Tag Archives: money

Ranching for Profit

I always chuckle a bit when i type out ‘ranching for profit’ because it’s almost an oxymoron!  Yet, David Pratt, owner of Ranch Management Consultants and Ranching for Profit instructor, contends that there is such a beast if we ranchers use sound financial and economic principles.

Mr Pratt’s most recent blog discusses using debt properly.  Now, okay, my mind goes immediately to the song, ‘Neither a borrower, nor a lender be.  Do not forget, stay out of debt.’  Which then led me to wonder where that came from.  I knew it was from Shakespeare’s ‘Hamlet’ (Polonius counsels his son, Laertes in Act-I, Scene-III of William Shakespeare’s play, Hamlet by saying, “Neither a borrower nor a lender be; / For loan oft loses both itself and friend.”  But what about the tune?

Completely surprised when i discovered that it was created and made famous on the TV sitcom, Gilligan’s Island, which i watched religiously when i was young.  SO FUNNY!  It is sung to the tune of the Toreador Song in Bizet’s Carmen.

The Bible also has advice on debt and teaches us to guard against being in debt, likening it to slavery and bondage.  However, debt does not seem to be a sin, but a tool to earn money wisely, but counting the cost before taking on the burden.

May 9, 2018
ProfitTips
from the Ranching for Profit School
A lot of people tell me that they want to be “debt free.” They are tired of making big interest payments on land, livestock, machinery and their operating note. They have had too many sleepless nights worrying about making the next payment. They believe that if they didn’t have to borrow money they would be more profitable and financially secure.
But the proper use of debt makes us more profitable, not less. And being debt free doesn’t make us financially secure. In fact, for most of us, short of winning the lottery, the appropriate use of debt is our only realistic path to financial security.
The problem isn’t debt, it’s our misuse of debt. The two most common ways we misuse debt are:
  1. We put finance first and economics a distant second
  2. We use debt on the wrong things.
Using debt effectively begins with understanding the difference between economics and finance. It boils down to this: In economics we ask, “Is this profitable?” In finance we ask, “Can I afford to do it?” If we are going to be smart about our use of debt, economics must come first. If it isn’t profitable you don’t have to worry about how you’ll pay for it, because you shouldn’t do it in the first place.
Smart Debt
Economics vs Finance
When RFP grads evaluate the profitability of a livestock enterprise they include opportunity interest on the herd as a direct cost in the calculation. If the enterprise has a healthy gross margin it tells us that borrowing money to expand the herd will increase profit. If we haven’t included opportunity interest in our calculation we can’t be sure if expanding the herd is a good idea.
Opportunity Costs
The other problem is that people use debt on the wrong things. There are two primary places where we put money in our businesses: fixed assets and working capital. Simply put, fixed assets are things we intend to keep (e.g. land, cows, infrastructure, vehicles, equipment). Working capital is the money tied up in things we intend to sell (e.g. calves). Most of us have most of our money invested in fixed assets. This is the biggest financial problem in agriculture. It’s a problem because when most of our money is tied up in things we intend to keep, we have relatively little to sell and generate very little income relative to the value of our assets. Making matters worse, a lot of the income that we do create gets spent maintaining the fixed assets. That’s why most ranchers are wealthy on their balance sheet and broke in their bank account.
Borrowing to buy fixed assets may be a smart long-term investment strategy, but it might cause you to go belly-up in the short term. We’d be better off to use debt to buy assets that directly produce income.
We shouldn’t be afraid to borrow money, provided the economics of our enterprise is rock-solid and we use the borrowed money to buy income producing assets.
2018 – 2019 School Schedule
Sept. 9-15, 2018
Boise, ID
at Holiday Inn Express
Dec. 2-8, 2018
Abilene, TX
at MCM Elegante Suites
Jan. 6-12, 2019
Colorado Springs, CO
at Radisson
Jan. 13-19, 2019
Billings, MT
at Billings Hotel
Jan. 20-26, 2019
Rapid City, SD
at Best Western Ramkota

Tidiness Tips

  1. Make your bed, hang up your clothes, shut closet door, drawers, straighten rug
  2. If you take it out, put it away – where it belongs!
  3. If you make a mess – clean it up.
  4. When you get out of the car – take all your stuff and rubbish with you.
  5. Deal with paper that comes into your house daily – mostly rubbish usually – which means deep six it immediately – no piling.
  6. Wash the dishes, let dry, put them away along with the drain rack.  Clean and shine sink/faucet/handles.
  7. Clear and wipe counters, sinks, back splash, faucets every day.  Just takes a moment – just do it.
  8. Keep laundry current – when hamper is full – wash the clothes, dry or hang them to dry.  Fold them and put away.  Consider washing a load everyday.
  9. Throw away things that don’t work, give away or sell things you don’t use.
  10. Some tasks simply take time and need doing at least once a week.  Cleaning showers, bathtubs, toilets, vacuuming or washing floors, dusting ceilings, washing walls, windows, sills.  Some prefer scheduling the same time each week to do all or choose one or more to do each day until it’s all done.
  11. Consider carefully whether or not you need more storage units or shelves vs just getting rid of extra stuff.  Less stuff; less to clean.

 

Benefits:

  1. Company can drop in and you won’t be embarrassed or feel the need to apologise for filth.
  2. Having to unload papers and junk from a chair to allow a guest to be seated or clearing papers from the dining table or washing it off before serving puts your guests at odds with feeling welcome – already they feel guilty for causing you extra work on their behalf.
  3. Clean and organised eliminates the stress caused by a chaotic environment.
  4. Putting things away saves time in looking for ‘lost’ items.  “A place for everything and everything in its place.”
  5. Cleaning and keeping things clean often increases its useful life in addition to it looking nice during its life in your home or property.
  6. Being clutter free and organised saves time/money/health.

 

IMG-3891
I’m not a fan of buying shelving or other storage units – usually that just means i’ve got too much stuff.  However, when renovating our old house and enduring NO shelves in the lower cupboards, after 3 years, i finally relented to purchasing this nice inexpensive unit and now, finding stuff is oh such joy!  This is actually called a 2-tier shoe rack, but works perfectly in this space for my needs.  

What are your tips for keeping your house, job, and life neat and tidy?  What are your challenges?

Cheers!

tauna

 

Getting Into the Cattle Business: Buying a Ranch and Making it Pay

Solid figures to help me decide whether or not to pursue any land purchases should any come up for sale. Farms in Linn County, MO rarely change hands.

Land & Livestock International, Inc.

By Dr. Jimmy T (Gunny) LaBaume, President & CEO, Land & Livestock International, Inc.

What and Why?

First, do you want to own a ranch or do you just want to be in the cattle business? Did you know that you can enter the cattle business without owning either land or cattle?

"Waiting for a Chinnook" Also known ...
“Waiting for a Chinnook” Also known as “Last of the 5000”

You are already thinking, “This guy has lost his mind!” But seriously, you can. You can lease land and take in pasture cattle–i.e. you can pasture someone else’s cattle on leased land for a monthly per head fee. Once you get a reputation for paying your bills and taking good care of other peoples land, ranch lease opportunities will come to you. You won’t have to look for them.

This is an excellent way for young prospective ranchers to get into the business without having to…

View original post 2,118 more words

Time Management Lesson

Too many times I engage in projects which end up as time wasted. Case in point this 12×12 chicken tractor. After spending time and money on it, I’m now faced with more time wasted disassembling it. I have no intention of raising layers on pasture again and it’s too awkward to move very far and a waste of space to store it. The high quality tarp from Troyer Tarp will be stored, however, since it is a $100 item. I’m learning, albeit slowly and with the wisdom my children bestow upon me, to utilize my time more wisely.

Cheers!

tauna

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Keeping Records

Yeah, i’ve harped before about keeping good records and tracking expenditures and income, but when i hear the same people complain about having no money to pay bills, yet when asked if they keep records, they say ‘no,’ it causes me to wonder if they just want to complain, don’t have any idea of where their money is being spent, or perhaps don’t want to know.  But, like anything, if one doesn’t make improvements, then you’ll always be able to complain about something and that is stressful.

Here’s a short article i stumbled upon.  “Make a Personal Budget and Keep Track of Spending

It’s imperative and so easy to keep track of expenses.  Most can simply use a notebook and pencil.  Even easier is to have a calculator in the mix. (Coffee optional)  Write down the amount or ask for a receipt when you stop by the coffeeshop for a latte.  Picking up a soda from a vending machine – well, you’ll have to write it down.  Whatever you need to do, keep track of even the smallest expenditure and categorise it.  THEN, you can make decisions to change and improve your financial situations.  Reimburse your cash expenditures by writing a check to maintain your petty cash stash.  Sure, you can take cash out of your paycheck each month, but it makes it more real when you have to write a check.  Keep your petty cash in balance.

This can be applied to businesses as well, but managing one’s household and personal expenses is the first step.  Personal finance record keeping should begin in the preteen years – as soon as you earn or spend money.

Cheers!

tauna

FSA Microloans

This might be a good place to look if you need to borrow funds for a small farming or marketing operation startup.

Contact your local FSA (Farm Service Agency) office if interested in a USDA microloan that can help new farmers own land. http://www.fsa.usda.gov/…/farm-loan-progra…/microloans/index

Program Description:

The focus of Microloans is on the financing needs of small, beginning farmer, niche and non-traditional farm operations, such as truck farms, farms participating in direct marketing and sales such as farmers’ markets, CSA’s (Community Supported Agriculture), restaurants and grocery stores, or those using hydroponic, aquaponic, organic and vertical growing methods. 

Cheers!

tauna

 

 

How Much Grass do Chickens Eat? Replication 1 – 3days

The opportunity cost of owning land is next to nil since the government insists on stealing our savings by keeping interest rates near 0% and printing money (inflation), so the easiest way to determine the cost of the grass consumed is by using current pasture rental rates, which in north Missouri is about $60/acre.

Too many times I read (even from producers, sometimes!) that grass is free.  Whoa, Nelly!  It is not free and, in fact, the cost of grass has sharply increased due to so much of it being ploughed up to raise more corn and soybeans.  Folks, that is not sweet corn nor edible soybeans.  This is commodity, GMO crops raised to be fed to animals like cattle, chickens, pigs, fish, horses, buffalo, and even lambs and deer!

But I digress – how much grass do pastured hens eat and how does that relate to a dozen eggs?  Hopefully, these questions can be answered at least for our management style.

By measuring the amount of forage in a small paddock before the chooks are moved in and then again after they are moved out in 3 days (during the growing season, it is imperative to move stock at least every 3 days to prevent removing too much forage, however, if you need to improve the diversity, overgrazing is a good tool to use for establishment, but it must be part of the plan).  As with any research, there are variables that are hard to control.  While we will measure the amount of feed we give them and report that, there is no way of knowing how many bugs they will eat.  We plan three replications.

Trial 1 – Replication 1 – Day 1  cool, partly sunny weather (65-70F)

Trial 1; Day 1, grass is pretty mature with only about 40% red clover.
Trial 1; Day 1, grass is pretty mature with only about 40% red clover.

Day 1 – Fourteeen mature egg laying Barred Rock hens – .039 acres with mature fescue and about 40% red clover.  Estimated forage available is 4 inches times 200 lbs of grazeable feed is 800 lbs per acre or 31.2 lbs (800 x .039).  I’ll measure what is left when we move them in 3 days to obtain what they actually consume.  Chooks will mash down a fair bit, but that is okay since that will feed the soil microbes and organisms.  We are offering 1 lb of seed cleanout consisting of wheat screenings – unsprouted.  Sprouted would be better, but for this trial, we want to know how much forage they are eating out of the pasture.

Trial 1: Day 1,  Paddock size about 1680 square feet or .39 acre. There are 14 mature hens.
Trial 1: Day 1, Paddock size about 1680 square feet or .39 acre. There are 14 mature hens. Since the mature fescue stems are too lignified for anything to eat, I do not count that as part of the forage available. So, estimating 200 lbs per inch per acre.
After 3 days, the chooks are moved to fresh paddock.  Here's the residual.  About  2 inches overall or
After 3 days, the chooks are moved to fresh paddock. Here’s the residual. About 3 inches overall which is about  1/4 of what was available.  One inch then was eaten or trampled resulting in about 31 lbs utilized by 14 chooks in 3 days.

Results:  Eggs laid: Day 1: 12 eggs, Day 2: 11 eggs Day 3: 7 eggs.  Indications are that without more grain – production decreases markedly, this may not be a bad thing – pencil out the costs and needs.

Grazing equivalent:  The 14 chooks grazed in 3 days what 1 cows would grazing in one day

Bear in mind, however, the trampling/mob effect would be entirely different since cows would likely trample more and certainly put more poop in large piles which will then cover up more grass.  With so much rain, even more grass would be destroyed.  There would also be a considerable difference in mob effect with 500 or 1000 chooks vs 14 as well.  Chickens range only up to 250 feet (extreme outer limits) from their nesting boxes, so more trampling would occur due to concentration.  I would think with that many – chooks would need moving everyday vs 3 days.

Chooks will eat far more bugs than cows.

There are several differences in the grazing impact, so just comparing the potential grazing is just for fun.

Neverthess, this experiment demonstrates that no matter the species – pastures MUST BE ALLOWED ADEQUATE REST PERIODS TO IMPROVE AND ALLOW FUTURE GRAZING!  Animal movement must be controlled and their keepers must balance animal performance and pasture production effectively.