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Running on Empty

Posted on January 31, 2011 08:44 by Doug Ferguson

“With one in six people going hungry, one child dying every six seconds and 80% of sub-Saharan African countries facing higher food prices than a year ago, the poor and the hungry are facing one of the biggest crises in our lifetimes.  It is critical for the world to remember  that hunger will have a permanent impact  on children and we may lose a generation unless they have adequate access to nutrition during this crisis”.

That is a pretty powerful statement from Josette  Sheeran, director of the United Nations’ World Food Programme, at a meeting of G8 nations last June.    Not too often do I read an article in any magazine that I think is worth a hoot, but Wes Ishmael’s article “Running On Empty” in the Angus Journal, was pretty good stuff.  It covered the upcoming population boom and possible food shortage, and the challenges it will present to agriculture.  I will share some of the highlights.

Alex Avery, Center for Global Food Issues at the Hudson Institute, says “Over the next forty years world food demand will at least double, and we have little new farmlands with which to meet that demand.  We really have only more productive farming methods to use on our existing farm ground”.

The global population is expected to peak at 9 billion people by 2050.  The current population is 6.8 billion.  Much of the explosion in food demand will come from expanding global wealth, giving more people access to food and richer diets.  The current global recession not withstanding, Chinese meat consumption has doubled in the last 15 years.  All projections show that Chinese meat consumption will double again.  And that’s just China.  Nations such as India are expected to have a larger population than China in several years and the story of consumption is much the same.

Avery points out “There are only two ways to meet this growing demand. Take more land from nature or produce more food per acre on existing farmland.”  One thing I think I should point out is that we lose farm ground every year in the U.S.  After traveling to China a couple years ago I learned they lose way more farm ground per year than we do.

I think that trend gives us the option of getting more production per acre.  In 1950 we grew 39 bushels of corn per acre, in 2000 that average was 153 bushels per acre.  Each farmer in 2000 produced 12 times as much farm output per hour worked as compared to 1950.  Development of technology is a primary factor in this progress. More...

You Never Know

Posted on January 18, 2011 07:39 by Doug Ferguson

Last evening I got an email from a guy I met one time at a bookstore in Lincoln.  I’m still shaking my head in disbelief.  Just some quick background.  I was in the business management section, when a total stranger walked up to me and started discussing books, and what we do for careers.  I thought it was just the typical time killing harmless chit chat.

Now hold that thought for a moment, and follow me on this next part.  In November I kind of got pushed into putting together an Angus consignment sale.  The sale was held the first weekend in January.  I didn’t get as many lots as I would have liked.  Some people didn’t think I could get it together in that short of time frame.  Most of the details didn’t get handled as well as I would have liked.  I was unaware of how much work goes into putting on a sale like this.  I hired a sale manager and had to get all the information on the cattle.  We then took a day to go view most of the cattle and get a few more consignments.  Then in one weeks time we had to print a sale book, and get them in the mail.  We also had to do some creative advertising in a short time frame since we missed every publication deadline.

The week leading up to the sale was very stressful.  As the sale chairman, I was getting calls from our consignors and buyers.  There were a lot of little details to take care of.  At the end of the sale, I think most people were happy.  We had good weather, a good location, and a good turn out of buyers.  The sale average even exceeded my expectations!  Before I left the auction barn that day I had people come up to me and express interest in selling some cattle on the sale next year.

Now go back to the guy at the book store.  He friend requested me on Facebook, and was following some of the posts I had on my page about the sale.  He then emailed me, telling me he has a couple of projects coming up and that he would like me to be a part of his team.  Turns out he owns his own marketing firm in Lincoln.  He wants somebody who can coordinate things in a short time frame and can deal with pressure.

I do have a point to this story.  I hear cattleman sell themselves short all the time.  Or even worse when some one blames some one else for why they can not make a profit, or other short comings.  There is no reason for any of us to sell ourselves short.  After some time running your own operation successfully you will possess the job skills the world is looking for.  After you prove you have something of value to offer to the world, it will beat a path to your door when it sees you are willing to do business.

And in case you are wondering.  I haven’t decided yet if I’ll take him up on his offer.  I still need more details; my guess is I won’t take it.  I am doing what I’ve always wanted to do.  Raising cattle at a profit and being with my family.

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Posted on January 5, 2011 07:49 by Doug Ferguson

It’s the time of year when we take some time to reflect, and to look ahead.  I seem to be doing a lot of both this week.  In January my wife and I will have our first child.  Since I am going to be a dad now I decided not to run for re-election to the Nebraska Cattleman’s (NC) Board of Directors.  I felt this was the best decision to make in regards to my new family

When I first got on the NC Board, I was not sure what to expect.  The only thing I did know is that it was going to be an exciting time.  And man, I was so right.  Things started out somewhat uneventful for me.  Then I got asked if I was willing to be a participant in NCBA’s YCC 2009.  It was very short notice, and even though I was getting ready to set up recip cows, I made it work and was quickly on a flight to Denver.

YCC  was something that I had been wanting to be a part of for quite some time, and I felt honored to be going.  One thing I remember is waking up in Chicago and my roomie asking about the cow that tested positive for TB back home in Nebraska.  I hadn’t checked my phone for any messages yet, and naturally I was shocked.

This TB cow kinda changed my agenda for when I got to visit with the Nebraska delegation while in D.C.  I was so prepared to discuss Cap and Tax, the Clean Water Act, Trade, and the Food Safety Act.  I got all the information about TB, I could cram into my dense skull with a short phone call back home to the NC office in Lincoln.

Shortly after I returned home from YCC a herd in my home county was quarantined because some of the cattle had been purchased from a herd that may have had contact with the infected cow.  NC was very proactive in working with the Department of Ag and communicating with not just our membership, but all producers.  We had several meetings to share the latest information about what was going on and answer any questions people may have.

One task NC does every year is to review the bills that get introduced in our Legislature.  I may be a sick twisted freak because I really enjoy doing this.  I really enjoy the dialog that takes place.  I am always amazed at how intelligent some of the board members are.  I was always treated respectfully and like I was an equal to other board members.  The only reason I mention this is because most of them are the same age as my parents or older.  I never once got treated like the wet behind the ears kid.

I volunteered to be on a task force once.  About five minutes into our first meeting I realized I was in way over my head.  If you have never done this you will be amazed at how much information there is to sift through, and how detailed it is.  Our association president was there and I could not believe he could keep it all straight.  I mean this guy has to be up to speed on everything that is going on in the association.  I have a whole new respect for that position.

And who could could forget that total bogus nightmare, the new GIPSA rule.

If you are not a member of NCBA or your state affiliate, just know that the few things I mentioned here don’t even begin to scratch the surface of all the issues that we work on, on behalf of the American cattleman.  Right now is a perfect time to join.

As for looking ahead.  I am eagerly awaiting the arrival of my daughter.  The Bank of Dad has already approved her for a loan to buy five head of feeders to put in the back grounding yard.  I plan on doing this about a month after she is born, and reinvest her profits into buying more cattle and growing her herd.  I’m hoping for a little political grid lock so we can catch our breath a bit from the ride we’ve been on.  I have volunteered to help NC with projects they think I may be good at.  And I’m looking forward to another profitable year.

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Vegetative Treatment Systems

Posted on October 18, 2010 05:06 by Doug Ferguson

Cattle feeders seem to always get unfairly blamed for hurting the environment.  There are well organized groups that spread false evidence about what really happens out here.   They even get the news media to believe their story.  Then millions of people see it and just accept it as truth without questioning the source.  I’m going to narrow my focus on this topic to ground water.  The fact is nobody cares more about this natural resource than a cattle feeder.  I am one, and the reason it is so important to me is because we get all our water from a private well.  That well provides the water that my pregnant wife drinks, and the water that she cooks with.

So what did I do to ensure it will be safe?  I built my feedlot from scratch, so I sought the advice from some engineers from the University of Nebraska Lincoln.  These guys had a different approach to the project than myself.  I would have designed pens for the cattle first then retro fitted how I was going to handle runoff water.  These guys designed how we were going to handle the runoff water then designed the pens.  Location was also a big consideration.  We had to make sure we were a safe distance from our well, and we had to determine the risk of contact with surface water.  Soil type was also considered to be sure no leaching would take place.

What we have in place now is a Vegetative Treatment System (VTS).  My pens are built with a slope to get all the runoff water to flow out the back of the pens where we have built a settling basin.  In the lowest point of this basin we have an outlet structure to filter out any solids in the water.  There is a terrace that has an underground line buried in it that goes from the outlet structure to some gated pipe on the other side.  This underground line has a shut off valve.  We keep this closed until after a rain event.  Usually after a short period of time the solids settle out of the water that has been held up in the settling basin and then  I can open this valve and release the run off through the gated pipe.

The water runs out of the gated pipe across an area where we planted grass.  This area has some slope to it as well so the water will flow away from the pipe.  This area is completely contained.  We have dikes that run along the pens and the grass area, so no water can escape, and come in contact with other surface water.

The grass is the main component  of the VTS.  The grass takes up nutrients from the runoff water; by utilizing the nitrogen, phosphorous, and potassium contained in the water, this grass allows us to make sure that these nutrients do not reach the ground water.  We then get these nutrients off that area by harvesting hay off the grass area.  I usually get two cuttings of hay a year off of it, and the tonnage per acre is double what my hay fields produce.

I have hosted tours that were attended by people from the NRCS, EPA, and DEQ.  All were amazed at how easy the VTS system is to maintain and how simple the concept is.  Soil and plant growth are a natural filter for keeping contaminants out of ground water.  In fact, that is where the idea of filters came from years ago.

Since this was one of the first of it’s type built in the state, I have some monitoring equipment set up that the University uses to collect data.  We built this in 2005 and have had absolutely no problems.  We even experienced a fifty year rain event and still managed 100% containment.

The Vegetative Treatment System was a simple and effective way to manage water quality in my feeding business and I know when my daughter is born, I won’t have to worry about the water she drinks.

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Posted on September 29, 2010 03:12 by Doug Ferguson

The other day I was building fence.  Those of ya that have done that know it gives ya a lot of time to think.  I was really pondering how this new GIPSA rule could reshape the American cattle biz.

I built my feedlot in 2005 with the idea I was going to buy heavy feeders and sell them as fat cattle.  After I gave this more thought, I decided I could not compete with the big feedlots.  I changed what I was going to do.  I have carved out a real good niche buying calves off the cow.  I wean them, vaccinate them.  Dehorn and castrate if necessary.  I then resell them in pot load bunches.  I have my own type of value added program going on here.

What GIPSA will do is take away most all of my profit margin.  It will make it so slim it will not be worth my time to do the work that I do.  There is wording in this rule that refers to “competitive injury”  and I don’t really believe there is such a thing.  If a cow/calf operator refuses to wean, vaccinate, and castrate his calf crop, then that is his choice.  We must all live with the consequences of our actions.  I can buy these cattle at a lower price than other cattle.  I take them home and do the work no one else was willing to do.  So in my opinion “competitive injury” will only reward laziness and take the reward away from the people that are willing to do the work.

So I wonder if GIPSA will have farther reaching consequences.  Follow me on this.  If guys like me decide this ruling isn’t worth messin' with, it will have a backlash that will affect the businesses we get our supplies, feed, fuel, trucking, pharmaceuticals, and so on from.  No one is better at spreading the wealth around than a capitalist like me.  Now follow that dollar that I pay each of them.  It will cycle through our local economy a few times before it leaves.  Each time it changes hands it generates tax revenue for the state.  With budget constrained times like these, you would think that would be a big deal to our lawmakers.

Now if you are a young operator just starting out like I was a few years ago, this new rule could make it next to impossible for you to get operating capital from your banker.  He will not side with you because he will only see that there is not much opportunity for you to add value to the calves you purchase.  And he may also be afraid that the cattle you buy may only go down or stale in value, which looks like a high risk loan to him.

Another look at it, from a packers view, may suggest that they will try to buy the cattle sooner, and feed them themselves.  They may go to some existing feedlots with a proposition that the feed yard just work for them feeding the cattle that the packer’s order buyer picks up at an auction barn.  Might be an appealing offer to some.  There is no market risk involved.  Just receive the cattle, keep them alive, feed 'em and when it is time, load them out.  They will probably get a steady paycheck for their efforts.  If you no longer have feed yards fighting to fill bunk space, it will deflate the calf market.  Not to mention if a packer can fill his week with cattle he has in a leased feed yard, there will not be a cash bid.

I think by now you get the idea of how this rule could really hurt our business, and other businesses as well.  I was discussing this idea with a friend last night and he pointed out that pharmaceuticals will go down in price as well as corn.  As the commodities of cattle and corn decrease in value, land price will eventually follow, hurting tax revenue generated off property taxes.  And we all know our schools operate off those tax dollars, as well as county governments.  My friend then took it one step farther and pointed out that if they can get the land devalued it may make it easier for the government to buy it up, or take it, like they are trying to do in the western states right now.

This GIPSA rule has the potential to have farther reaching consequences than was probably foreseen.  I will be drafting a letter that I will take to all the places I do business with and ask them to sign it.  In the letter it will state how if GIPSA hurts my operation it will in turn hurt their business as well.  I will also write a letter to GIPSA myself outlining how it will crush my American dream.  I don’t like other people micromanaging my business and I doubt any of you do as well.  Take time to think this one through and make your voice heard.

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The Greatest Export

Posted on July 21, 2010 04:15 by Doug Ferguson

I’ve been negligent in my blogs for awhile so I’d like to rewind back to this spring.   Seems for a while there, every time I turned on the radio I heard some talking head, rattling on about beef exports being the third highest they’ve been since 2003.  I wasn’t paying as much for calves as I was in 2004, so I don’t see what the big deal is.  I don’t sit down and pencil in an export factor into what I think I can pay for cattle, so I have a tough time seeing how this really puts money in my pocket.

Now all this was happening at graduation time.  Have you ever stopped to think what our most valuable export is?  It’s our youth.  They have been programmed to go to school and get a degree so they can get a good job.  I get phone calls from about a dozen kids every year asking where they should go to school.  I ask what they want to do, and every one of them tells me "they want to come back to the family farm, but..."  That excuse just pisses me off!

Now it’s not my place to micromanage what parents tell their kids.   I used to hear the same crap from my high school counselor and my folks.   All I can say is if you are burning with enough desire, eventually people will come from miles around to watch you burst into flames.  Want proof?  This past weekend I got phone calls from people in three different states that were interested in my bull calves.  I don’t advertise.  I got phone calls this week from sale barn managers in Oklahoma and Kansas.  I’ve never been to their auctions.

Here’s my point.  Do you have enough desire, and passion?  Or are you filled with doubt?  Are you willing to out work and out hustle your competition?  People too weak to follow their own dreams will always find a way to discourage your dreams.  Now it can take a long time.  It took me eleven years to get established.  Eleven years before people I don’t know started calling me.  The average age of the American rancher/farmer is in his sixties.  Who’s gonna fill their shoes?  They are gonna retire in the next five to fifteen years.  I smell opportunity.  An opportunity to stop exporting our youngsters to urban areas.

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