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Going From Macro To Micro

We spend a lot of time talking about the industry in aggregate. We talk about the chilling effect of ethanol subsidies on this industry, the potentially devastating effects of USDA’s proposed GIPSA rule, about Environmental Protection Agency rules, and animal welfare activists. We also talk about exports, supply and demand, and profitability for the various industry segments.

Without question, these aggregate/macro numbers and indicators play a role in our individual operations and strategic plans. However, I think we’re guilty – or at least I’m guilty sometimes – of focusing too much on these macro trends and events.

As an industry, we take great pride in our individual ruggedness and personal freedom. Still, we tend to operate our businesses almost identically under the premise that there are best management practices that should be adopted and that we are not that individually unique.

What happens at the macro level really doesn’t determine the success of our own individual operations. From a simplistic view, a business is nothing more than the purchase of production or goods, followed by the sale of the merchandise in an attempt to make a profit; or a business is providing a service for a fee. It’s not running cows; it’s not feeding cows or merely getting them bred; or even riding horseback with your kids. A business doesn’t necessitate loving the lifestyle, although I can’t imagine one being overly successful without a true passion for it.

While we all share a lot of common values in this business, it always amazes me how differently the various sectors are wired. We’ve all known breeders, feeders, traders, and production-oriented, or marketing-oriented individuals, with successful businesses. The reason they succeed is that they do it better than most other people.

But across all these various sectors in our industry, I’ve found what really separates those who make money from those who don’t is their commitment to making a profit. We spend a lot of time at all these various cow-calf conferences talking about profitability; I suppose that’s because we’re trying to convince ourselves that is why we are in the business. Of course, I wouldn’t call anything that requires millions of dollars in investment, or 60+ hours/week of labor, a hobby. Still, for many of us, profit motivation is almost secondary.

I’m not saying that as individuals we can ignore the macro trends, but rather that our focus should be on finding what it is that we do best in this industry and profiting from it. We love talking about the aggregate in this business, but profits and losses are created on an individual basis.