl, are majority shareholders of Bonnifield Cattle Company, located near Hyannis, Nebraska. It’s the same Sandhills operation that Don Klase ran for most of 50 years, on leased land. To understand how the Andersons’ participation evolved, it helps to know some of the history behind Bonnifield Cattle Company. According to Lily, Don was just 14 years old when the Klase family came to the Hyannis area and his father, Bernard Klase, went to work for rancher Bob Bonnifield.
Don soon entered high school at Nebraska School of Agriculture, in Curtis. Now the site of the University of Nebraska College of Technical Agriculture, the campus served as a boarding school from 1913 to 1968. In addition to the high school curriculum, the school offered agricultural training. Between terms, Don returned to the Sandhills and worked on area ranches. Within a few years, Don’s father became a partner in Bonnifield Cattle Company, thus sharing ownership of the ranch’s cattle, but not the land.
“It wasn’t that long, though, before Mr. Bonnifield died,” tells Lily. “So, after graduating high school (in 1945), Don joined his dad to help run the ranch. They owned the cattle and leased the land from the Bonnifield family. They had a 25-year lease with an option to renew it.” Lily believes that was orchestrated by Bonnifield, before his death, to make sure his wife would have help managing the land and to further the business he and Bernard
Klase had begun.
“Don always appreciated what Bob Bonnifield had done. It really helped Bernard and Don get established,” affirms Lily. A nurse in Columbia, Missouri, at the time, Lily met Don on a blind date arranged by a mutual friend that Don was visiting. They married in 1951, and raised four children on the ranch. Don succeeded his father as manager of the operation and the couple eventually acquired full ownership of Bonnifield Cattle Company. Over the course of years, the Bonnifield estate – the land – passed to a succession of heirs whose business and personal relationships with the Klase clan continued uninterrupted.
“We remained close to the (Bonnifield) family, kind of like they were part of our family,” adds Lily. All of the Klase children attended college, but only one had any real interest in ranching. Daughter Amy and her husband eventually joined Bonnifield Cattle Company. It did not last, however. The young couple separated and both
moved away. It complicated Don’s plans for slowing down. He didn’t want to quit, but he was ready to share the burden of running the company. Enter Russ Anderson.
LOOKING FOR SOMETHING MORE
Russ and his wife, Cheryl, grew up at opposite ends of Nebraska’s Sandhills. Cheryl was a native of Alliance, while Russ was raised near Anselmo. They met while attending Chadron State College. The couple moved to Hyannis, in 1996, where Russ worked on an area ranch until the outfit was sold. He and Cheryl established a custom fencing business in 1998. They also started a contract haying business, and began to accumulate a small herd of cows.
Russ also day-worked on ranches and kept his ear to the ground. “We kept looking for some kind of ranching opportunity,” explains Russ. “I knew Don Klase. I’d done some fencing and day-work for him, and I knew Don to be an honest, respected and well-liked rancher. After his daughter and son-in-law left, in 2002, I called Don. He told me that he’d actually been thinking about calling me.”
The men talked. Russ explained that he was looking for something with more potential than another ranch job paying no more than enough to live on. Don made it clear that he had no desire to retire yet, but he did want to ease up a bit. He needed help and was willing to share some of the management responsibility. He also had a plan for helping the right person gain a foothold in the cattle business.
“Don suggested that we try each other for a year. He would pay me a wage, and I could still work in some custom fencing. If we were getting along good after a year, we could try to work out a way for Cheryl and me to buy a share of the company,” says Russ. After the trial period, both men were satisfied they could work well together.
Ready to pursue a permanent arrangement, they sat down at the kitchen table, inventoried the Bonnifield Cattle Company assets and calculated the company’s worth. Don and Lily then agreed to sell 33 percent of the company. They also offered to loan the money the Andersons would need to make the purchase. The Andersons provided their own 33 cows, plus some fencing and haying equipment as collateral.
“The loan’s interest rate was just a little bit higher than what the money would earn with a CD (certificate of deposit) at the bank. And we could take as much time as we needed to pay it back. It was a great deal for us,” states Russ. “I still received a wage, andCheryl and I could still take some fencing and haying contracts. That gave us enough to live on so, at the end of the year, we could pay our share of company profits toward the loan.”
Reflecting on it now, Lily thinks Don saw some of his younger self in the eagerness and ambition Russ displayed. Appreciative of the younger man’s energy and hard work, Don wanted to make Russ a good deal.
In a manner similar to what old Bob Bonnifield had done for the Klase family, Don wanted to help the Andersons get ahead in the cow business. The lease on the land was renewed when the Andersons bought into the company. Terms remained similar to the previous long-term agreements, with the land lease price tied to the cattle market. That way, the land’s absentee owners share in the risk posed by bad weather and shifting markets.
Basically, each year’s per acre land cost is calculated as a set percentage of the sale price of calves produced on the ranch. But the lessee (Bonnifield Cattle Company) also pays real estate taxes and all costs associated with maintaining existing improvements, as well as any that are added. The lease cannot be terminated early, just because the landowners decide to sell the real estate. And should they choose to sell, the lessee has the first option to buy the land.
“Don always tried to keep the landowners in the loop, explaining any improvements we wanted to make. I believe that’s only right. That way they understand how it should make things work better for everybody. The landowners have always been agreeable. Nobody has ever been greedy; only fair,” says Russ.
RECEPTIVE TO CHANGE
The good working relationship with Don Klase continued until the elder man’s death in 2013. Don had gradually shifted more and more management responsibility to Russ, and was receptive to the younger partner’s suggestions. Together, they began to implement some changes. Recurring drought was a challenge, particularly in 2006 and 2012. Some destocking of the ranch occurred, but the effects of drought were also mitigated
through changes in range management.
Large pastures were cross-fenced and pipeline was laid to create additional stock watering sites for the increased number of pastures. The improvements facilitated increased rotational grazing. Russ plans to do more in the future.
Long term, he expects improved grazing management to enhance forage utilization, forage quality and ultimately increase the ranch’s carrying capacity. Drought prompted Don and Russ to consider other significant changes in what, for decades, had been a fairly traditional spring-calving cow outfit.
Historically, replacement females had been purchased as bred cows, and all steer and heifer calves were marketed in the fall. Following fall pregnancy testing, any cows that had failed to rebreed were sold as well. But the drought of 2006 actually put the ranch in a position to consider different cattle management options.
“That year hurt our range, but we still put up a lot of hay,” explains Russ. “The meadows dried out enough that we were able to cut hay in areas that Don had never been able to hay before. We had about 3,000 big bales. It included a lot of bulrushes and cattails, so it wasn’t great for quality.
Using that hay and some protein supplement, we kept our open cows, bred them and sold them as fall-calvers. It worked pretty good.” Figuring out ways to make use of their low quality forage relieved the pressure on lesser supplies of winter range and better quality hay. Encouraged by Russ, Don agreed to use some of their feed resources to retain and develop a small number of home-raised heifers as replacements. That practice has continued, with increased numbers of heifers retained in subsequent years.
“I want to have more control over the quality and disposition of our replacement females, and we’ve learned that we can run heifers over to yearlings, affordably, by using low-quality forages,” states Russ.
Also relatively new to the operation is the weaning of steers for placement in a custom backgrounding lot, while the lighter steers and feeder heifers are sold off the cow, as in the past. Russ says this change in calf management and marketing practices takes advantage of opportunities to add value and spread out marketing dates.
Another practice, introduced by Russ, focuses on conservation of riparian areas through fencing and planned grazing. The effects – reduced erosion, the return of more native plant species and improved wildlife habitat – are already visible. Fenced wetland corridors can be grazed early and quickly. Either haying the regrowth or grazing again in the fall are management options.
“We could see that Russ and Cheryl would be good stewards,” states Lily. “We were glad to find people that would care for the land and look out for the landowners’ best interests. That was really important to Don.”
BLESSING TO WORK TOGETHER AS A FAMILY
More recently, Russ and Cheryl have relocated an older home that stood on the ranch, and they are in the process of remodeling it. As time and money allow, Russ is either restoring or redesigning and rebuilding ranch corrals or cattle working facilities. He still accepts some custom-fencing contracts. Cheryl helps with all of it, along with serving as Hyannis city clerk and giving summertime swimming lessons. Along with activities including competitive swimming and 4-H, the ranch provides each of the Andersons’ daughters, Mackenzie (14) and Rudi (11), ample opportunity to ‘make a hand.’
“The girls help us a lot with rotating pastures and other cattle work. They help with the fence work, and Mackenzie helped in the hay fields for the first time last summer,” offers Cheryl. “It’s a blessing to be able to work together as a family. The girls really are learning how to work, but we make sure to take some time to get away as a family and play.”
There is always work waiting when they return but, according the Cheryl, Russ thrives on it. In that way, he is much like Don Klase, and it’s probably why their partnership was such a good fit.
“Don was far-sighted. He wanted our arrangement to work and go forward after he was gone. The plan was written into our contract. It gave peace of mind to everyone. It’s the reason Cheryl and I now own 50 percent of the company and can continue to increase our share,” says Russ.
“One time, I asked Don, ‘Why me?’
He said he had been watching me and thought I knew how to work. He knew Cheryl and I could run a business,” tells Russ. “According to one of our neighbors, Don claimed that he and I made a good pair. Don told him, ‘I only work when I want to and Russ does all the hard stuff.’ That sounds like Don.”