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Key to profit: set a goal, stick to it

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Watch each Friday for Doug Ferguson's Market Intel blog on Beef Producer and BEEF magazine.
Creating a profitable cattle business requires commitment to more than the tactics of raising cattle.

This week I ran into an old buddy of mine. It’s been a while since I’ve seen him. This guy lost 120 pounds this year!

I asked him about it, and he told me he wasn’t happy with how things were in his life and made the decision to change. It started with just a change in diet. After he started seeing some results he started riding his bike after work. He got more results and now tries to hit the gym in the morning before work as well.

Here’s the awesome part. He told me he was on medication for several different issues, and now he is off all of them except for his blood pressure med which is now at half a dose, and he may be going off that soon as well. And these aren’t the only changes. He has more energy, he is more vibrant, I could quickly tell his self confidence is higher as well. He went from being the guy that hoped maybe someday he’d find a good woman, but thinking it was probably unlikely to having an awesome girlfriend and they are talking about getting married. These paragraphs do nothing to illustrate how dramatic the changes are, how far he has come, or how difficult it was.

Committing to a decision

As I was driving out of town, I knew I had the inspiration for this week’s blog. What if we decided like that in our business? I have often said the first thing to making a profit is the committed decision to be profitable. People spend time discussing the tactical issues that they hope will make them a profit. By that I mean things like calving in synch with nature, better grazing and extending the grazing season. Or its locking in cheap feed and working with a nutritionist to maximize gains.

To get desired results we need to set a target, and make a committed decision to hit that target. We must be committed to it, or anything will knock us off our trajectory to reach our target. Let’s say we are the kind of person who drinks eight sodas a day. We start eating clean, but we don’t give up our eight sodas. Then it’s unlikely we will hit our target, and if we do it will take much longer to get there.

But when we set a target and commit to hitting it, we cut ourselves off from anything that will not help us accomplish the goal. This helps us be accountable to ourselves. If we want to have a profitable business we start making decisions and taking actions in harmony with a profitable business. If we want to lose weight, we start doing skinny person things and behaviors. Just like my buddy, he first made the decision to lose weight and go on a diet. Then later he added biking, and then added going to the gym in the morning. His behaviors, and habits changed. His decision-making process changed to be in harmony with what he wanted

I heard an awesome speech by Zig Zigglar, it was the one where he talked about paying the price, and enjoying the price. In that speech he was talking about his weight loss journey. He started working out and he couldn’t do one sit up or run around the block. He felt miserable.

But he stuck with it and lost a bunch of weight, he got in better shape than he was when he was in his twenties, and had more energy. He said he paid the price for letting himself get overweight. The price was feeling miserable and being unhealthy. But then one day he was jogging and for the first time he enjoyed his run. This is when he got to enjoy the price. The price was all the time and discipline of working out and eating healthy, and he got to enjoy feeling awesome.

Keep working on the business

Again, our business is the same. If we get on social media, we will quickly notice that people who claim to be stockmanship experts have huge followings. The people whose pages are devoted to business and marketing have much smaller followings. If we spend all our time on the tactical issues of working in the business and none or very little working on the business, then our operation will suffer. We will eventually pay the price. That price may be struggling every year to get by or it may be worse, we could be using our wonderful stockmanship skills on cattle with someone else’s brand.

If we want to own livestock and be able to do cowboy things, we must make money on the stock. This is how I got so involved in the marketing myself. I knew I wanted to own cattle and the only way to own cattle and eventually own even more cattle was to make money on them.

My goal was to own cattle. So, I did what I call cattle ownership things. I got good at marketing, budgeting/managing cash flow, business structure and these kinds of things. These things got the snowball effect rolling for me. With them in place, and reviewed often I might add, I could then focus on the day to day issues, like improving my stockmanship, and grazing skills.

Making money is what allows us to do the things we really like to do. Marketing skill can help keep us lined in on that target of owning and working with the animals, or for some of you using the animals to capture the value of grass and improve soil health.

This week I got to watch part of a female sale. I quickly noticed some trends (note this is one sale and does not represent what is happening across the entire country). The cows 4 years old and younger were selling above their intrinsic value, and the older cows were selling below their intrinsic value. This set the stage for a huge depreciation gap if the vet called her a four-year-old or a five year old. This also set the stage for an outstanding trade! We could sell $70-$100 value into the market and get paid around $300 for it, and there is only one year age difference in the cows.

The three- to four- to five-year-old cows lost $150 in value per year of age. From five-year-olds to short solids there was only $100 difference in price.

Depreciation is an expense to the business. We can silently pay the price of depreciation and hope to get by, paying the price. Or we can utilize some marketing skills, and not only deflect the depreciation expense but get paid to do it, enjoying the price. It all comes down to the committed decision of do we want to make a profit?

Cattle market view

The week the Value of Gains (VOG) were consistent up to 800-pounds. After that point some sales saw a huge drop in VOG and some did not. The VOG peaks around the seven weights, which is a change from the past month. Another significant change this week is the relationship difference between the heavy feeder heifers and fats. This swap is the only one against fats and it’s a great one.

Feeder bulls and unweaned cattle were up to 20 back. Thin cattle (thin but healthy) caught a premium of up to 10 dollars this week.

Heading to Husker Harvest Days? You can catch Doug Ferguson live each day at 12:15 has he offers ways to put more money in your wallet with sell/buy marketing. And it’s your chance to talk with him each day. Husker Harvest Days runs Sept. 13 – 15 near Grand Island, Neb. Make plans to attend.

The opinions of Doug Ferguson are not necessarily those of beefmagazine.com or Farm Progress.

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