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expert, as an adviser. Dr. Haaland's primary responsibility was
to devise a more profitable business plan for Flying H.
At the time of acquiring Flying H, petitioner believed that
he would be able to put together a profitable cattle operation
through better management of the land. When petitioner acquired
Flying H, his initial herd of cattle was 20 head of longhorn.
Later, when petitioner and his advisers realized that the
longhorn were not profitable, they decided not to expand that
aspect of the ranching operation. To cut losses, they put the
longhorn to work as lead cattle.
During 1986 and 1987, Flying H continued to run cattle under
rate-of-gain contracts, as it had done under previous owners.
Under rate-of-gain contracts, the ranch does not buy cows or
calves; rather, it allows the calves of others to graze on the
ranch for a fee computed on the basis of how much weight the
calves gain. These contracts were less profitable than
petitioner had expected and resulted in overgrazing.
In 1987, petitioner employed Dr. Haaland to analyze the
ranch operations in an effort to improve its profitability.
After examining the ranch, Dr. Haaland found that the pastures
had been overgrazed and that the facilities were in disrepair.
Dr. Halland's initial plan for Flying H was to reduce grazing and
rebuild the ranch's infrastructure, such as the fences,
buildings, and irrigation systems. In order to let the pastures
recover, grazing had to be limited for a short while. With this
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