The lead-off article in our 2017 Winter Newsletter was entitled “Do You Have a Competitive Advantage.” I bring this up again because we firmly believe having a competitive advantage will be the difference between mere survival and true success in the future of the cow-calf business. There is no reason you cannot have a competitive advantage – if you want one. It is up to you! There are two primary types of competitive advantages – a cost advantage and a differential advantage.
A cost advantage exists when a business is able to deliver the same product as competitors but at a much lower cost. This requires a lower cost of production. Low-input cow-calf producers, for example, have a big competitive advantage over status quo producers. Many (perhaps most) PCC customers have a cost of production that is less than half what the national average is.
Having a cost advantage will only be possible for those who focus on production per acre – instead of production per cow. I personally know several producers who have increased pounds and profit per acre by 50 to well over 200 percent. These producers have implemented proper grazing management to make the most of every ray of sunshine and drop of rain that falls on the land they control. They also produce smaller, more efficient cattle that fit their environment – instead of artificially changing the environment to fit their cattle.
A differential advantage is created when a product differs from competing products and is perceived to be superior to competing products. Many PCC customers, for example, produce and market grass-finished beef. While the demand for conventional beef has been struggling, the demand for grass-finished beef has been increasing by leaps and bounds. While the price of grain-fed animals is about half what it was just over two years ago, the price of grass-finished animals has increased during the same time period.
Several PCC customers have both a cost advantage and a differential advantage. They produce beef for less than everyone else and they sell it for more than everyone else. These producers are my heroes! They are doing what all of their neighbors say is impossible to do. As time goes on, these producers will be buying out more and more of their neighbors. That’s a little sad – but I don’t have much sympathy for people who are too lazy and/or too afraid to think for themselves.
Quote Worth Re-Quoting –
“Human beings never think for themselves. For the most part, members of our species simply repeat what they are told – and become upset if they are exposed to a different view.” ~ Michael Crichton