Herdquitter Blog

With the coming of the New Year, it is traditional to look back at what happened, good or bad, in the world around us.   For the cattle industry, one definite change I have seen in the last year is that “cow size” is mentioned more and more and finally given its full due – even in the freebie magazines!   These are the same magazines devoted to following the path of the money laid down by the sellers of inputs who depend on pushing production as opposed to profit.

Going back to the early 1970s, everything we read, whether in magazines or university and government research papers, was all about increasing individual animal performance – with a special emphasis on weaning weights.   This led to big cows, although it was not considered a detriment at the time.   But now cow size is becoming a popular topic amongst producers and academics alike.

Why is this changing after over 40 years of big-cow dominance with very few speaking out about the illogic of big cows?   One person, with the knowledge of what the producer on the land needed to be profitable, brought this into focus. Kit Pharo began his seedstock operation with a totally different approach than the norm.   Instead of the industry’s standard of increasing performance no matter the cost, Kit knew it would take more than buying high-performance bulls for his customers to be profitable.   This led to the PCC Philosophies that continue to be the guiding force in PCC’s seedstock operation.

One of Kit’s focal points was cow size.   Bigger cows were not efficient and were reducing profit in several ways.   Kit began a campaign for smaller cows that started with the publishing of the PCC Newsletter and speaking engagements around the country.   As the years rolled by, with newsletters going to several thousand people and speaking engagements before thousands of producers and academics, cow size became something to not only talk about – but to seriously consider.

For nearly three decades… Kit was the only one speaking out and making waves about cow size.   There were others with similar views, but they did not have the platform from which to sway large numbers of producers, which eventually encouraged (forced?) academics to take a real-world look at cow size and how it diminishes producer profits both directly and indirectly.   This proves that one person with persistence can make a difference.

WARNING: This Newsletter may be Hazardous to Closed Minds.   Read at your own risk!

Click to Read…

One of the smartest things I’ve heard anyone say was Johann Zietsman’s comparison of corn farming and beef production.   The rancher-consultant from Zimbabwe said if corn farmers thought like beef producers, they would space their plants far apart and try to maximize the number of kernels per ear and the number of ears per plant.   They would think nothing about yield per acre.   In the end, they would surely go broke.

This is pure, sound logic, and yet the cow business has been chasing profit per corn plant … er, I mean per cow … for 50 years and more.   In fact, we don’t really even measure profit per cow but only production per cow, with little attention paid to net profit at all.   No wonder our industry’s average net return is so low, commonly averaging 3%.   Of course, there exist cow operations that make 10% or more and those which lose money nearly every year.

Texas economist Stan Bevers says cow operations are asset-management operations – meaning the investment money goes into assets with very low turnover – and the largest asset is nearly always the land.   Usually, the second-largest asset class is the cattle.   Yet the profit-per-cow mindset overlooks the natural tendency to make bigger cows so they require more land, thereby increasing cost per unit of production in two ways.

If we also consider that when managed grazing is properly executed, it has been shown by hundreds of practitioners across the nation – indeed around the world – to improve the land’s productivity over time.   That means we can run more units of production (cows) on fewer acres, thereby lowering our cost of production.

If we at the same time select cattle that are well-suited to forage, moreover well-suited to the very high-density grazing which allows us to improve the land faster and produce even more pounds of beef per acre, we are also selecting for animals that lower our cost structure further.

There is a counterintuitive outcome of profit per cow that needs to be explored.   When we focus on the cow exclusively, the side effect is bigger, higher producing cows and lighter and lighter stocking rates – exactly the path we’ve taken.

We talk about how much our calves weighed on sale day and whether they topped the sale in price.   Instead, we should be measuring our net profit per acre, and secondarily asking whether each cow is paying her way by producing a calf every single year and doing it at very low cost.

We should also stay out of the coffee shops and co-ops if we can’t learn to ignore the neighbors’ drivel about how much their calves weighed.

The easiest money you will ever make is the money you DON’T spend.   Ben Franklin once said, “A penny saved is a penny earned.”   Folks, this is just as true today as it ever was – and it applies to every $10, $100 and $10,000 you DON’T spend.   Guess what?   This income is tax-free.   You DON’T have to pay income taxes on the money you DO NOT spend!

Reducing and eliminating expenses is easier than most cow-calf producers think – but it will require a paradigm shift for most producers.   Most expenses are fossil fuel-based.   Long-term success in this business will require you to transition from fossil fuel energy to FREE solar energy.   Winter feeding is usually the biggest expense.   With the right kind of cows and with proper grazing management, most winter feeding can be eliminated.   Working with nature will also reduce and eliminate expenses.

If you are a cow-calf producer who is in the business for the long haul, you probably need to make some changes in your operation.   I firmly believe the beef industry is at a major turning point.   What has worked so well for the past 40 years won’t work for the next 40 years.   Those who are quickest to adapt and change will be in the driver’s seat.   Those who are slow to change will get left behind or run over.   This might be a good time to review the Ten Steps to Double Your Profits.

I received a tremendous amount of response to last week’s PCC Update.   This included an inordinate number of unsubscribers.   To be honest, I expected to receive a tremendous response.   Our Cowboy Logic said, “You’re not old until your dreams are replaced by regrets.”   I followed that with an article entitled “Regrets” which was followed by an article entitled “A Cowboy Hat and a Dream.”

All of this was designed to push people out of their comfort zone and challenge them to make the most of their life – before it is too late.   Some people refuse to be pushed out of their comfort zone.   They would rather unsubscribe than to think about changing their life for the better.   That’s too bad – but that is just the way some people are.   Others truly desire to accomplish more – but they can’t figure out how to get the ball rolling.

I am, by no means, an expert on this – but I have always been a highly driven and motivated individual.   I am not afraid to dream big.   I set goals and do what is required to make them come to fruition.   Over the years, I have helped a few other individuals and groups make some of their goals and dreams come true.   The biggest obstacle most people deal with, including me, is the box (paradigm) they have put themselves in.

As we have said many times, it is impossible to achieve greatness if you are locked into the status quo way of thinking and doing.   By definition, members of the status quo herd will always be average.   Several people who responded to last week’s PCC Update said they are definitely NOT status quo.   One said he is considered the village idiot.   The fact that you are not status quo does not mean your paradigm is not holding you back.

If you are having trouble reaching the next level, you need to determine what is holding you back.   More than likely, it is in your head.   For example, many producers cannot imagine increasing the size of their operation because they don’t think they can move to a different location – a location with more opportunities to expand and grow.   You cannot choose where you were born – but you can choose where you live and work.

Most people go through life flying by the seat of their pants.   They spend most of their time reacting to events rather than being in control.   To be in control we need to be proactive, instead of reactive.   A clear destiny with goals is very important.   Goals, however, must be attainable.   I like to break my big goals down into smaller goals that can be easily achieved in a relatively short period of time.   How do you eat an elephant?   One bite at a time.

Cowboy Logic: “Think small.  Big ideas upset people.”

I am fortunate enough to know several very successful cattlemen who started out with nothing more than a cowboy hat and a dream.  They did what everyone in the status quo herd said could not be done.  I have always been greatly impressed and inspired by such people.  Some of these people did not even have an agricultural background.  In my opinion, that was more of a blessing than a curse.  They were not handicapped or hindered by status quo traditions and ways of thinking.

As we have discussed in previous PCC Updates and Newsletters, there have always been more opportunities to advance in a down market than in an up market.  For example, more millionaires were made during the Great Depression of the 1930s than at any other time in history.  The fact that more and more status quo producers are struggling to make a decent living, indicates there will soon be more and more opportunities for others to advance.  In a world that seems to be filled with whiners, complainers and blamers, it’s extremely refreshing to visit with people who are totally excited about the future.

Getting started in the cattle business does not require that you own land.  If you do not already own land, do not purchase any until you can do so with your profits.  I did not own any land for the first ten years I was in the cattle business.  Getting started in the cattle business doesn’t require that you own cattle either – at least not in the beginning.  The only thing required is knowing how to be profitable.  Be very careful who you listen to, though, when you seek knowledge.  Most of the status quo information that is floating around free of charge will take you in the wrong direction.

The money you have should be invested in things that will provide a relatively quick payback or return.  You should also consider turnover.  The more times you can turn over the money you have, the more opportunities you will have to increase profit.  With that in mind, you might consider taking a course in Bud Williams Marketing.  The cost of using someone else’s money has never been as cheap as it is right now.  I hate debt, but it can be a great tool when properly used.  Long story short, use your money (or someone else’s money) to make more money – NOT to fill your shop or garage.

As I look around… I see many options and opportunities.  The time is right!  There is always a need for custom graziers who know how to get the most out of every ray of sunshine and drop of rain that falls on the land they control.  There are niche markets popping up everywhere you look.  Consumer demand for non-traditional beef has been on the increase for several years.  Consumer demand for grass-finished beef is growing by leaps and bounds.  There are not enough producers to even come close to meeting the demand.  Keep in mind, though, you cannot produce acceptable grass-finished beef with high-maintenance, status quo genetics.

Each and every one of us have unique competitive advantages based on our location, our personality, our experiences, our acquaintances, etc., etc.  Status quo producers, however, never take the time to identify their competitive advantages.  They fail to realize they must be different to truly excel.  The first step to becoming extraordinary is to stop being ordinary.  Don’t be afraid to dream.  Dream BIG while you are at it!  Don’t be afraid to follow your dreams.  If you’re afraid to follow your dreams, your kids and grandkids will probably end up working for someone who did.

What about YOU?  Most cow-calf producers started out with much more than just a cowboy hat and a dream.  What is preventing them from being as successful as those who started out with much less?  For the most part, they are unable to make their hopes and dreams come true because they are afraid to break away from the so-called “comfort” of the status quo herd.  What about you?  Are you as happy and as successful as you would like to be?  Are you creating a good future for the next generation?  Are you doing what needs to be done to avoid having regrets when you come to the end of this life?

Have you noticed that the most successful and happy people throughout history have been those who made decisions that were based on the future?   It’s true!   Successful people know that nothing stays the same.   The present is different from the past – and the future will be different from the present.   Those who make decisions that are based on the future will always have a HUGE competitive advantage over those who continue to make decisions based on the past and/or the present.

Unfortunately, nearly all people from all walks of life are afraid to make decisions that are based on anything but the past or the present.   It has always been this way, and it will probably always be this way.   Even though they can see things transforming before their very eyes, they are reluctant to make any changes in what they are doing.   It’s as though they would rather fail doing what they have always done than succeed if success requires change.   That is a shame – but it gives you the opportunity to move your family and your family’s business to a very sought-after position.

Based on what you think about the future, what kind of management decisions should you be making in your cow-calf operation?   I’m not going to tell you what I think.   I want you to do your own thinking.   You may come up with something different and/or better than what I have.   The decisions you come up with, however, need to be based on what you think the future holds.   Be bold in your actions.   Those who are slow to take the appropriate actions may lose all they have – forcing their kids and grandkids to get jobs in town.

We hope you are making plans to attend and/or participate in our Colorado Bull Sale…

Where else can you purchase coming-two-year-old bulls that have been developed on native grass?   Where else can you find bulls that were produced by efficient, easy-fleshing, moderate-sized cows that have never been pampered?   Where else can you find bulls that can reduce cow size and maintenance costs – without cheating you on pounds?   Where else can you find bulls that come with a One-Year Guarantee?   Where else can you find bulls that are guaranteed for calving ease?   Where else can you find bulls that can breed more cows for more years?   Where else can you find bulls that will sire calves that will sell for a substantial premium?   Where else can you find bulls that were bred and developed with your long-term profits in mind?

Status quo cow-calf producers are getting by – but most would not consider themselves to be financially successful.   Truth be known, in a ten-year period, status quo producers are doing very well just to break even.   Well over half of them won’t break even.   In a nutshell, there are three keys to attaining real financial success in the cow-calf business.

1. Reduce and eliminate expenses
2. Increase pounds per acre
3. Sell calves for a premium

Reducing and eliminating expenses is easier than most cow-calf producers think – but it will require a slight paradigm shift.   Most expenses are fossil fuel-based.   Real success in this business will take place when we transition from fossil fuel energy to FREE solar energy.   Winter feeding is usually the biggest expense.   With the right kind of cows and with proper grazing management, most winter feeding can be eliminated.   Working with nature will also reduce and eliminate expenses.

Increasing pounds per acre will never take place until you STOP focusing on increasing pounds per animal.   Status quo producers have been focused on the wrong thing for the past 50 years.   Stocking rate affects profitability, or lack thereof, more than anything else.   With the right size and type of cow, most cow-calf producers can increase stocking rate by at least 30 percent.   With proper grazing management, it is possible to increase stocking rate by another 50 to 200 percent.

Status quo cow-calf producers will never sell their calves for a premium.   They will take whatever the market is willing to pay them on that particular day.   PCC customers, on the other hand, will soon be able to sell their calves for a $15/cwt premium.   That amounts to a premium of $75 per head on 500-pound calves – and a premium of $120 per head on 800-pound yearlings.

There was a tremendous amount of talk and excitement at the Nebraska Bull Sale about PCC’s Grass-Fed Beef Alliance with Cactus Feeders and Tyson Foods.  Cow-calf producers are thrilled to be receiving big premiums for their calves and yearlings.  Everyone wants to be involved.  More than once I heard someone say, “This is a No-Brainer!”If you would like to know more about this program and how you can participate, make plans to attend our pre-sale meeting Sunday night in Burlington, Colorado.  Tim Goodnight will be sharing information about this program and answering questions at this meeting.  This meeting is free and open to the public.  No need to RSVP.

Circumstances are where you are right now.  You had no control over some of your circumstances.  Circumstances of your birth and childhood, for example, are not the result of any choices you made.  Other circumstances, however, are the consequence of choices you have made.

Choices are what you make happen to alter your circumstances.  The choices or decisions you don’t make can have as much of an effect on your circumstances as the choices and decisions you do make.

Consequences are the result of your choices, or lack thereof.  Consequences can be both good and bad, depending on the choices you made – or didn’t make.

You can’t go back in time to alter your circumstances.  You can, however, change your future circumstances.  The decisions you make (or don’t make) will have a profound effect on your future and the future of your family business.  This is a responsibility that should not be ignored or taken lightly.  Your kids and grandkids are hoping you make the right choices.  Don’t be afraid to take control of your future.

Quote Worth Re-Quoting –

“Life is 10% what happens to you and 90% how you respond to it.”   ~ Lou Holtz

There continues to be a tremendous amount of excitement about PCC’s Grass-Fed Beef Alliance with Cactus Feeders and Tyson Foods.  Everyone is anxious to see how the steers in in our trial run perform and grade.

We have already procured 2000 head of PCC calves for late fall delivery.  Tim Goodnight is in the process of going through customer surveys to identify cattle for deliver next spring.  Cow-calf producers are thrilled to receive a $75 to $120 per head premium for their calves.

If you would like to know more about this unique program and how you can participate, make plans to attend our pre-sale meeting in Nebraska.  Tim Goodnight will be sharing information about this program and answering questions at this meeting.  Find out how you can receive a $15/cwt premium on your calves.

This meeting will take place at the sale barn in Valentine, Nebraska, THIS Friday night, October 26th.  It will start at 6:30 pm Central Time.  This meeting is free and open to the public.  No need to RSVP.   Tim will also be speaking at our Colorado pre-sale meeting on Sunday, November 4th.

Pharo Cattle Company does much more than sell bulls.  We provide a program and a way of thinking that are focused on helping you make your business as profitable, enjoyable and sustainable as possible.  Our ultra-low-maintenance bulls are just one part of this program.  We also provide a way for you to receive a substantial premium on your calves.  There are several reasons our customers are the happiest and most profitable cow-calf producers in the world.

We believe… people have the ability to create their own future.  Yes, we know many things are totally out of our control – but we also know many things are within our control.  The key is to focus on the things we have control of – and take action.  Make things happen!  The world is full of people who just sit around waiting for something to happen.

Quote Worth Re-Quoting –

“Some of the world’s greatest feats were accomplished by people not smart enough to know they were impossible.” ~ Doug Larson

Whether you want to believe it or not, your long-term success in the cow-calf business will be dependent on your willingness to make some changes.  Cattle prices will continue to go up and down – while the cost of inputs will continue to go up.  In the last 50 years, the cost of inputs has risen four times faster than cattle prices.  As time moves on, more and more producers will fail to have enough income to cover their expenses.

WHATCHA GONNA DO?

Those who would like to increase their long-term, sustainable profit need to start thinking in terms of production and profit per acre – instead of per animal.  They need to work with nature – instead of against nature.  They need to implement proper grazing management to make the most of every ray of sunshine and drop of rain that falls on the land they control.  They need to reduce and eliminate expenses.  And… they need to produce cattle that fit their environment – instead of artificially changing the environment to fit their cattle.

Pharo Cattle Company has the low-input, grass-based genetics you will need to produce efficient, easy-fleshing, 3 to 4-frame momma cows that can increase pounds and profit per acre.  Our 3 to 4-frame cows weigh 1100 to 1250.  In contrast, most seedstock producers have high-maintenance, 5 to 7-frame cows.  Their bulls will continue to take you farther and farther in the wrong direction.  Call 800-311-0995 to request a catalog for our two fall bull sales.  Our Nebraska Bull Sale will take place in Valentine, NE, on Saturday, October 27th.  Our Colorado Bull Sale will take place in Burlington, CO, on Monday, November 5th.

Kim Barker, a longtime PCC customer in Oklahoma, shared the following C.S. Lewis quote with me.  This is a powerful quote.  It has application for everyone I know – including me.

“Progress means getting nearer to the place you want to be.  And if you have taken a wrong turn, then to go forward does not get you any nearer.  If you are on the wrong road, progress means doing an about-turn and walking back to the right road; and in that case the man who turns back soonest is the most progressive man.”  ~ C.S. Lewis

Imagine, if you will, that you are driving east on a highway with plans to meet up with a friend in a certain town.  You come to a Y in the road.  To continue traveling east toward your destination, you should have taken the left-hand fork – but you mistakenly chose the right-hand fork.  Now you are driving south on a different highway toward a totally different destination.  Once you realize you are on the wrong road, how long will you continue before turning back?  Five miles, 100 miles or 1000 miles?  A wise person would turn around immediately.

Over the years… I have known hundreds of cattlemen who knew they were on the wrong road as far as their genetics and business were concerned.  Most slowed down – but stayed on the wrong road.  Today they are even farther away from where they want to be than before.  Unfortunately, only a few were able to do an about-face and get back to the right road.  This is a very tragic and disturbing part of human nature.  If you discover you are on the wrong road, the best time to turn around is NOW!

These bulls are being developed on grass in northern Nebraska, in preparation for our Nebraska Bull Sale on October 27th.  Notice the snow on their noses.  This indicates they were grazing through four to five inches of snow.  Notice the condition these bulls carry.  Fleshing ability has been bred into these bulls – NOT fed in.

The status quo beef industry is a result of a time when land was unbelievably cheap – at least by today’s standards.  It is also a result of cheap feed and cheap fuel.  Gasoline could be purchased for only 25 cents per gallon in the early 1970s.  Labor was cheap – and equipment was cheap.  The status quo way of doing things made sense 40 to 50 years ago.  Unfortunately, that era is over – and it ain’t coming back.  Ready or not, we are entering the New Frontier in Beef Production.

We believe the next twenty years will be exciting times for those who are willing to change with the times.  In addition to increasing pounds and profit per acre, PCC customers now have the opportunity to receive a $15/cwt premium on their calves.  That’s $75 to $120 per head!  This will create opportunities to advance and grow the family farm or ranch.  This will also create opportunities to bring the next generation into the family business.  Unfortunately, the next twenty years will be sad and depressing times for others.  That’s the way it is during times of change.