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Shoo Fly

Every year there are numerous articles about fly control. All of them revolve around using some kind of gimmick for control. Now it’s no mystery why these freebee publications will only write about gimmicks that siphon money out of the pockets of cattle producers. It helps them sell advertising space. They probably also don’t realize there is another way: well managed grazing

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I know there are people that read this and want me to provide research to back my claims. I don’t care for scientific research, no matter who conducted it. Here is why, science only tells us how we should act if we want to attain definite ends. So for that research to worth a hoot my cattle, the flies, the weather, and other factors in nature must all act a certain way. Ha! Good luck with that.

Here is what happened for me with better managed grazing. I started putting my cattle into groups of 200 head or more. I use poly wire to split the pasture into smaller grazing cells, and rotate daily to every third day. Cell size will vary based on terrain and water. I rent several different pastures, that are only a few miles apart. I will rotate around one then load the cattle up and haul them to the next pasture, then rotate around that one. (I haul them because I have to cross two major highways, and am surrounded by irrigated corn with no fences around it and I have no help)

One day when I was hauling cattle from one pasture to the next, I had an extension researcher riding along with me. He did the typical routine of rolling up the window every time I loaded and unloaded. He finally noticed that I was not doing the same, and he remarked that there were not any flies getting into the truck. We then looked at the cattle and there were little to no flies on them!

At first we were only interested in how my new grazing system would affect my grass, now we were both interested in following up on how it would affect my cattle and flies. For the next month I had the same results, until I rotated up against the perimeter fence and the neighbor’s cattle bunched up next to mine. Then I had flies, a lot of them. I also ended up with their bull too, I was running stocker heifers.

After loading the cattle up and then moving to the next pasture I still had the flies for a while. This pasture has no neighboring cattle. I rotated as I needed to and eventually the fly load lessened. I think this is because my grazing system breaks the fly cycle. In the short amount of time it takes for a fly to lay an egg and for that egg to become a fly my cattle are gone away from that area.

I have only done this for two years, and have noticed a big difference in fly control. I mentioned the neighbor’s bull for a reason. Long story short they ended up paying for a preg check on my cattle. That got expensive for them in a hurry. The following year, they didn’t turn their cattle out into that pasture until I rotated away from the perimeter fence. That year I didn’t end up with their flies or their bull. To me that one variable right there is why science doesn’t mean much out here. It proves how other people’s sloppiness can affect your plan.

We all know that parasites can affect cattle performance and their behavior, so I don’t feel I need to get into that, to keep this short as possible. I do feel that I should do some cost comparisons.

For my grazing system I had to invest in a fence charger, rolls of poly wire, pigtail posts, a water tank, valve, and portable water line. I bought extra poly wires and posts so I could build fence several cells ahead when I have time, so all I have to do is move the cattle which only takes a little while. My total cost for all this was around $5000. That is a lot of money. Thing is I started this program to help improve the pastures, and it has. This is a small investment when compared to that. Also at the end of the year I still have all that equipment.

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If I were to spray my cattle for flies it would cost me $400 for a concentrated solution, that they recommend I mix with water and diesel fuel. The fuel would cost an additional $36. Its by far the cheapest solution. There is labor involved to gather all your cattle in, unless you use a rubber. Here’s the rub for me. Why do you want soak your cattle in a little bit of poison over and over? Second, these products will also kill the good bugs that are essential for a healthy pasture. Not to mention the pests you are trying to get rid of will come back before the beneficial bugs do. How do you assign a cost to that? I am not sure but I can assure you it would be high.

Fly tags would cost me almost $2000. I have used fly tags in the past and they are just crap. In fact when I buy my grass calves, if they already have fly tags in their ears (which is the wrong time to even have them in, leading to the flies building a resistance to them) I cut them out, even though they are brand new.

Then there is using flow through control in your mineral. I’ve tried this and it didn’t make a whole lot of difference. Also I have never gotten a straight answer on how it affects dung beetles. That literally could be a million dollar question that I have not yet got an answer to. If I were to add Altosid IGR to my mineral it would cost me an additional $1600. If I used it in tubs for 60 days it would cost me and additional $1900. (cost difference in tubs with compared to without, so you would also need to add in the cost of the tub/mineral itself) Then begs the question of what do you do with the empty tubs. Around here no one takes them if they are plastic. I can’t help but notice that people around here just leave their empty tubs accumulate in their pastures. Nice uh?

Now for Vet Gun. If I were to purchase this thing it would cost me $1250. That includes CO2 cartridges, gun, and the balls. If I were to go out and start shooting a couple hundred head with this how do you suppose it’s gunna end? If I were to walk into a crowd of people and start shooting them with a paintball gun is the crowd just going to stand there? Heck no! Plus what if I miss and hit one in the eye? To me this just looks like it don’t end well.

Then there are predator wasps. I have a little experience with these guys. I have noticed a little affect with them and the cattle seem to hang around the area where the wasps were. I plan to experiment with them more in the future

wasp

Now I didn’t start my grazing system to control flies. I did it so I could look at all my cattle in just a couple hours (I couldn’t do that when I had 50 here 200 there 20 in another pasture and so on. There was too much travel time between pastures). I did it to improve soil and grass, and cut down on less desirable species, while lightening my work load. Using my system I grow more grass. Assuming I only grow a mere 150# an acre more grass, and it’s valued at $60 a ton, there is my $5000 initial investment for water line, tank, posts and poly wire in just the first year! And just a reminder, I still own these things. With the other fly controls, you spend money, use the product and it’s gone. You also are not improving rangeland, or wildlife habitat.

All of these controls take time/labor except the mineral. All of these have a negative impact except the controlled grazing and the wasps. To me it comes down to what kind of person you are. Are you really a steward of the land or not. Are you really a stockman or not. It comes down to your work ethic, and managerial skills.

 
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Posted by on April 21, 2016 in Uncategorized

 

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Agproud Q5 F.E.A.R

Question 5 on the Agproud list

What allowed you to move beyond fear and diversify a perspective of your farm/ranch/business?

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This is a great question! Much has been written on the subject of fear over the last century, and strangely enough, all this time later it is still a huge problem. That is probably because fear is one of the strongest human emotions there is.

First off I’d like to share my favorite definition of fear. It is an acronym F.E.A.R. standing for False Evidence Appearing Real. Now that may need an explanation for some people. Most of the things we fear demand that we believe in something that we can’t see, or that may not actually happen. Fear is an emotion, and as such it tells you nothing about reality other than something makes you feel something.

Since most of my blogging and expertise is in cattle I will continue to focus there for an example. Many people would like to be in the cattle biz. Thing is they conjure up all kinds of “reasons”, more like excuses, why they can’t be. For example I have seen fear freeze people solid when they go to an auction to buy cattle. The most popular excuses are they are afraid, there’s that word again, that the market will go down. They are afraid the cattle may get sick or die. They are afraid the weather may deal them a bad hand this year. They are afraid that if any of these happen they will lose money. They are then afraid that if they lose money the bank will take things away from them. They are afraid of being a laughing stock.

That is quite a list of things to be afraid of, and emotion. We are all human and have all stared these fears squarely in the face. It will suck the energy right out of you.

Some of you may be thinking that I made a list of things that are very real, yet called fear false evidence appearing real. Thing is, all the things in that list are not real, because they have not happened. If you let them stop you from bidding on cattle or starting a business, you just let images in your mind that are not real stop you. Do not create troubles in your mind that have nothing to do with reality and waste precious time. You can’t stop the bad stuff from happening, but you don’t have to let the fear of bad stuff happening stop you from the good things that are happening now. That would be recognizing opportunity. You see everything on that list is manageable, and will provide an opportunity.

Every successful person begins with two beliefs: 1) the future can be better than the present, 2) they have the power to make it so. Every morning when you wake up you have the ability to choose your attitude. You choose what ideas to become emotionally involved in. Whatever you focus on will expand. If you create scenarios in your mind that create fear, you will be given things to be afraid of. The universe has a funny way of doing that. Whatever you think about comes about. You see your beliefs cause your thoughts, actions, and emotions, which when added up will equal your results.

So here’s the trick. Both fear and faith demand you believe in something that you can’t see. Faith is putting your trust in the good. Fear is putting your trust in the bad. You can easily change your future by changing your attitude. Have faith in your best outcome, instead of fear in your worst outcome.

So how do we build faith in such a volatile business? In one word: skill. Yup, here I go harping on skill again. Go back and look at the list of common fears in the cattle biz again. Market crash, natural disaster, death loss, poverty, and humiliation. With the right skills, and the right attitude you will find opportunities in all of these.

I have spent my time, and money traveling around the United States, and even Canada to learn from people that were/are the best. I learned valuable skills from them.

At first I was skeptical that the things I had learned would actually work. I placed some trust in them, and they did work. Overcoming fear and having success builds self-confidence. When you let fear control you, you lose self-respect, and that is a downward spiral. The only requirement is the ability to act, and action is the real measurement of intelligence.

At the end of the day just make sure that your own worst enemy is not living between your own two ears.

 
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Posted by on April 15, 2016 in Uncategorized

 

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Q4 Agproud Lessons Learned

Question 4: How did your business get started? And lessons learned.

I started my stocker/feeding operation from scratch, when I was 21. I started with $6,000, and bought 15 head of fly weight heifers. They were mostly the junk no one else wanted. Over the years it grew from there, and in less than ten years became big enough I no longer had time for an off the farm job.

That previous paragraph just busted a huge myth, and destroyed many excuses.

I had to learn a great many things along the way to be successful. I am grateful every day for the people that came into my life and taught me the things I needed to know. Contrary to popular belief we do not inherently know the correct things.

I wanted to be the best, and one thing I learned from Rodeo was that if you want to be the best you had to study the best. That’s what I did. I have traveled around the country to learn the cattle biz from the best. I’ll give you a hint on how to find them, they are not in the universities.
It is always important to earn money. When you start young and broke there seems to be more of an urgency to succeed. I went to a marketing school, and it all just made sense. The skills I learned there changed my life, and the future for my family.

I learned stockmanship skills from the master. This helped eliminate problems, and the need for extra labor.

I had to learn to structure and manage a business. This topic right here is why most production agriculture operations fail, or are run as failures. I feel it is extremely important to point out, that most of the ag bloggers I have read are clueless on this topic and it is evident in their writing. The only reason I bring this up is so people may learn to recognize it and not accept any of their points as truth. I fear their writing sets a very dangerous precedent for young people getting into agriculture.

One of the hardest things I’ve faced in my business was making the leap to being a full time cattleman. My operation had to pay my salary, groceries, all the different kinds of insurance I buy, equipment purchases, feed, rents, and the list goes on. This is why marketing skill and business structure are so important. Doing this properly eliminates much stress. It also eliminates the desire to assign blame and come up with creative excuses for when you fail, and don’t want to take responsibility for it.

You have heard knowledge pays the best interest. Thing is very few actually heed that advice. More and more people rely on technology, that in reality is letting them down without them knowing it. I am talking about learning old school skills. By learning these I have been able to eliminate problems, and drastically cut overheads. What is old is new again

Another big lesson I’ve learned is to understand ecology. The more I learn about nature the more I’ve change my operation to work with it. Sounds simple, I know, but so many in production ag spend most of their time and money trying to dominate nature. You can read about our quest to dominate nature every day. It’s in the research papers, blogs, and magazines. It is so engrained in us we do not even realize it.

Who you marry will have a huge impact on your success. So will how you behave in that marriage.

Critical thinking, decision making, and problem solving skills are a must. I should’ve tied this in better with business management. Sometimes the most important thing is not knowing what to do, but knowing what not to do.

I also want to point out the reason most generational operations fail is because the old man held onto all the power, and never included the kid in the decision making process. This is why you see so many people who finally get to take over the farm, when in their 40’s or 50’s and they can’t do it. They just lock up.

Last points, communication and listening skills are important, but most people do not have them so you will constantly have to double check. Also people like to play dumb, and are dishonest, so trust no one, again double check.

 
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Posted by on March 4, 2016 in Uncategorized

 

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Daddy’s Day of All Stars

When my daughter was four she went through a phase where she was afraid of bugs. It didn’t matter what we said to her about bugs, she was terrified. At the time we also had what we called “Daddy’s Day”. On this day she’d spend most of the day with me, and all of it if the weather would allow. (feeding cattle in the rain or freezing cold is a bit much to ask a little one)

On one of those daddy days I had it with her freaking out about bugs. I came up with a plan on the spot. I asked her if she wanted to go for a four wheeler ride, which I knew she’d be more than eager to. I always have a spade on my wheeler, so I grabbed a fishing pole and we were off. I took her to an outdoor class room, a pasture I rent.

When we got there I got off the wheeler and tried to show her all the different bugs, and tried my best to explain to her how not all of them are bad. I didn’t seem to be getting anywhere with her. If I caught one and tried to show it to her close up she’d freak.

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Then we found an All Star team. Dung beetles. I didn’t know much about the other bugs I found, but I know these guys. I simply explained to her the beneficial role these guys play in supporting a healthy pasture, pasture feeds calvies, calvies feed dung beetles, the beetles feed the soil, and soil feeds the grass. We were trying to teach her to recognize patterns, and explaining that cycle like I did helped make sense for her. There also was the element that whatever is good for the calvies is good as a whole.

The beetles we found were rollers. These guys can easily entertain a little one. She became very excited, because she thought they were playing ball, just like she does.

dungbeetle

I then took out my spade and turned over some soil. Boom! There was the other All Star team. Earth worms. I again gave her a simple over view of the benefits of earth worms. She seemed to really be catching on.

After finding a way to get through to her and help her realize not all bugs are bad, we took a few worms and headed over to a farm pond that is always good for bull heads, which is just perfect for a kid her age, since they usually bite fast.

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I feel it is important to include this last bit. There was a lot going on in the first 400 words, that I’m afraid most may have missed, since the focus was on bugs. First, by setting up a “Daddy’s Day” we have provided a structure where our little girl really has a strong presence of me in her life. She gets exposed to many life lessons that farm life, and commerce provide. As you can tell from this story, I slow down a bit on daddy’s day. I take the time to use our large class room to teach her things, and we also use it for play time. Like four wheeler rides and fishing. The surprising thing is how much I have learned. It is difficult some times to explain things about agriculture to a four year old. But when I hear her explain what she learned to someone else I get to relearn about what I do through her eyes. This has opened my eyes to more things, helping me to learn more, by giving me a fresh perspective. It has also helped me communicate better.

 
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Posted by on March 2, 2016 in Uncategorized

 

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My Sustainable Competitive Advantage

Six or seven years ago I was asked to be part of an interview that included several other producers from around the country. The topic was focused on young producers and what our competitive advantage was due the region we each lived in.

It was mostly they typical stuff you’d expect. One guy mentioned he had a longer growing season and could easily double crop. The gal from the Flint Hills had access to some of the best grass on the planet. Pasture rent is cheap in Kentucky. One lived where urban sprawl was taking over but she was using that to sell direct to the consumer, giving her a huge profit margin.

When it came my turn I think the interviewer expected me to mention things like, Nebraska having a lot of crop ground and raising mountains of corn for feed. The ethanol industry was really gaining momentum here, and at the time they had some difficulty getting rid of distillers grain, making it a bargain. We have strong cash markets here, and we have packers.

I skipped over all of these and said my competitive advantage is my ability to learn faster and adapt faster than my neighbor. She did not like this response. I guess it didn’t fit her theme. She tried pointing out to me all the things mentioned in the previous paragraph. I dismissed them, and stuck with what I had said.

The interview was in both print media and online. My part was left out.

Today I was sorting some cattle and for some strange reason I recalled a quote I read in the Pharo Cattle Co. weekly newsletter. “It is not necessary to change. Survival is not mandatory.” ~ W. Edwards Deming. While I was thinking of that, for some reason I remembered the interview from years ago.

While I continued sorting cattle these things were rolling around in the back of my mind. All the reasons she listed off are definitely advantageous to those of us in Nebraska. While these things have certainly helped grow the cattle biz here, they do not make us immune from failure though. Some people still go broke. Change is not necessary, survival is not mandatory

I spoke wrong during that interview. Most people that I know that went broke have 4 year degrees. Some got good really good grades. I did not. I have enjoyed success in the cattle biz. They did not. It’s going to be difficult to argue who is smarter. What I should have said my sustainable competitive advantage is, is my willingness to learn and adapt faster than my neighbor. We all have the ability, few have the willingness.

 
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Posted by on February 16, 2016 in Uncategorized

 

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529 Plan Updated

My 529 plan was originally posted in March of 2013. In my example here, my daughter would have the original 5 head paid off at age 3.  As an update of how well this can work, my daughter has 8 head fully paid for and a few hundred dollars left over.  The cattle market has been extremely generous this year, making our original investment of just over three thousand dollars in February in 2011 worth over ten thousand dollars today.  I seriously doubt anyone has a college/future investment plan for their kid that has done this well.

In all fairness and objectivity, I am fully aware that this bull market will not last, and the value of her cattle will drop. Even so, she has added three more head than projected, which will generate an income even in the bear market that will come someday.

I also mentioned that the cattle biz will help me teach her life lessons. My buttons pop off my shirt as I swell with pride over how much she knows already.  Most of that knowledge coming from her just being around and observing me.  Seeing as how I have seniors from K-state and UNL calling me now seeking advice on everything and anything to do with the cattle biz, I’d say my little girl is way ahead of the curve in more ways than one.

Her lunch is there on the left.  She is following along during the sale with barn card and pen in hand.  Still a bit young for a cell phone

Her lunch is there on the left. She is following along during the sale with barn card and pen in hand. Still a bit young for a cell phone

cat walks provide the best view.  From here she can see all the action in the yard.  This can provide entertainment for quite awhile

cat walks provide the best view. From here she can see all the action in the yard. This can provide entertainment for quite awhile

 

 

The original post:

Ever since I was a little kid all I wanted to do was farm and raise cattle. Everything seemed so simple back then.  Just grow up and do what you want to.  We all had that dream.  When you get older, and especially when you have a kid, things get real.

 

In the last year and a half I have spent way more time in the lawyer’s office and CPA’s office than I care to in a lifetime. I did not get into the cattle biz to learn all about LLCs, Trusts,  payroll taxes and crap like that.  Thing is I do get to do one money/parent thing I love.  Invest in my kid’s future with nothing other than cattle.

 

A couple years ago I got fed up with the stock market, and pulled all my money out of my Roth IRA, and used the money to buy cattle. I’ve had a 20%, or better, return on my money since 2005 with cattle.  My IRA never did that.

 

So here is my thinking. As a parent it is always a concern of how to pay for college, even though I would not recommend college, or how to at least give our kids a good start.  After Bernie Madoff ,  John Corzine, and computer generated trades I do not trust the markets.  Thing is I know cattle, so I stick with what I know.

 

Here is what I’m doing for my kid. The numbers are based off my last trade just last week.  I know the cattle markets will move so for this example I am going to freeze these numbers for the next 18 years.  Thing is even in the last 8 years I’ve still managed to make a 20% return.  Keep that in mind

 

I market my cattle on a real time cash flow reckoning, so this allows me to always buy back replacement cattle at a profit. You will need to learn how to do this in order for what I am about to outline for you to work.

 

So when my daughter was born I bought her five head of calves. In this example I am using 480# heifers at $1.43 or $687 head.  So five head would cost a total of $3385.  We are going to back ground these heifers and resell them, and replace at a profit.  So in this example we are selling 730# at $1.33.  My real cost of gain is $.93 with a 2.75# ADG so when I add on a 20% return my cost of gain goes up to $1.15.

 

The 20% return is a $55/head profit. Buying 480# calves and selling them at 730# with our rate of gain we get to turn 4 times a year.

 

Now those first five calves I bought for my daughter are financed through the Bank of Dad (BoD). So when we do our first four turns in year one the BoD collects all $1100 of profit and subtracts it from the $3385 that was loaned to the new baby.  At this pace the kid pays off the first 5 head by age three and has $84 left over.  After this point we make the kid reinvest their profits into buying more cattle.  So after four more turns the kid will have enough saved up to buy 6 calves.  I think that would make for a pretty proud four year old.

 

Now I am going to assume you see the pattern here and I don’t need to do all the math for you and show you the year by year turns.

 

By age ten in this example the kid will have 37 head. Since there was an income for a minor dad paid the taxes for them.  By now I figure it’s time to secure voter registration, and make the kid a tax payer.  Ouch!  So just figure between Fed and State tax kiss 15% good bye.  Gotta pay for the roads we are using to haul these cattle.  Long before we get to this point, a responsible parent is having/helping the kid pay bills, and balance a check book.  Lots of lessons to be taught here.  I have a buddy doing this with his kids, and it helps them to see there is a purpose in learning math in school.  Also all the lessons that come from helping, do chores.  Some real character building here.

 

Now by the time the kid is 14 we stop adding more cattle. We stop at 75 head.  That is enough for a pot load.  Also when we stop at 75 head after the first turn we have the rest of the year to do the other 3 trades and save money.  At 14 what kid doesn’t want a car?  So, let them buy one with their own money.  They will have enough.  Also let them pay for some gas, tax, title, insurance and so on.

 

Now after the car is paid for with cash, we have a decision to make. Do we just hold it here with 75 head, or do we keep buying more?

 

For my example here I stopped at 75 head and just started saving money.

 

By 18 the kid will have 75 head of cattle worth $72,000 and saved $39,000, and spent $35,000 on car, gas and so on. So our original investment of $51,500 turned into $146,000 in 18 years.

 

Now I know the doubting Thomas out there is thinking well you didn’t figure feed and so on. That was in the cost of gain and subtracted from the dollar difference between selling the 7 weight and replacing with the 4 weight.  Leaving us with the $55 retained profit.  And it took 14 years to get up to a load lot.  This is a crockpot not a microwave.

 

Now what if we took that $51,500 and invested it into a 529 over 14 years, and stopped and then just let the interest compound for four more years until the kid was 18. At a 10% rate of return we would have $169,000.

 

I really think cattle can compete with a 529, IF you market correctly.

 

This is what I am doing for my kid. Now according to this example the 529 out performed my cattle plan.  Thing is the 529 didn’t give a sense of accomplishment, or ownership like the cattle do.  The 529 didn’t teach responsibility of paying bills, buying and caring for a car, and cattle, managing cash flow, or understanding where money comes from, and marketing skill.  The 529 didn’t teach the kid how to run a business, and looking at how many animal science and ag business majors corkscrew operations into the ground college didn’t teach that either.

 

So when my kid is 18 there will be three choices to make. 1) Go to college, keep the cattle and hire dad  to take care of and manage it and use the income for school, or sell them off and go to school, with the goal of graduating debt free.  2) Sell them off and pursue something else.  3) Continue to do the cattle thing.  And I can tell ya with a track record and cash flow like this even at 18 a banker will finance the youngster, with daddy’s supervision of course.

 

Now suppose I’m half right. And after 18 years you only have a net of $70,000.  Still pretty damn good.   What if I’m half wrong and by 18 you have $300,000?  Wow!

 

My kid is two and already owns 6 calves all on her own. But she gets to take advantage of my buying power too.

 

Dave Wright President of Independent Cattlemen of Nebraska (ICON) said something to this effect once “I raise kids, the cattle are there to help me teach them life’s lessons”

 
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Posted by on September 26, 2014 in Uncategorized

 

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Face Palm (bread & milk)

Anger is one emotion that really motivates me.  I’ve had some people nudging me for some time to resume blogging.  Last week my attention was brought to an article that appeared on Cattlenetwork.  It was full of some of the worst marketing advice out there.

Here’s a link.  Remember this is bad stuff.  http://www.cattlenetwork.com/e-newsletters/drovers-daily/Worth-the-Weight-259959381.html?utm_content=&utm_medium=eNL&utm_source=1017H7692790D8V&utm_campaign=Drovers+CattleNetwork+Daily_20140521&utm_term=&page=2   You should never read anything in Cattlenetwork and take it seriously.

 

I already confronted the guy quoted in the article.  It didn’t go well.  At one point I even had to ask him if he was even taking the conversation seriously or if he was just messing around!  It became very clear to me in just a few minutes he has no grasp of the North American cattle biz.

Here’s what really bothers me, and is the reason for me writing this.  I am afraid someone somewhere read this article, believed him to be and “expert” and  is following  his advice, which may seriously affect their ability to pay for bread and milk.  I know most people aren’t in the cattle biz to make money, that is clear, thing is there are some people who are really depending on those cattle to earn a living.  That is something you just don’t screw around with!

I told this guy that all his article needed to say was this, “anytime you can turn a profit, DO IT!”  In the article he mentions having leftover feed.  People, as dry as it is in most parts, including where him and I both live, feed in inventory is a damn good thing.  His advice to feed it to put more weight on your cattle based on Value Of Gain (VOG) is, well, just “beep”ing dumb.

There are three legs you need in the cattle biz, cattle, feed, and cash.  If you have all three your business can stand up on its own like a bar stool.  So if you can sell your current inventory of cattle and replace them with undervalued cattle, then you should take the profit and start adding value to those replacement cattle.  You can’t turn a profit and generate cash flow by holding inventory.  Take Walmart for example, they didn’t get as big as they are by holding inventory, or selling for more.  They did the opposite, turn inventory over lots of times and sell it for less, taking small margins lots of times.

Now I totally understand the VOG thing.  I blogged about it years ago on the YPC Cattle Call page.  Thing is it is not something you make a marketing decision based off of.

Now let me explain why this Kat is wrong.  He said the market is signaling that it wants us to put more weight on our cattle.  I sent this guy weighted averages from multiple states showing that just isn’t so.  Hasn’t been for months.  The buyers have been telling us for sometime now that they want to be the ones to put the weight on them.   Our “expert” confessed to me he based his market outlook off of Salina.  You can’t come to a conclusion based off one sale barn, and post it as if it’s a nation wide deal.  I know this for a fact.  I buy cattle in lots of different states in lots of different barns, including Salina.

Since this Kat is from KS and used 7 weights as an example in his article, let’s look at that.  Here is what was written:

In this example, Tonsor pointed out that the feeder cattle market in June compared to May looks to be higher. If the steer sells at a higher price in June when he is 50 pounds heavier, the value of gain (VOG) is projected to be more than $2, around $2.11, which could well exceed the cost of gain (COG) for producers who have access to feed resources.

First off, this guy must be a gypsy with a crystal ball.  I would not want to play cards with this Kat.  Trying to predict/forecast the future, in this case June, is a form of gambling.  Otherwise known as “betting on the come”.  Yeah, that always works out well, playa.  Like I’ve said before, all it takes is a rising market for an idiot to look like a genius.   Don’t even get me started on what he says about December.  I’ll tell you this, feedlots are about to start feeling some heartburn, but you won’t hear anything about that for several months yet.  Maybe feeders will be higher in June.  Maybe not.  Why risk it?  Take the profit

On the weighted average I sent him from KS a 668# steer brought $2.15 or roughly $1430ish/head.  A 728# steer brought $1.91 or roughly $1390ish/head.  What was the signal again?  Wait, I bet we didn’t hold em long enough and feed enough weight on them.   Wrong playa, Thing is, it gets worse the bigger they get.  And its not just KS, its every state.

The weighted averages for most states from last week aren’t posted yet.  Since I actively market cattle on a day to day basis to pay for bread and milk for my family, I will tell you that the market was inverted.  What I mean by that is the market really rewarded lighter cattle.  At one NE barn 650# steers brought over $1525/head.  7 and 8 weight cattle didn’t bring that much money.  SO, if you sold those 6 weights you could buy back replacement cattle that were 50 to 150# heavier, for even money or even had money left over.  Think about that, THE MARKET WAS PAYING YOU TO TAKE WEIGHT HOME!!  You could buy 8 weights for roughly $40 head more than the 6 weights.  Can you put 200# on for $40?  HELL NO.  Hey, where’s our buddy with that VOG thingie?

I don’t know what is worse, the fact that the guy put this garbage out there, the fact that the author wrote it and didn’t stop and say “WTF?”  We can’t blame Cattlenetwork, they don’t have a brain and don’t want one.  Normally this is where I would suggest they all be fired or quit.  I’m not going to do that.  Having been on the receiving end of vocational terrorism just 14 months ago I know how that feels.  It is my sincere wish/hope that these Kats take some time to learn sound marketing skill, and critical thinking skill and share THAT with the world.

Think about this.  Suppose you do what I say, and take the profit and replace with other cattle.  Suppose the other guy is right and the market goes up.  Now you are set up to take two profits and replace again, making it even easier to pay for bread and milk.

 
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Posted by on May 27, 2014 in Uncategorized

 

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