Tag Archives: production

No One Owes You A Living!

 

The world, including the US, does not owe you a living. Or as Dave Ramsey would say, “You Are NOT Entitled To Anything“. If you dream to make a widget and insist that everyone must support you in your dream and insure that you make a full time living making that widget, then i fear you may be sorely disappointed.  Especially, if your widget making imposes on others’ freedom and property rights.

There are very few, if any, financially successful people with no debt and have, or are building wealth, working only one job.  Often the most successful have at least 2 or 3 other gigs on the side going.  (Even Warren Buffet has several unrelated income streams going!)  When you are in your teens, twenties, and even into thirties, you have energy, vision,  and motivation that enable you to put in 10-16 hours a day, 6 days a week.  This allows you to save, build equity, and work towards your dream job if you aren’t already doing that.  When you are older and that energy level drops, hopefully those side gigs are the money invested which are then working for you rather than you working for it.

I recently wrote a blog which told of the near impossibility of a person to get into farming or ranching these days.  This is largely due to the out of balance cost of land vs its productive value.  However, it is not yet impossible to farm and build wealth – even without incurring massive debt!  It may take longer, however.  And, i know of absolutely no one – young or old, in the present or in the past- who can farm or ranch (or any other business for that matter) full time without some sort of side gig.  Read stories of old timers – they were blacksmiths, carpenters, mechanics, traders, transportation specialists, suppliers; any skill they could put to use for pay was engaged.  Wives farmed alongside their husbands, raised the children, and often had a couple side gigs as well.  (Yes, i know that many women are farmers and ranchers, i am one, but also raised my own children, managed the household, and help with the farm.)  It is the same today – if you want to farm (or start any business for that matter) you’d better put a sharp pencil to how you’ll put food on the table and a roof over your head.  Don’t incur debt and make sure you have some savings.  (a borrower is always slave to the lender).  Operational farm debt is as bad as school loans.  Debt for building  a depreciating asset may be the worst of all!  What if something happens to you?  make sure you have plenty of life insurance!  Liability, maintenance, disease, accident associated with buildings and machinery are expensive and ongoing.  Once debt is incurred for a single purpose gadget, you have to keep it going or you may default or leave your family with a ball and chain which seldom adds value (it may actually devalue) to your property. Better yet, don’t go into debt.

Keep your paying job and save your money before you buy a single acre or cow or gadget. Many ranchers today are leasing both land and cattle which can be a great way to get started with very little investment or risk.  Best book i’ve read on this is Greg Judy’s book, No Risk Ranching.  Maybe you won’t have the exact same opportunities that Greg has, but use your imagination – maybe you’ll have to move – as Allan Nation, founder and former editor of Stockman Grass Farmer, used to say, “Everyone has an unfair advantage.”  Figure out yours and put your best foot forward.

Many farmers today still abide by the ways of Earl Butz to ‘get big or get out’ and we now have such an abundance and overproduction of all products that prices continue to slide.  Yet, the mantra continues to be ‘produce more’  and use the economy of scale to maximise profits.  That may good to a point, but the cost to the environment has been substantial by farming ‘fence row to fence row’  and with government subsidies now firmly entrenched there is less risk of a ‘failed crop’ resulting in going broke regardless of debt load or lack of wise financial planning.

I’m not espousing a return to farmers falling out due to the vagaries of weather, political machinations, or burdensome regulations.  Without subsidies, food, fiber, energy prices could soar to the level of parity and the consumer would certainly cry ‘foul’.  But, we all must remember that the economic  rule of supply and demand may cause us to consider better management practices.

There is the concept of focusing on profit rather than production.  If it is possible to make more money producing 120 bushel corn to the acre rather than 200 bushels to the acre, would that be something to consider?  what is the cost to the land and quality of life to produce 200 and even 300 bushels to the acre?  Can i do a better job of regenerating and improving the soil i have to increase pounds, bushels per acre and lower cost as well?  There are a lot of opportunities and new/old practices to learn – the hard part is keeping it simple and CHANGE!  This is a head issue – don’t be a stiff necked people.

Speaking of quality of life – how have you organised your dream?  does it enhance and edify others?  or detract from the lives of others?  is it sustainable?  is it regenerative?  can you keep doing this for the next 60 years?   If not, it’s not sustainable and you had better have a plan in place for the future, less strong, less energetic you.  Will your model rely on unpaid labor of yourself or your family?

Happy Planning!

 

Proverbs 6:

1My son, if you have put up security for your neighbor, have given your pledge for a stranger, 2if you are snared in the words of your mouth, caught in the words of your mouth, 3then do this, my son, and save yourself, for you have come into the hand of your neighbor:  go, hasten,a and plead urgently with your neighbor.

4Give your eyes no sleep and your eyelids no slumber; 5save yourself like a gazelle from the hand of the hunter,blike a bird from the hand of the fowler.

6Go to the ant, O sluggard; consider her ways, and be wise. 7Without having any chief, officer, or ruler, 8she prepares her bread in summer and gathers her food in harvest.

9How long will you lie there, O sluggard? When will you arise from your sleep? 10A little sleep, a little slumber, a little folding of the hands to rest, 11and poverty will come upon you like a robber, and want like an armed man.

12A worthless person, a wicked man, goes about with crooked speech, 13winks with his eyes, signalsc with his feet, points with his finger, 14with perverted heart devises evil,
continually sowing discord; 15therefore calamity will come upon him suddenly; in a moment he will be broken beyond healing.

16There are six things that the LORD hates, seven that are an abomination to him:
17haughty eyes, a lying tongue, and hands that shed innocent blood, 18a heart that devises wicked plans, feet that make haste to run to evil, 19a false witness who breathes out lies, and one who sows discord among brothers.

 

Fertilize with Hay

Going along with my previous post, this article appeared in the 24 March issue of Midwest Marketer and tickled my ears.  

Check out this Bale Grazing Calculator!

This primer on bale grazing is excellent, though dated.  Since its publication, i think producers have found that plastic twine and netwrapping materials need to be removed before the livestock have access to the bales.

 

Fertilize fields with hay

Winter-feeding beef cattle on hay and pasture fields can minimize labor of hauling manure while still distributing crop nutrients.

Fertilize fields with hay

Many Beef cow-calf producers feed hay rations to cows in confinement settings during the winter months. Feeding hay on fields away from the barn is gaining popularity. Labor and machinery requirements of hauling manure can be minimized by winter-feeding beef cattle on fields. Care should be taken with feeding practices to ensure that crop nutrients are evenly distributed.

Feeding on fields is typically accomplished by strategically spacing hay bales around the field either with or without hay rings frequently referred to as bale grazing. Another feeding method on fields includes unrolling bales on the ground. Unrolling bales on the ground typically allows for better crop nutrient distribution. Spacing bales across a field creates a situation of concentrated nutrients from manure and waste hay in the areas where bales are fed. Over time, nutrient distribution can equalize with good grazing and management practices to promote soil health. Nutrients can be distributed by livestock and soil microbes over time, however, uniform nutrient spreading is more ideal for crop production yields.

Utilizing the various feeding methods can result in a wide range of hay waste. Producers need to weigh cost savings associated with winter feeding on fields and feed loss with any given feeding method.  Feeding on fields allows nearly 100 percent nutrient cycling into the soil for both phosphorous and potassium while nitrogen capture will be variable. Consequently, hay waste is not a 100 percent loss. Much of the crop nutrients from hay waste is available to the next growing crop. If hay is harvested on the farm, nutrients are simply redistributed to the feeding area. If hay is purchased, those nutrients are added into the farm nutrient pool.

Purchasing hay and bringing nutrients onto the farm can be a cost effective addition of fertilizer to the farm. The vast majority of fertilizer costs for crop production are for application of nitrogen, phosphorous and potassium. Producers should use a feed analysis of purchased feed to determine its fertilizer value. Producers can use dry matter, crude protein, phosphorous and potassium content to determine fertilizer value. Table 1. demonstrates the calculations of converting an example feed analysis to the quantities of fertilizer nutrients in a 1000 lb. bale of hay. Using an example of dry hay containing 85 percent dry matter, 10.6 percent crude protein, 0.18 percent phosphorous and 1.6 percent potassium content, the following value can be calculated:

Dry feeds will usually contain 10-15 percent moisture or 85-90 percent dry matter. A 1000 lb. bale of dry hay with 15 percent moisture will contain 850 lb. of dry matter. Ensiled feeds will contain considerably more moisture.

Protein contains 16 percent nitrogen. Crude protein is calculated by multiplying the percent nitrogen by a conversion multiplier of 6.25. From the example hay analysis, 10.6 percent crude protein can be multiplied by 0.16 or divided by 6.25 to equal a rounded off 1.7 percent nitrogen. The nitrogen content multiplied by the dry hay bale weight of 850 lb. equals 14.45 lb. of nitrogen in the bale of hay. The percent phosphorous (0.18 percent) and potassium (1.6 percent) are also multiplied by the 850 lb. of dry matter hay to equal 1.53 lb. of phosphorous and 13.6 lb. of potassium.

Producers must be aware of the differences between feed analysis and fertilizer analysis. Feed analysis are recorded as percent crude protein, elemental phosphorous, and elemental potassium. Fertilizer analysis is recorded as percent elemental nitrogen, phosphate (P2O5), and potash (K2O). Using Upper Peninsula of Michigan fertilizer prices, nitrogen is valued at $0.47/lb. N, phosphate at $0.35/lb. of P2O5, and potash at $0.325/lb. K2O.

Table 2. demonstrates the fertilizer value contained in a 1000 lb. bale of hay. Fifty percent of the nitrogen and 85 percent of the phosphate and potash are recycled through cattle back into the soil and is used for future plant growth. Some of the nutrients are lost to volatilization into the atmosphere and are retained in the animal. Referring back to the example, 50 percent of the 14.45 lb. of nitrogen contained in the hay gives 7.2 lb. of nitrogen into the soil for plant uptake. The 7.2 lb. is multiplied by $0.47/lb. to value the nitrogen at $3.38. Elemental phosphorous and potassium need to be converted to percent phosphate and potash. Elemental phosphorous 1.53 lb. is multiplied by a factor of 2.29 to equal 3.5 lb. of phosphate. Elemental potassium 13.6 lb. is multiplied by a factor of 1.2 to equal 16.3 lb. of potash. Eighty-five percent of both the phosphate and potash will be recycled into the soil for future plant uptake then multiplied by their respective unit price gives a value of $1.04 of phosphate and $2.65 of potash.

The calculated fertilizer value of the 1000 lb. bale of hay is worth $7.07/bale or $14.14/ton. Current value of this quality of hay is roughly $80-100 per ton. In this example, about 15 percent of the value of average beef quality hay can be attributed to its fertilizer value. Farms that are marginal on soil nutrient levels may consider purchasing at least a portion of their feed to increase crop nutrients on the farm and replace some portion of purchased commercial fertilizer.

Feeding hay on fields during the winter months has several advantages that beef producers can use to offset some of the production costs associated with beef production. For more information regarding the impact of feeding hay on pasture and hay fields, contact MSU Extension Educators Frank Wardynski, 906-884-4386 or wardynsk@anr.msu.edu or Jim Isleib, 906-387-2530 or isleibj@anr.msu.edu.

Ultimate Test of Sustainability?

Will Your Operation Succeed to the Next Generation?

It’s been said that a farm or ranch is not truly sustainable unless it employs at least two generations. I believe it’s imperative that as producers we recognize that even if we become both ecologically and economically sustainable, but fail to pass our mission and work on to the next generation then we’ve failed the ultimate test of sustainability.

According to the most recent census of agriculture: from 2007 to 2012 there was a decline of over 95,000 farms in America. A quick look at the current trends tell us that most of today’s family farms and ranches will not succeed to the next generation.

I believe there is hope for a bright future.

This hope is not based on wishful thinking but rather a ground swelling of innovative farmers that are indeed beating the odds and are building thriving operations. A few names you may recognize are operations like Joel Salatin’s Polyface Farms in Virginia, Gabe & Paul Brown of Nourished By Nature in North Dakota, as well as Will Harris’s White Oak Pastures in Southern Georgia. These are just a few of the many operations that are shining a bright beacon of hope to the greater agricultural community.

If you visit any of these operations there is a very obvious, but all too often overlooked, common thread of success. Each of these operations spring forth with a multigenerational team of people that bring intellectual diversity to each acre of their land.

Most of us in agriculture are at a road block because we’re too narrowly focused on a production mindset and we’ve lost sight of people and relationships. We must make the critical distinction that people create profits – profits don’t create people.

Those of us pursuing regenerative agriculture understand the value that biological diversity brings to our land, but we often forget about the value that human creativity and diverse intellectual capital can bring to our land.

At Seven Sons Farms we’ve stacked multiple enterprises on only 550 acres. By creating synergistic relations between our land, livestock and people, we are able to employee over 10 full time people as well as several part-time positions. We refer to our team as our intellectual human polyculture:

Human Pollyculture

Any successful leader knows that their organization’s most valuable asset is having the right people in the right place.

Zig Ziglar offered this belief: “You don’t build a business – you build people – and then people build your business.”

If the above statement is true then it begs the question – how is agriculture as a whole doing at building people? The graph below shows a plummeting decline in the number of human minds in agriculture.

The erosion of human capital:

1482013689_5855bbf99fc0d.jpg

SOURCES: Agriculture in the Classroom, 2014; BLS, 2014; NASS, 2014a,b; U.S. Census Bureau, 2014a,b; USDA, 2012

Over the course of time we have eroded much of our land’s precious resources in the form of minerals and soil organic matter. But no greater erosion has taken place than the depletion of human minds from each acre of our land. In the early 1970s we reached a critical point – for the first time in the history of American agriculture the number of human minds per acre involved in agriculture fell to a negative ratio.

Interestingly, it was around this same time period that the farmer’s share of the food dollar began to plummet as well.

The erosion of the food dollar:

There are many factors at play but it only stands to reason that if we want to capture a wider diversity of the food dollar, it requires wider diversity of intellectual talents. This is exactly why at Seven Sons Farms we have sought to foster synergistic relationships with people that enable us to capture a greater diversity of the food dollar.

To sum up the past half century of agriculture, one could say that in pursuit of production, we’ve attempted to trade people for profit. In the end we’ve yielded neither profit nor people.

At Seven Sons we believe that the people connected to the land represent the most valuable asset a farm could ever possess. To illustrate this point, imagine for just a moment if you were to remove Joel Salatin, Gabe Brown, or Will Harris from their respective farms. These farms would look nothing like what they do today without the creativity and vision that each of these leaders bring to the land that they are called to steward. The same holds true for your farm as well. The beliefs you operate from, the vision you put forth and the people you inspire to join you – these are the game changers that will empower your operation to beat the odds and succeed to the next generation.

There are unprecedented opportunities ahead of us…

I believe we have unprecedented opportunities ahead of us when you consider many of the recent breakthroughs in regenerative agriculture as well as the rapid shifts we’re seeing in our food culture.

So if you’re looking to exchange new ideas and be challenged to think outside old paradigms then I encourage you to join myself and hundreds of likeminded people at this year’s Grassfed Exchange in Albany New York.

The very mission of the Grassfed Exchange is to catalyze the exchange of practical knowledge, ideas, and strategies that you can take home and begin applying on your operation. Bring a family member, friend or budding young agripreneur who is looking for their way forward in agriculture.

What The Grassfed Exchange Is About:
Click here to register for the 2017 Grassfed Exchange

Reprinted from Grassfed Exchange

The Road Ahead

Reprinted in part from Farm Journal, December 2015.

Reassess, Dump Loser Assets

Smart farmers will survive the challenges that arise in 2016.  Just as they’ve done in the past, they’ll reassess their spending and recognize cash is king.  I also recommend the following:

Understand true cost of production.  Account for every dollar.  It’s how you’ll quantify whether you’re headed for profit, loss, or breakeven.  Don’t overlook your true living expenses, including what you set aside for college and retirement.  “Tis the year for living frugally.

Scrutinize every line item in your budget.  It’s the only way you can stop haemorrhaging cash and become leaner.  Is there a way to cut your overall costs?  I challenge you to cut all expenses by 1%.  It might seem small, but I’ve witnessed this exercise lead to six-figure savings.  Question input costs and negotiate with suppliers.

Be sure to liquidate all non-productive assets.  You can generate thousands of dollars by selling losers.

Stay in contact with your lender.  They realise down cycles occur.  The last thing you want to do in tough times is cut them off.

article by Peter Martin, Finance & Growth Expert, Farm Journal magazine.

My comments:  Just because an asset is no longer working in your operation, doesn’t necessarily mean it’s a ‘loser’ for everyone.  Sometimes our goals change and someone else needs exactly what we no longer need.  Of course, if the asset is junk,  be sure to sell it that way.