Cow-Calf vs. Stocker Strategic Planning

Planned Grazing: A Study Guide and Reference Manual A few days back, I received an email from a friend who, with her husband Fernando Falomir, ranches in the northern Chihuahua, Mexico. She Wrote:

A Handbook for Ranch ManagersJimmy, How are things going for you? I have a bit of a heavy question. I’m not sure if you, or anyone you know, has any experience with the subject matter but we are considering changing our management style completely from controlled calving to year-round calving. I will explain our situation and reasoning below.

Environmental & Natural Resource Economics: The Austrian ViewIf you do have any knowledge will you share it with us and also the pros and cons. I thought to ask you this question as I know you are familiar with the terrain and environment in which we ranch and you know a ton of ranching folks who may have also run into a similar issue.

Combat Shooter's HandbookFor the past 5+ years we have been set in our ideals of rotational grazing, controlled calving, higher animal impact when able, and yes we have seen amazing progress in both our pastures and genetics. We derived our management from holistic aspects, and have adapted many tools from mentors and through self study and observation of what does and doesn’t work for our ranch/land/environment.

Reconnaissance Marine MCI 03.32f: Marine Corps Institute Those tools have enabled us to be more productive. What we see as a/the problem though is trying to manage things at the mercy of nature. For the past ten years the ranch hasn’t had any predictable weather patterns as the old timers have seen. My husband personally has only seen two years out of six in which we have met our average 230 mm a year, and unfortunately for those two years majority of it feel during one or two events.

The Betrayed: On Warriors, Cowboys and Other MisfitsAs a result we have seen a major impact economically from failure to achieve high pregnancy rates, especially in our heifers/first time mamas. We are now beginning to think there is a direct correlation to lack of nutrition given our brittle environment which is affecting their natural cycle and health. My husband has observed our herd seems to be cycling every 15 to 16 months instead of a normal 12 month period.

The Essence of Liberty: Volume I: Liberty and History: The Rise and Fall of the Noble Experiment with Constitutionally Limited Government (Liberty and ... Limited Government) (Volume 1)  Although visually our cattle look good, healthy and have an above average body condition score compared to our neighbors, we are left scratching our head that our numbers are not higher. We release the bulls mid November for 60 days and calve August-October, when we should have rain and more “green pasture” to support better nutrition for the mother cows.

The Essence of Liberty: Volume II: The Economics of Liberty (Volume 2) All our herd has been vaccinated for ibr bbv and everything, bull fertility is good to excellent as we have them tested, and more importantly we have stuck to the idea of focusing on body condition two months before calving until the end of bulling, and during non growing seasons only then manage for landscaping.

The Essence of Liberty: Volume III: A Universal Philosophy of Political Economy (Liberty: A Universal Political Ethic) (Volume 3)From the perspective of land health and cattle health we believe we are way above average from all our neighbors and we are quite satisfied from the results and the improvements we have seen. For the exception of pregnancy rates.

Simply put, we have observed our cows are not being able to cycle soon enough and as a result either there is a low pregnancy or a very extended breeding period.

This essentially leads to good and young cattle being culled. We have really tried to maintain optimal body condition at the time of breeding and no diseases to blame so we are left to believe only a couple of things: Either our cows are not yet fully adapted to the environment or the environment has really been to erratical to attempt to manage predictably.

With all of that being said, we are contemplating running two controlled breeding seasons (Fall and spring) or simply let nature be nature and release the bulls year-around. We are leaning towards that option.

We believe we should have better pregnancy results if we allow the bulls to be with the cows at all times because maybe they are cycling during a time in which we do not normally have them with the bulls.

By the way things are looking this year, we have only received 3 inches of rain all year and the raining season is over, we are beginning to be convinced if we stick to our guns on controlled calving we will be heading for financial ruin.

Anyway….that is more or less the scenario and just our honest situation. Of course we are 100 times better off than most however, when the ranch is your livelihood and you see and obverse things every single day you begin to make certain questions.

Thus, this is our biggest one currently. We are also awaiting the advise/experience from a friend in Africa who went from controlled to year-around. We are very curious about the pros and cons in his experience.

Thanks for any advise you may have!!

Alyssa Wagner Falomir

My Response:

Alyssa, wow! You referred to it as a “heavy” question. I’d say so. It is indeed a complex question with the pertinent attributes and assumptions so inter-related as to be confounded. This is the type of decision making that is greatly facilitated by a step by step planning process.

To address such questions, we generally use a planning process that was developed over hundreds of years by the militaries of the Western World in situations where critical decisions have to be made quickly and decisively while under stress. This type of planning follows a logical, step-by-step process where each decision is made in a manner that takes full consideration of those made before it.

I don’t promise to get all that involved and will try to simplify the process a little by sharing my experiences meant to give you some things to think about and other things to consider.

Your comments and questions are reminiscent of things that Stan Parsons has talked about for years. For sure, you guys are doing one thing right—planning strategically. Way too many business managers spend way too much time working “in” the business rather than “on” the business.

I will try to address your questions by giving you my personal preferences (developed through personal experiences) with what kind of operation you might want to have.

Number one choice

First, (and I cover this in detail at Cell Grazing: Part VII. How to Get Rich on Drought and Bad Cattle Prices) on any ranch I might own or manage, the only cow close to the place would be the one that the wife milks in the morning. I would run stockers (steers and heifers).

The reason is a flexibility that allows me some control over both drought and bad cattle prices:

Let’s start with the forage. At the end of each growing season, I can match forage available with the appropriate animal numbers (including a drought reserve). I do a forage inventory which tells me how many head days of grazing that I have available.

After that, I check the futures markets (put options) to see if I can place an effective hedge on my estimated amount of production.

But, even if I can, I would still not rush out and buy cattle.
Instead, I’d check the grass market—what can I expect to receive by running pasture (someone else’s) cattle.

At that point I choose the most profitable—own and hedge or take in pasture cattle and the numbers would be matched with the forage inventory.

Note that by using this process I have, in effect, established a great deal of control over both prices and rain. Plus, I have insured that my profits are maximized (or losses minimized) each and every year consistent with sound long-term range resource conservation.

Plus, this approach has an additional advantage over cow-calf operations in that it takes far less labor to achieve—nobody ever had to get up at 2AM and pull a calf out of a steer (I used to tell my university students that, if they didn’t understand that they could see me after class and I would explain it. lol)

You guys might do very well at prepping light cattle (including pre-conditioning) for the feeder cattle export market.

Also, depending on the market situation, there is good money to be made in over-wintering skinny cows for somebody else.

In fact, Chris Gill at the Circle Ranch only runs cattle during the winter months and they always belong to somebody else. And he does very well at it and his land appreciates it too.

Another (very good) reason to avoid cows.

Going back to my old mentor, Stan Parsons, from his little book “If you Want to be a Cowboy, Get a Job.”

Stan developed a marketing model that revealed that NEITHER reproductive rate NOR weaning weight are the primary determinates of cow-calf gross margin. NOR is it the market price of calves. Instead it is the cattle “cycle.”

Cow depreciation is the main determinant and it depends further on when (during the cattle cycle) they are culled. Here is how that works.

Rise in prices > increase in heifers retained and fewer cows culled > increase in the price of cows. This continues until, ultimately, as true as the law of gravity, fat cattle prices start to fall and eventually (after a year or so) cow prices begin to fall very quickly—sometimes to as low as 30% of what they were worth when they were acquired at the peak of the previous upswing.

In other words, most ranchers lose money when they sell cows.
Sometimes those that produce their own replacement heifers are deceived into believing that they have not suffered such a loss but they are forgetting to account for opportunity costs. In the first place, the cost of raised replacement heifers is far greater than most ranchers would believe. Secondly, if that heifer had not stayed at home, she could have been sold for the high price that prevailed at the time.

To avoid all of this would take some very sophisticated strategic planning. There are simply better and easier ways to operate.
So, if by now I have not convinced you that you would be better off not having cows, let’s talk about your proposed decision model—two controlled breeding seasons vs. turning the bulls out permanently.

Forget the two controlled breeding seasons. You would only be doubling the market cycle vs. cull cow price complexity I outlined above.

Actually, if I was forced to run cows, I would turn those bulls out before the sun goes down tonight. There are so many advantages to that.

First, let’s deal with the most frequently held objections.

Sometimes some people confuse (or associate) leaving the bulls out yearlong with yearlong grazing. The two should not be confused.

In fact, leaving the bulls out yearlong facilitates rotational grazing. It enables you to put everything together into one heard which improves your stock density and herd effect which, in turn, improves the productivity, carrying capacity and profitability of your land.

Probably the most frequently herd objection is that most people want to confine their calving period to 60 days or so in the belief that a uniform group of calves will fetch a better price at the market. And there is some truth to that.

But, there is a forehead slapping, duhhh, why didn’t I think of that? solution. You can get exactly the same result through culling—if she doesn’t calve with your designated time frame, she goes to town. In fact you can get the jump on that by pregnancy testing at a time that will guarantee she will calve during the designated time.

Of course, you still have the cattle price-cull cow price cycle to deal with. Perhaps you could mitigate some of that by taking lesions from a few good stocker operators—sell and replace. In this case you would be buying bred cows at the same time you sell dry cows—sell expensive (cheap) and at the same time buy expensive (cheap).

And coincidentally, WRT the machinations of the weather. The only thing that is constant in the desert is change. On all arid lands, annual rainfall is more often below average than it is above average. The long term average is about 1 to 4–One really good year for every 4 below average years. But the problem with that is being able to rely on it due to variability—it may be 8 years off and 2 years on—you just don’t know.

The grazing plan is the key to coping with it. When you go into your closed ended plan, you budget your forage out to last until the beginning of your expected rainy season PLUS A DROUGHT RESERVE.

And time goes on until you enter your rainy season. But it does not start raining as you expected. You IMMEDIATELY construct another closed ended plan to budget out what you have PLUS A DROUGHT RESERVE.

Etc, etc, etc for as long as it doesn’t rain. When it finally does, you immediately make and implement an open ended plan.

I have a good friend up at Tucumcari, NM who did that all throughout the last drought and never had to destock drastically—remember you can get rid of one cow today or 180 cows 180 days from now. He knew that and acted on what he knew.

At cattle growers meetings, our friends would be belly aching about the drought. All he would say is “we plan for it and the plan is working.”

One last indirectly related comment on your comment about your cattle “looking good.” It used to happen to me more often than it does now. I guess maybe they have learned. But I have helped with many gathers where cows were to be culled. The rancher would invariably say, “Boy, that sure is a good looking cow. She don’t have a calf but I think I’ll keep her because she looks so good.” I could never resist saying, Hey buddy, the fact that she doesn’t have a calf is WHY she looks so good.

Hope this helps

Jimmy

PS It is raining outside as I write this.

Readers who would like to join in the conversation, please do so below.

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Planned Grazing: A Study Guide and Reference ManualPlanned Grazing: A Study Guide and Reference Manual. This is the ideal squeal to A Handbook for Ranch Managers.  Although the ecological principles remain the same, what was originally known as “The Savory Grazing Method” now answers to a multitude of different names: ranching for profit, holistic management, managed grazing, mob grazing, management intensive grazing, etc. Land & Livestock International, Inc. uses “Restoration Grazing” under its “Managing the Ranch as a Business” program.” No mater what you call it, this summary and synopsis will guide you step by step through the process and teach you how to use it as it was originally intended. No more excuses for failing to complete your grazing plans.

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6 Responses to Cow-Calf vs. Stocker Strategic Planning

  1. Tom Sidwell says:

    Since Gunny referred to a good friend in the Tucumcari, NM area, and I am the only one in the area doing grazing planning and intensive grazing practices, he must be talking about me!! Thanks Gunney and I will try to respond to Alyssas’ email to the best of my ability.

    Alyssa, without knowing anything about your operation, the first thing that occurred to me that may be a problem is the grazing planning. The purpose of grazing planning is to not only provide adequate rest for the grazed grass plant to recover from the previous grazing before being grazed again, but also to provide the grazing animal the highest plane of nutrition. So, the length of rest period provided is critical; too short and the cattle return to a grazed plant before it can adequately recover, thus overgrazing occurs and plane of nutrition will decrease over time as overgrazing continues. Too long and overgrazing will occur in the pasture being grazed as the grazed plant will be bitten twice, or more, during the grazing period and plane of nutrition decreases as time grazing in a pasture increases.

    You also referred to part of the problem being that “Either our cows are not yet fully adapted to the environment or the environment has really been to erratical to attempt to manage predictably”.
    Again, not knowing anything about your operation and your statement that the cows may not be fully adapted to the environment, I have to assume that perhaps the livestock may not be suited for your environment. The rainfall average for your area is about 9 inches and the rainfall average in my area is about 16 inches. You have had two years out of six that were average and we have had three years out of thirteen that were average. The ten years that were below average on my ranch were 20-70% below average and I’ll bet it is similar for your ranch. The rainfall deficits are more severe than the rainfall surplus. So, how do I deal with the type of livestock for the environment?

    My experience in 35 years of holistic management also includes many years of having cattle too big for the land and inputs being too high for the outputs received. Ranchers in my area run 1200 to 1400 pound Angus cows and wean 750 pound calves. They calve in Jan-Feb and always lose a few to winter storms. And their inputs are high. I run a 900-950 pound Corriente cow with Charlais bulls and wean a 400-500 pound calf with a one percent or less death loss, usually to mountain lions. Ninety three to ninety seven percent of our cows will be bred. We calve Mar-May and hold the calves over to sell at 15-17 months of age as grass fed beef. Any yearlings we have above the number we market direct to our customer base are sold to other grass fed beef producers or on the conventional market. Our half corriente yearlings are gaining, in a below average rainfall year, 1.8 pounds per day for heifers and 2.8 pounds per day for the steers. (Ironically, the yearlings this year have gained less even though we had 15-18 inches of rain in May to July. I attribute this to the grass being too “washy” and other ranchers have confirmed this as their calves are weighing less than in other years when we had less rain). We sell direct to customers and therefore, we are price makers and not price takers. The cattle fit the environment and our inputs are lower than the neighboring ranches. We have, over the years, become debt-free and do not borrow money.

    By running yearlings with our cows, we are better able to destock in low rainfall years without cutting into the cow herd( By running one herd we take advantage of animal impact and herd effect to improve the land, increase forage production, and ultimately, increase stocking rate.) I do this by assessing the forage in the fall of the year to determine the number of animal day acres(ADA) of grazing that is available for the coming “drought” year based upon the forage that was produced this year. I don’t know when we will have a drought, so I plan for it. When I determine the total ADAs of grass production on the ranch, I allocate them to 1) 40% for ground cover, watershed, and wildlife; 2) cows, bulls, and horses; 3) yearlings to meet our customer grass fed beef demand; 4) yearlings to sell to other producers. If I have ADAs left over then I have a choice of buying extra cows, taking in cattle on pasture, or leaving the extra ADAs for ground cover/watershed protection/wildlife. If I don’t have enough ADAs then we won’t keep calves that would have been sold to other producers as yearlings but I will sell them, if ADAs permit, to take advantage of higher prices in the spring and if we still don’t have enough ADAs, then we will destock some of the cows. I will always keep yearlings to satisfy our customer based needs for grass fed beef as that is where the majority of our income comes from. As the drought decreases and forage conditions improve, we will add back cows to the herd. Stocking rate is based upon ADAs as determined by forage assessment and drought planning. Forage assessment and budgeting ADAs allows me to determine when I market the cattle and to take advantage of higher prices.

    For me, forage assessment/drought planning is a very critical component of grazing planning. As Jimmy said, you budget your forage so you can plan marketing, or grazing, the livestock before the drought occurs and we never know when that will occur, so plan for it. I plan for drought and so far everything is going according to plan!

    I also send in forage samples for protein and TDN analysis in the fall/winter. From this analysis, I will determine the supplemental feeding needs based upon the forage quality and the physiological needs of the cows and yearlings. I find that my supplemental feed costs are lower and the product I use is different than what other ranchers use. The only time I feed hay is when snow covers the grass and this meets the cattle energy needs. It is cheaper to maintain a cows condition than it is to put it back on.

    Holistic Management International is planning a workshop series at our ranch:
    Improving Land Productivity with Holistic Management
    April 1-2, 2016: Holistic Management Intro & Ecosystem Processes;
    Tools, Soil health, Monitoring
    April 15-16, 2016: Grazing Planning
    April 29-30, 2016: Land Planning

    Hope to see you there.
    tom

    Liked by 1 person

    • Ou rah! Yep, you recognized yourself Tom. And thanks for a great reply.

      Alyssa although you will be reading this, I will direct my reply toward Tom but the information is for your benefit.

      Tom, there are a couple of things that Alyssa has told me that shed light on the things you honed in on. One is the grazing plan and this is why I emphasized it heavily but not as thoroughly as you did.

      Here is what Alyssa told me: “We do have and use the big holistic grazing chart. We don’t use or follow it religiously because we came up with the same concept on an excel speadsheet and just adjust the grazing days.”

      I sent her a copy of the Excel planning sheet sold by Holistic Management International. It does replicate the hand made chart to the “T” and works just like it does. As we know, that monster (grazing plan) contains far more important information than just being able to “adjust grazing days.” I could be wrong but I seriously doubt that Alyssa’s replicates it. I would have to see it and would be glad to look it over, Alyssa, if you want to send it to me as an attachment.

      The next one is the cattle. They are running Herefords on the Corrente’s home. I have been known to say: “The longer I live the more I wonder what in the hell anybody would want with a Hereford cow?” The only thing I have been able to come up with is, to breed to a Brahman bull.

      I recall one first hand experience. I once received two truckloads of stocker cattle originating from the same place and within an hour of each other. One load was straight Hereford. The other was Brahman crosses.

      The Brahma’s jumped off the truck, blowing snot and looking for something to eat. They went straight to the pasture. On the other hand, the Herefords crawled off the truck, bleeding out of their eyeballs and looking for a place to die. We had to keep them up and feed them for several days before sending them to the pasture.

      I do believe that is the explanation for the 16 month cycling that Fernando has observed.

      Tom, tell Mimi hello for me and I’ll probably be seeing you guys in April. Keep me posted if there are any changes, dates, etc. I will post the information on this blog.

      Alyssa, good luck and let me know how you progress. Maybe I’ll see you guys at Tom’s place in April. Hope so.

      Like

      • Tom Sidwell says:

        I agree with you Gunny. Start with the grazing planning and get it right. A lot of things will straightened themselves out with that.
        Mimi says howdy and will be good to see you here in April.
        Alyssa, I hope to see you and your husband here also. The workshops will be taught by Kirk Gadzia and they will be very worthwhile.

        Liked by 1 person

  2. Jimmy and Tom—Thank you both so much for your time, words of advice and wisdom!! Sorry for the LONG delay in responding. With a newborn baby it is amazing how time just disappears, haha. Plus, we discussed the subject matter in great depth for a long time and concluded to release the bulls year around. It is the typical time we would have released them anyway, so I do not expect our calving time next year to be too off kilter to what we are used to. Thus, we have embarked on a new “chapter” and shift in management at the ranch. We concluded, for us, there is nothing but positive outcomes by moving away from controlled calving and releasing the bulls year around. I had to laugh Jimmy, when you said, “If I was forced to run cows, I would turn those bulls out before the sun goes down tonight.”

    (Tom—Your operation sounds fantastic and very successful!! A huge congratulations to you!! Like you, we are not strangers to HM. My father in law first took the course in the early 80’s with Allan and many of the original folks. Unfortunately, he was not able to implement the principles until he inherited the family ranch in 2004. His father was not fond of change. Many elements you shared is exactly what we have either observed or are in the process of shifting towards. My husband and I manage our families ranch. He has been here for 6 years now, myself only 4. We are in our late 20’s so we feel very fortunate that we are able to ask these types of questions now and not 30 years down the road. We are very eager to speed up time to see the incredible progress that has already been achieved and will hopefully continue to be.)

    Jimmy, As you outlined there are many advantages to running a stocker operation and it is actually something we are in favor of doing during good years, which tend to come every 4 to 5 years, when our land can support the extra animal units and when we need the additional impact. However, we have to use the resources we have so we will remain a cow-calf operation to a degree. Plus, it is a bit of a paperwork nightmare here to buy and sell/export steers and heifers. I’m not sure how it is in the States but that model would create a lot of extra administrative work for us.

    That being said, many of the points you shared about the advantages of year around bulling are all things we discussed. Better emphasis on herd effect, rotational grazing, increases stock density, ect. And yes we can still “control” the timing of calving by selling anything that is going to calve when we do not want. A friend of ours, who also shifted from controlled to year around bulling 5+ years ago, made a great point that made a lot of sense to us. He suggested we wrap our mind around the thought of, “Everything is for sale at all times.” A diversified portfolio if you will. This model will also allow us to focus on selling heavier animals, which is something we have wanted to do. We would like to move away from the export business and focus on retaining steers for two years, or more, and sell them locally as slaughter ready. Thus selling heavier animals every month instead of once or twice a year. This will also help us to be more resistant to drought. As Tom discussed, when you have a bad year sell your steers and your cow inventory will not be affected. We would love to sell them as grass fed but unfortunately that market does not exist here yet. Hopefully it is an option we can explore in the future. I have even tried to find some US grass fed buyers that we could export our animals to, but that was also a dead end.

    We also concluded that indeed our struggles to achieve higher pregnancy rates are a direct result of a deficiency in energy. Of course our land is not in optimal shape right now considering we have only had 3 pushing 4 inches of rain all year and not in consecutive or effective events. Plus to be honest, we have not had any consistent rain or weather pattern for 10+ years. Thus, as much as we focus on pasture health and improving things the truth is, the nutritional quality of our pastures have taken a big hit from drought like conditions. The other factor working against us is that our ranch had been abused/overgrazed for the past 150 years so pasture improvements are extra slow. On the bright side we do see great strides to the extent that one neighbor has asked us if he can rent land from us and we have heard another neighbor already has cattle dying.

    I’ll share a few more points we discussed:

    *Is it realistic to expect a cow to calf every year when drought like conditions are present?
    *Who should be blamed: cows or management? After all, we humans are the ones that place parameters on cattle. For example, only giving them a set number of days/months to breed under controlled calving. This model assumes both the cow is able to cycle and the bull is able to perform. Another example is humans determining the “best” time for cows to calve.
    *What is natural? In nature you would not remove the bulls 9 months out of the year. Nor would you choose the time in which they calve. Thus, we concluded it is against nature to practice controlled calving.
    *Can we afford financially to sell our cull cows every year? Based on basic math if you have a pregnancy rate of 70% or lower, which we personally do not believe to be acceptable, you end up having to sell more cull cows to compensate for production. If this trend continues within 10 years you will run out of cows. If you do not run out it can be assumed your herd size will be dramatically affected and herd expansion will never occur. To take this point a little further, we have noticed we are culling and selling young cattle in excellent condition only because they are open. This is not desirable and will hurt our business. We determined it is potentially due to them maturing later than expected, which we feel is directly related to poor nutrition in times of drought.
    *From a business and profitability point of view what is better? Putting the bulls year around and sell the cows you don’t like, pregnant or not pregnant, as you need to. OR Keep your cattle that did not get pregnant for another year/9 months. We decided we are wasting our money, time, resources and grass on empty cattle we retain hoping they will be bred the following year.
    *Is more work/roundups required? Some may argue yes. However, we concluded that no matter what your cattle practices are at some point, be it once a year, twice a year or as the calves hit the ground, you still have to work the animals so really it is the same amount of work.
    *What type of business are we in and what is our goal?

    We believe this shift in management will increase both our productivity and profitability from a cash flow point of view. We think this will be less stressful for the animals as we are not putting as much pressure on them and in turn we should see higher pregnancy results as we allow nature to determine things. The biggest pro is the financial stability. There is always something to sell when you need money, i.e calves, steers, bulls, heifers, and cows, pregnant or open . What you do not sell that month continues to gain kilos. This is a huge paradigm shift and one that our neighbors will probably criticize and say, “They are doing things wrong,” but we are more focused on grass to meat conversion rather than the common trend. Thus, we have shifted our goal to be selling heavier animals. We find the most important thing is to remain flexible and do not become “married” to one idea.

    Thanks Guys soooo much!!

    I hope we are able to attend the workshops in April. It would be great to meet you both in person!!

    Liked by 1 person

    • Tom Sidwell says:

      Alyssa,
      Good luck and hope to see you and your husband in April
      Tom

      Liked by 1 person

    • Alyssa, thanks for the update. I’m glad we could do a little something to help.

      Looking forward to seeing you and Fernando at Tom’s place in April. I don’t know for sure but I seem to recall reading or hearing this some where. They plan to hold the even on a series of weekends. Traveling back and fourth for 3 or 4 weekends might be a little tedious. We’ll see.

      Again, best of luck and don’t take no for an answer. ‘

      Like

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