Category: Change

Woe is Me – By Kit Pharo

I skim through many beef publications on a daily basis.   Within the last two weeks, I have read the following statements in various online and printed publications.

  • The average age of farmers and ranchers in America has been increasing drastically over the past 30 years.
  • From 2002 to 2015, the cost to produce a weaned calf more than doubled from $400 to $875 per cow.
  • The average net farm/ranch income was negative for 2018.
  • Farm bankruptcies in some states were up 60% in 2018.
  • Calf losses this spring were well above average because of snow, cold and wind.
  • The USDA reported that since 2013 there has been more than a 50% reduction in net farm income.
  • Total farm income decreased $9.1 billion in 2018.
  • Total farm debt increased $410 billion in 2018.
  • Delayed corn planting will have a negative effect on feeder cattle prices.
  • Net income has been dropping due to circumstances out of farmers’ and ranchers’ control – dropping commodity prices, increasing input costs, machinery purchase costs and repairs and inclement weather.

These statements don’t paint a pretty picture, do they?   They leave little room for hope – especially for those who are struggling to make a decent living in the cow-calf business.   It’s easy to understand why some producers are throwing their hands up in despair, thinking, “Woe is me.   What can I do?”   Most are doing nothing – which just makes matters worse.

I believe all but one of the above statements are true.   The last statement, however, is FALSE!   It will make producers feel a little better about the situation they are in – but it will discourage them from taking any appropriate action.   Truth be known, very little is totally out of our control.   We just like to think things are out of our control because we’re afraid to think or look outside the box (paradigm) we have put ourselves in.

At the risk of upsetting more subscribers, I am going to do my best to challenge you to look and to think outside the box you have put yourself in.   We have all put ourselves in a box of some sort.   Our actions and our success are limited by the box we have put ourselves in.   Thinking outside your box will probably go against conventional thinking – but I want you to understand that it is possible to create a very profitable, enjoyable and sustainable business.   I want you to understand that it is possible to create a very bright and prosperous future for the next generation.

In last week’s “The Next Generation” article, I asked, “What do you need to do to adapt to the changes that are taking place in the cow-calf business?”   I went on to say, “If you have been paying attention, you already know the answer to that question.   The real question is… do you have enough courage to break away from the status quo, herd-mentality way of thinking so you can make the right decisions?”   Herein lies the problem for most people.

Let me begin by admitting we have no control over the weather.   However, we do have the ability to plan for most weather-related events and situations.   With a good grazing system and a good drought plan, we can decide when to turn our cows into cash to conserve our grass.   As Bud Williams once said, “You will never go broke having too much money or too much grass – but going broke is easy if you have too many cattle at the wrong time.”   We have the ability to take control of these situations.

Hundreds of cow-calf producers lose an inordinate number of calves every year while calving.   To add insult to injury, these same producers work harder than anyone else trying to save those calves.   Apparently, they do not realize they have control of when they turn their bulls out.   There are very few environments in which winter calving makes sense.   Why do wild ruminates wait until May to have their babies?   Why are all calves born with a summer hair coat?   There is nothing more enjoyable and profitable than calving on green grass.

I am also willing to admit we have very little control over the markets and the prices we receive.   The only way to take control of the prices you receive is to get out of the commodity business and sell a product like grass-finished beef directly to the consumer.   Several PCC customers have been very successful at doing this.

Farmers and ranchers cannot do much about commodity prices.   Most will whine and complain – but that does no good.   Many will blame others for their problems – but that does no good.   So, what can you do?   If what you are doing now is not working, you need to do something different.   This is as obvious as the nose on your face – but most people will not change a thing until they are forced to.   By that time, it will be too late for many.

PROFIT  =  (Production  x  Market Value)  –  Expenses

Since we have no control over the markets, we need to focus our attention on increasing production and/or decreasing expenses.   When we talk about increasing production, we are referring to production per acre – NOTper animal.   Focusing on production per animal (bragging rights) will actually decrease production and profit per acre.   The status quo beef industry has been focused on the wrong thing for the last 50 years.

I know several producers who have increased pounds and profit per acre by 50 to well over 200 percent.   That’s HUGE!   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 cows that fit their environment – instead of artificially changing the environment to fit their cows.   This allows them to increase stocking rate and production per acre.   If they can do it, why can’t you?

The average cost of producing a calf has more than doubled in the last 20 years.   That makes it very difficult for most producers to make a decent living.   In contrast, most long-time PCC customers have a cost of production that is 40 to 50 percent less than the national average.   That’s an advantage of $350 to $450 per calf!   If they can do it, why can’t you?   The easiest money you will ever make is the money you don’t spend.

The reason the average age of cow-calf producers has increased so rapidly over the last 30 years is because the next generation, for the most part, is not coming back to the farm or ranch.   The reason the next generation is not coming back is because very few cow-calf operations are profitable, enjoyable and sustainable.   The reason very few cow-calf operations are profitable, enjoyable and sustainable is because most producers are unwilling to make the necessary changes in their operation.   It is easier to say, “Woe is me,” than to think outside the box they have put themselves in.   We encourage you to choose a different route.   You can do it – and we can help!

Quote Worth Re-Quoting –

“You are responsible for your own happiness and success.”   ~ Harvey Mackay

The bigger-calf theory isn’t working right now

The solution is to sell cattle that have higher value of gain than your cost of gain.

It was an interesting week in the market. What I find even more interesting is how people can get so emotional about such things. Cattle marketing is simple math, and that should take the emotion out of things since math is fundamental and never changes.

That said, it is hard to override an old paradigm. This week the paradigms that hold onto conventional wisdom got smacked in the face.

Conventional wisdom says that it pays more to wean a bigger calf. This week I watched an auction that had a good amount of bawling calves sprinkled throughout the run of different weights. While the bigger calves did get more dollars per head, it wasn’t much more. When I calculated the value of that gain it proved what I already knew: The value of gain wasn’t all that great. From the smallest bawler to the heaviest calf, the value of gain was 45 cents.

Can you put the weight on for less than that? The value of gain between some of the other weights was less than 30 cents. I am pretty sure it’s costing more than that to put the weight on. My point is, those extra pounds were actually costing the producer money.

A commentator on the local radio was going on and on about the “rally” in eight-weights at a local sale barn this week. I pulled up the market report and those eight-weights had the lowest value of gain compared with all other weights. At that barn seven- and eight-weights were the only weights that were higher this week, and yet the eight-weights were still undervalued to the lighter feeders, and also undervalued compared with fats. So again convention wisdom got smacked. Just because they were higher didn’t mean that a person was going to profit from selling them.

I have had a few people ask me how this blog is being received by people since I talk a lot about turning cattle quicker instead of holding them and putting more weight on them. I just outlined above the math isn’t adding up by the long-held convention for adding weight to create value.

Here’s the thing, there are three components to maximizing profit, and one is turnover. If you owned a hardware store would you make more money if you were open two days a year, or 365 days a year? I have a friend who used to work in the parts department at a dealership, and he told me if a part didn’t turn over at least every 30 days they quit stocking it. I’m not saying we should trade our stocker cattle every month. What I’m saying is that we need to watch the value of the gain, and price relationships to prevent ourselves from getting cattle too big and becoming undervalued at times.

Next week is the last full week of auctions before some barns will go to their summer schedule. One thing I find interesting and am curious to see how it pans out is some barns are adding a special female sale to the schedule in the middle of summer. This typically doesn’t happen. There obviously is some interest in selling bred cows and pairs at that time, but will there be much buyer interest?

If One Can Do It…

If One Can Do It…

By Kit Pharo

If I had a nickel for every time my long-time friend and mentor Chip Hines has said, “If one can do it, they all should be able to do it,” I would have a truckload of nickels.   In the 30+ years that I have known Chip, he has had a profound effect on me, on Pharo Cattle Company and on the entire beef industry.

Although Chip has an excellent understanding of the minute details of beef production, he likes to keep everything as simple as possible.   Nature has always been Chip’s example and teacher.   He thinks cows should be able to produce and reproduce without any outside inputs.   If one can do it, they all should be able to do it.

In the mid-1990s… we were giving our cows a protein supplement three times a week for 30 days prior to calving.   We did this because that is what we thought we had to do with cows grazing short, dormant grass all winter.   I remember a cow (Angel 382) who wouldn’t even look up when we came to feed the range cubes.   She continued to graze – even though all of the other cows were frantically running to the pickup.

This cow reminded me of what Chip had told me many times, “If one can do it, they all should be able to do it.”   I decided to eliminate all protein supplementation.   I remember one university expert advising me against taking such drastic actions.   He said, “We both know the protein level of your winter grass is very low.   According to the book, you need to supplement some protein.”   I nodded my head, but ignored his advice… and I got away with it.

Do you know why I was able to ignore his advice and get away with it?   I got away with it because not one of my cows had read the book the university guy was referring to.   They didn’t know any better.   Who wrote the book anyway?

I’m sure some cows eventually fell out of our herd after we discontinued providing a protein supplement.   Most of the cows, however, were not affected.   This is how you make genetic improvement and progress.   If you never take away inputs, you will never know which cows can survive without inputs.   Over the years, we have essentially eliminated all outside inputs with the exception of salt and mineral.   I know a few PCC customers who have eliminated mineral supplementation.

Recently, I have taken Chip’s “If one can do it…” statement to a different level.   I have thought about how successful and profitable most PCC customers are in comparison to their neighbors.

What’s the difference between PCC customers and their neighbors?   The primary difference is that PCC customers are focused on increasing production per acre, while their neighbors continue to be focused on increasing production per animal.   There is a BIG difference!   If some cow-calf producers can do it, others should be able to do it.

Quote Worth Re-Quoting –

“The men who succeed are the efficient few.   They are the few who have the ambition and the will power to develop themselves.”   ~ Robert Burton (1577 – 1640)

Replacing the Monkey –

By Kit Pharo

The PCC Discussion Group recently had a very interesting discussion that tied in very well with the “Woe is Me” article in last week’s PCC Update.   While most people know what they should do, very few actually follow through.   Why is that?   What prevents most people from making the changes they know they should make?  I will share a few high points from this discussion.

The discussion thread was started by Jim Gerrish, who is a world-renown grazing expert.   Jim discussed two clients he had worked with.   He helped one client double his carrying capacity and reduce hay feeding by 60% in just three years.   Since the infrastructure required to do this cost $36 per acre, this client essentially purchased another 8000-acre ranch for $36 per acre.   Rangeland in that area is currently selling for $1000 per acre.   That was a no-brainer.

Jim worked with another client who had a 30,000-acre ranch.   Jim said, “I am confident we can double the carrying capacity on this ranch similar to what we did on the other project.   Spread across the 30,000 acres, that is a stock water and fence infrastructure cost of less than $40 per acre.”   He went on to say, “That is the equivalent of buying another 30,000-acre ranch without closing costs, additional taxes, or all the other associated overheads for less than $40 per acre when the prevailing land cost in that area for similar rangeland is about $800 per acre.”   Although the client understood the possibilities, he decided not to go forward with the project.

Doug Ferguson, who lives in Nebraska and is a very active and outside-the-box contributor to the PCC Discussion Group, responded by saying, “Jim, I have spent several years studying the subconscious mind and paradigms – and how they affect our results.   I’ll try to condense what I have learned.”

Doug went on to say, “What you ran into with the second rancher is called the Terror Barrier.   He probably understood it, and gets it.   So, what is stopping him?   His old paradigm.   The old paradigm is what keeps us from doing what we know we should do.

“The second rancher has the knowledge and you gave him a simple plan to follow.   But then what I call the Monkey Mind kicks in.   The monkey represents the old paradigm – and that monkey talks a lot.   He’s going to put up one hell of a fight because he doesn’t want to be replaced by a different monkey.

“So, the monkey says things like: That’s a lot of money.   How are you going to pay that off?   What if there is a drought in a couple years and you have to destock?   What are you going to do then?   People will laugh at you because you spent all this money to increase stocking rate and you ended up destocking.   You’ll never be able to show your face in public again.

“The monkey may go a different route.   Fear of success: What if this works?   If your stocking rate doubles, where are you going to get the stock?   Can you afford to buy that many cows?   That’s a big risk putting all those dollars out there.”

Doug concluded this part of his discourse by saying, “The second producer was on board and fired up right until the monkey started talking.   Then he gets scared, hits the Terror Barrier and goes right back to his old paradigm – with results he is comfortable with.

“Paradigms are a multitude of habits.   Habits are hard to change.   That reminds me of a great quote that ties in with what Kit is always preaching, ‘In times of change, the learners inherit the earth, while the learned find themselves beautifully equipped to deal with a world that no longer exists’”

It is not easy to replace the old monkey.   It is a bit scary and a lot uncomfortable.   Nevertheless, monkeys must be replaced every now and then if we want to achieve true happiness and success.

Quote Worth Re-Quoting –

“Let us not be content to wait and see what will happen, but give us the determination to make the right things happen.”   ~ Horace Mann

“The cure for boredom is curiosity.   There is no cure for curiosity.”   ~ Ellen Parr

 

Want To Keep It? Then Build It To Sell It.

by Dave Pratt RMC

Stan Parsons wrote, “If you want to be a cowboy get a job.” A business owner’s job isn’t to put up hay, work cattle, or build fence. It is to build a business.

We hire employees to produce results that contribute to customer and owner value. When business owners hire themselves to work in their own businesses, it’s different. You might think that by hiring yourself you’ll save money, but owners should be paying themselves whatever it would cost to replace themselves. Like their employees, business owners should be fairly compensated for the results they produce, but they need to produce different results than their employees.

Rather than focusing on customer and owner value, business owners must focus on documenting how the business produces customer and owner value. They need to create systems through which others can produce those results consistently.

In the E-Myth Revisited, Michael Gerber explains that the true product of a business is the business itself and that the primary purpose of creating a business is to sell it!

At first you might think these principles don’t apply to ranching. I doubt that when the next generation assumes ownership of the family ranch, it’s with the intention of selling out.  But if your ranch is a business, Gerber’s principles do apply.

Imagine you have a truck that you’re going to sell. Before you put a “For Sale” sign in the window you’ll probably tune it up and wash it. You might even get it looking so good and running so well that you have second thoughts about selling it.

Gerber isn’t insisting that you sell your business. He is suggesting that you treat your business like that truck, tuning up it up so that it runs so well that you could sell it. But, because it runs so well, you decide to keep it.

Most ranches are not sold as businesses. They are sold as collections of very expensive assets. A business is more than the hard assets it owns. A business includes the systems through which those assets are used to produce customer and owner value, including cash flow and sustainable profit. It is the owner who is responsible for creating those systems.

Those systems might be step-by-step procedures for working cattle at branding, sending out a client newsletter, or holding WOTB meetings. The system could also be a simple checklist for making operational level decisions (e.g. When do we move the herd to another paddock? What are the selection criteria we use for bulls?).

Want to keep the business in the family, generation after generation? Then build it as though you were going to sell it!

Productivity Isn’t About Time Management. It’s About Attention Management.

“Time management” is not a solution — it’s actually part of the problem.

A few years ago during a break in a leadership class I was teaching, a manager named Michael walked up looking unsettled. His boss had told him he needed to be more productive, so he had spent a few hours analyzing how he spent his time. He had already cut his nonessential meetings. He couldn’t find any tasks to drop from his calendar. He didn’t see an obvious way to do them more efficiently.

“This is going to sound like a joke, but it’s not,” he confessed. “My only idea is to drink less water so I don’t have to go to the bathroom so many times.”

We live in a culture obsessed with personal productivity. We devour books on getting things done and dream of four-hour workweeks. We worship at the altar of hustle and boast about being busy. The key to getting things done, we’re often told, is time management. If you could just plan your schedule better, you could reach productivity nirvana.

But after two decades of studying productivity, I’ve become convinced that time management is not a solution — it’s actually part of the problem.

For most of my career, the most frequent question I’ve gotten is: “How do I get more done?” Sometimes people ask because they know I’m an organizational psychologist, and productivity is one of my areas of expertise. More often they’re asking because they’ve read in a New York Times article or a popular book that I get a lot done.

But the truth is that I don’t feel very productive. I’m constantly falling short of my daily goals for progress, so I’ve struggled to answer the question. It wasn’t until that conversation with Michael that it dawned on me: Being prolific is not about time management. There are a limited number of hours in the day, and focusing on time management just makes us more aware of how many of those hours we waste.

A better option is attention management: Prioritize the people and projects that matter, and it won’t matter how long anything takes.

Attention management is the art of focusing on getting things done for the right reasons, in the right places and at the right moments.

According to conventional wisdom about time management, you’re supposed to set goals for when you want to finish a task. I decided to try it for this article. The target was 1,200 words, so I sat down at 8 a.m. and gave myself three hours, which would allow me to write at the leisurely pace of six words per minute. I then spent the next six minutes writing a grand total of zero words, staring at a flashing cursor. The only task I completed was a Google search of whether the cursor was named in honor of all the writers who have cursed it. (Yes, I know you’re mocking me, you poor blinking excuse for a rectangle.) Then I wondered how many words I actually type per minute and took a typing test. I wasn’t happy with my score, so I took another … and another.

Eventually I got frustrated and shifted to attention management. E.B. White once wrote: “I arise in the morning torn between a desire to improve (or save) the world and a desire to enjoy (or savor) the world. This makes it hard to plan the day.” But in my research, I’ve found that productive people don’t agonize about which desire to pursue. They go after both simultaneously, gravitating toward projects that are personally interesting and socially meaningful.

So instead of focusing on how quickly I wanted to finish this article, I asked why I agreed to write it in the first place: I might learn something new when synthesizing the research; I’d finally have somewhere to point people when they ask about productivity; and it might help some of those people. That led me to start thinking about specific people who might read this, which reminded me of Michael. Boom.

Often our productivity struggles are caused not by a lack of efficiency, but a lack of motivation. Productivity isn’t a virtue. It’s a means to an end. It’s only virtuous if the end is worthy. If productivity is your goal, you have to rely on willpower to push yourself to get a task done. If you pay attention to why you’re excited about the project and who will benefit from it, you’ll be naturally pulled into it by intrinsic motivation.

Attention management also involves noticing where you get things done. I grew up in Michigan, and when I went back there for grad school, I tried to convince a friend from the West Coast to join me.

“It’s too cold and gray,” she said after a visit during a snowstorm. She then went off to Stanford. That next Michigan winter was the coldest, grayest season I could remember, and I have never been more productive. There was nothing to do but work!

Sure enough, a series of studies led by Julia Lee (now at Michigan) show that bad weather is good for productivity because we’re less likely to be distracted by the thought of going outside. Researchers found that on days when it rained, Japanese bank employees finished transactions faster, and on days when the weather was bad in America, people were more efficient in correcting spelling errors in an essay. With that in mind, I deliberately waited to start writing this article until the day after a snowstorm, when the melting slush outside my window was not appealing.

My favorite part of attention management is the when. Most of our productivity challenges are with tasks that we don’t want to do but that we need to do. For years, I thought the way to handle those tasks was to do them right after the most interesting tasks so the energy would spill over. Then my colleague Jihae Shin and I ran a study in a Korean department store and found that when employees had a highly interesting task, they actually performed worse on their most boring tasks.

One possible reason is what’s called attention residue: Your mind keeps wandering back to the interesting task, disrupting your focus on the boring task. But in an experiment with Americans watching videos and then doing a dull data entry task, we found support for a different mechanism: contrast effects. A fascinating or funny video makes the data entry task seem even more excruciating, the same way a sweet dessert makes a sour vegetable taste yuckier. So if you’re trying to power through a boring task, do it after a moderately interesting one, and save your most exciting task as a reward for afterward. It’s not about time; it’s about timing.

I’m guessing your goal is not just to be more productive — you probably want to be creative, too.

The stumbling block is that productivity and creativity demand opposite attention management strategies. Productivity is fueled by raising attentional filters to keep unrelated or distracting thoughts out. But creativity is fueled by lowering attentional filters to let those thoughts in.

How do you get the best of both worlds? In his book “When,” Dan Pink writes about evidence that your circadian rhythm can help you figure out the right time to do your productive and creative work. If you’re a morning person, you should do your analytical work early when you’re at peak alertness; your routine tasks around lunchtime in your trough; and your creative work in the late afternoon or evening when you’re more likely to do nonlinear thinking. If you’re more of a night owl, you might be better off flipping creative projects to your fuzzy mornings and analytical tasks to your clearest-eyed late afternoon and evening moments. It’s not time management, because you might spend the same amount of time on the tasks even after you rearrange your schedule. It’s attention management: You’re noticing the order of tasks that works for you and adjusting accordingly.

Paying attention to timing management also means thinking differently about how you plan your work. I love Paul Graham’s suggestion to divide the week into “maker days” and “manager days.”

On manager days, you hold your meetings and calls. On maker days, you block out time to be productive and creative, knowing you’ll be free from distractions that would normally interrupt your flow. Unfortunately, few of us have the luxury to manage every week that way, which means we need to find ways to carve out maker moments.

 

Time management says we should eliminate distractions altogether — not just interruptions from other people, but also the times when we interrupt ourselves. If you’re getting sucked into social media, you’d need to stop cold turkey. Attention management offers an alternative: Be thoughtful about the timing of those distractions.

When I was in middle school, I lost a whole Saturday to watching TV and I felt pretty disgusted with myself afterward. But I didn’t give up TV. I made a rule: I would only turn on the TV if I already knew what I wanted to watch. I’ve adopted the same policy on social media: In times when I could be working, I only log in to share content. I save scrolling for windows when I couldn’t be getting anything done, like waiting for a flight to take off or cooling down after exercise.

Most of the writers I know wait for maker days to start writing, believing they need at least four or six hours to dig into a big idea or a complex problem. But there’s evidence that binge writers actually get less done than people who write in shorter bursts. You can make meaningful progress in surprisingly small intervals: When graduate students were trained to write in 15-minute intervals, they finished their dissertations faster.

If you’re trying to be more productive, don’t analyze how you spend your time. Pay attention to what consumes your attention. I’ve just looked at the clock for the first time since I thought of the story about Michael. It’s 10:36 a.m., and I’ve gone about 500 words over my target. I’ll leave it to you to decide whether the past 156 minutes were a good use of my attention — and whether the past few minutes of reading this were a good use of yours.

Which brings me to one more thought: I’m pretty sure there’s an eighth habit of highly effective people. They don’t spend all their time reading about the seven habits of highly effective people.

Adam Grant, an organizational psychologist at Wharton, is the author of “Originals.” For more on building your career and connections, listen to WorkLife with Adam Grant, a TED original podcast on the science of making work not suck. You can find WorkLife on Apple Podcasts, or on your favorite podcast platform.