I graduated from another buy/sell marketing school this week. This was my first lesson with teenagers. I was happy to have these two young people because our young people are the future of this industry.
We often take the next generation and say they are soft and question their driving ability. I myself am guilty and so have my generation. Maybe it happened over time. Come to think of it, no generation has a monopoly on ethics, morals, business, or business ethics.
This week, one of the young men in my class attended 8 hours of class, then went to his hotel room and did homework while the rest of us went out for the night. He took the long way home with his mother, probably arriving a little after midnight, and I bet he got up and went to school the next day.
Every class is different. This group of people was the most comfortable group I have ever been around. They would not visit. We used the same host for each school and she commented on how comfortable they were on their first day.
Second day of school, I'm really excited to start trading and generating positive cash flow. The light bulbs on their heads flashed faster than the other bands and I could see the energy rise immediately. Then they became one of the liveliest bands I've ever learned. The energy and enthusiasm level is always higher when I show you how to win and exercise control, meaning not lose money. No assumptions. We'll be able to see what we can do with trading and more importantly what we can't do with progression
On the second day of my classes, people are excited and smiling. Winning is fun and this activity should be fun. We can't always buy or sell what we want or when. The point is, if we use it in a certain way, if it helps us move forward, the market will take care of us. With this new perspective, people stop seeing the livestock business as a struggle and begin to see opportunities.
I pride myself on being the only true teacher with both in-game and real-world day-to-day experience, and I bring that with me to the classroom. Most of the examples I use in my tutorials are from real auctions and real footage of cattle sales. (I also use some weighted averages.)
I use some of these examples as mental exercises. Let's do the math and this is how trading works. I will tie this to the inventory triangle of cows, money, time and food. Next, I want to talk about resource management. How will selling the animals we sell and returning other animals affect our resources?
Teenagers learn cattle trading
Back to those two teenagers in my class. They lectured on the importance of mindset and the importance of attitude. They were lectured on resource management and learned the importance of cost management and how it affects the relationship between different livestock classes and resource relationships in the triangle.
They learned to use math and apply market knowledge to make trades that would generate positive cash flow. If parents brought them into my classroom, I think they would probably engage in some business discussions and generate some sales. Imagine how valuable these young people with this kind of experience will be when they graduate from high school in a year or two.
This excites me. We can talk about stock trading and resource management for days. Our most precious wealth is our children. There's always this debate about what it takes to keep kids on the farm. I just told you. Get them to decide if they like it or not. You are running a profitable business because as I said before, when you start showing people how to trade and make money, people get excited. It will attract, and that's the word we need to work on: attract. We will attract the next generation. If we teach them the right things, they will thrive and their children will be attracted to this industry. I have now described a legacy.
A view from the cattle fair
There is what I describe as minimal impact when calculating the value of this week's earnings. VOG is high in flyweight cattle, then decreases in the middle of the spectrum and increases again in heavier feeds. In most market reports, I have noticed that the average VOG contraction is less than the value of the earnings.
My classmates this week know that I call it high fare, which means that feeding on this end of the spectrum will do us no good. But what if you already have it in your inventory? Feed him. If we sell, we understand the pain point and subsidize the buyer. When VOG is high again, we can recover some of it by making them heavier, because VOG is higher in heavier cattle.
By understanding VOG, we can detect and prevent price spikes. We know when it pays off, or perhaps more importantly, when not to eat cattle weight. This is resource management, which I wrote about earlier. By feeding ourselves, we underestimate our food. Also, if we understand VOG, we will not offer cattle when we return them to our inventory. There are marketing schools that teach people this. If you offer VOG you will run out of money.
This week, 15 heads of smokeless cattle and 30 fat bulls were returned.
The views of Doug Ferguson are not necessarily those of beefmagazine.com or Farm Progress.