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Plan

10 Apr

This time of year I get all kinds of phone calls.  High school seniors call and ask me where they should go to college.  College grads call and ask for a job or a job lead.  Local unemployed people call and ask for a job as a ranch hand.  Somebody else will call looking for a bull or some grass calves, or some semen.  Who knows.

There are two conversations I find extremely troublesome.  The one I will focus on is the youngster who wants to get started in the cattle biz.  This ranges from a high school student to a college grad.  They will call me with an idea of how they will get started.  I bet you can guess the most popular part of the industry they want to get into.  The registered cattle biz, followed by buying baby calves and raising them to fat and selling the beef quarters.

I’m not going to discuss these ideas in this blog because that is all they are is ideas.  What I do is question these youngsters about their plan.  You know what?  They don’t have one.  Guys you have got to have a plan.

I can ask them what it will cost them to run a cow, or feed the calf.  They don’t know.  What if the cow comes up open, then what?  Where will you get the feed to finish the calf?  Where are you going to purchase these cattle?  How are you going to market them?  What kind of return will you get?  Here I would like to point out there has never been a thought about making a profit.  The goal is to just get by and hopefully expand over time.  I even had one kid tell me he will raise his own replacement heifers because they are free.  There is never a mention of budgeting or cash flow.  Just a vision of a small feedlot full of fancy black baldy steers, or a pasture of registered cattle with that persons brand on them.  I like the clarity of their vision.  It makes it appear real to them and that leads them to believe it is achievable.

If there is no plan though, how are they going to make it happen?  When I got started in the registered biz I did not have a plan.  I thought if I just raised better cattle than everybody else the buyers would just show up.  A lot of kids have that same idea.  When I started feeding cattle, I had a plan.  I know what the calves were going to cost me.  I knew what my feed costs were going to be each month.  I knew the packer buyers to call and had an idea of how I was going to sell those cattle and I had a plan to buy back replacement calves.

It was the feeding part of my operation that allowed me to quit my off the farm job and raise cattle full time.  I think the key was that I planned my work then I worked my plan.  I had it written down.  When the grim emotions would creep in at 3 a.m. and wake me up at night, I would just stick to my plan and fight the demons off.  This kept me from making some irrational decisions based on fear, and things always worked out ok.  Not  always like I hoped they would.  The thing is I made some money and was able to stay in business.

It amazes me every year, how people will get into the cattle biz without a plan, or even without the thought of making a profit.  No other industry in the world would try that.

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5 Comments

Posted by on April 10, 2012 in Uncategorized

 

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5 responses to “Plan

  1. Travis

    April 11, 2012 at 5:44 am

    The only place you are off is thinking this only goes on in the cattle biz. I see lots of restaurants come and go in my travels. They are small enough start up cost (usually the place is for rent with all the major equipment) and six months to a year later they have burned through all their own saved up capital and the place is for rent again. Franchise Restaurants stay, because of two things: 1 to your point they have a plan already in place for you, just follow the recipe & 2 they require you to have a significant amount of capital which is simply proof you are not an idiot.

    As per our conversation last night, these same guys that want in the cattle business go to the banker for Beginning Farmer Programs and want to borrow 3 million dollars because they need to buy both cattle and land to be in the cattle biz. The banker has to sit down and tell them there is no Easter Bunny and that they have to have a plan and something put together, ie cash, feed,cattle or land that you cannot possibly borrow for all of them just because calf prices are at an all time high.

     
  2. Cattle Feeder

    April 15, 2012 at 10:57 pm

    Great submit, very informative. I wonder why the other experts of this sector don’t notice this. You must proceed your writing. I am sure, you have a great readers’ base already!|What’s Going down i am new to this, I stumbled upon this I have discovered It positively helpful and it has aided me out loads. I’m hoping to contribute & help other customers like its helped me. Good job.

     
  3. Annie O

    April 25, 2012 at 1:21 pm

    You are a great writer, and you have some excellent points! I enjoy reading it! While I appreciate your rally to have an operation plan – a GREAT and essential concept – along with good record keeping. I have these nagging questions in the back of my mind. You talk and sound like someone who “pulled themselves up by the boot straps.” A self made man. Am I right? You are very blunt and truthful in your blog post so I hope you will not be offended by an observation.

    You say you are a 5th generation rancher – so I assume your family’s land is paid for – owned out right. So do you personally own the land that you run your operation on? Or do you rent/exchange of labor or an agreement with your folks?

    You don’t mention anything about saving back or budgeting for buying land, or making payments? Or saving to have enough cash to make a down payment on a farm. What about equipment needs – how was that handled? It just seems a lot is lacking from your personal story that wouldn’t necessarily be true of a beginning farmer – with just a dream and a drive to succeed.

    You fail to mention that you also need capital. You would not be able to buy a farm without some startup capital – down payment and proof of repayment ability. That you would have probably borrower the money to purchase cattle as well. That’s two hefty payments to made yearly. The cattle and equipment loan could probably be paid off in seven years, the farm – probably the next forty. Not to mention a line of credit that one might need to pay the bills until the cattle are ready for market.

    So while I applaud you for making good decisions and encouraging plans, record keeping etc. If the above assumptions are true – you had a lot more going for you than most beginning farmers I have come across. Please correct me if I am wrong about your situation.
    There I said my peace. Thanks!

     
  4. Sydney Noell

    April 25, 2012 at 10:57 pm

    Thanks for the information on this subject, it’ll be genuinely valuable.

     

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