Tina and I decided to put together this collection of Bud’s Musings posts from both the regular and the subscription website for my kids, grandkids, and great grandkids. At first I wasn’t going to sell it, but we thought others might also enjoy reading them. Even though many of the Musings relate to agricultural topics, the ideas he shares translate to any other business or industry.

We offer this spiral bound, 145 page, 5.5 x 8.5 inch, soft cover book at just our cost to print and ship ($15 each).

Click here for information on ordering.

Bankruptcies happen in every industry from time to time and it doesn’t mean the end of that particular industry, only the end of that business. There have been many ranch bankruptcies over the years and yet ranching has survived.  What this should cause us to do is not quit but just understand what should be done before we invest money or time in something we know little about.

There is risk in any business and the amount of money put in any high risk business should equal the knowledge that we have about that business. Any money that is put in high risk situations should be money the person can afford to lose.  People put money in high risk situations they know very little about and then complain if they lose money.

In a perfect world there would be no risk, but in the real world there is some risk in everything. Every industry has some people who do things that should not be done, legal or otherwise, this doesn’t mean that the rest of the industry should or will cease to exist.  Actually the M-F Global bankruptcy may be a good thing as now it will get rid of M-F Global and bring people’s attention to some of the thing that were happening and allow or cause some firms to watch things closer.  Out of every bad thing that happens there are good things that come from it.

I say these things even though Eunice and I had money in M-F Global and may or may not get all of it back. This was the risk we took and was money we could afford to lose or it would not have been there.  We will keep trading as the industry is as sound as any industry and will last longer than the people who are complaining about it.

Remember, high risk things have the potential of large profits or large losses.

I am certainly considered a youngster at age 28 and while Cattle aren’t my only source of income I’ve been very blessed the last two years, largely in thanks to Bud and thinking about things in a world before cattle futures, FSA loans and disaster payments. I have no debt on either land (don’t own any) or cattle and this past year all my Cows were paid for out of retained earnings.

May I also recommend two books: “Knowledge Rich Ranching” and “Pasture Profits with Stocker Cattle.” Allan Nation, the author, is a smart man, he called Bud Williams a genius and the same can apply for Gordon Hazard, the man profile in the Pasture Profits book.

Cattle are amazing animals, a Cow can survive and raise a calf on pastures that other animals cannot utilize, the greatest advantage to someone is to therefore try and make this their unfair advantage. Field crop residue, so called waste land, seep land, CRP fields coming out of the program, these can all make excellent and very cheap Cow forage.

A young person could also try and partner with an older operator who has the money, land and resources but maybe not the energy or the desire to implement management practices. How much more productive can most pasture land be with grazing and animal management? How much money can a person nearing retirement age make on a bank CD versus what they can make loaning money or partnering with you? If you can prove your ability to work with cattle, especially weaning and starting calves I would think you would be a valuable commodity since almost no one anymore seems to want to do this or know how.

I actually think the barriers to entry in ranching/cattle are very low, there are lots of nice folks, few young people it seems and lots of resources available.

Answer:  Actually this is not a bad question, in fact there are very few bad question, there are many bad answers. One of the best ways to learn is by asking questions.  This will or should get you to the point where you know what questions to ask, then the learning can start.  Road blocks are only a state of mind, why can’t they just be learning experiences? Things that happen are just what they are not good not bad – just what they are.

“It seems so difficult with all the expenses” What are the expenses?  There are only expenses after we get into ranching and we have control of that. It is not possible to start many businesses with out there being some expenses.

With the e-mail I get no information just what you want and the perceived problems.  Getting into any business there will be some obstacles, that means that we must have a positive attitude about things and know or learn how to overcome or live with these obstacles. The most successful way to get into anything is to first learn what YOU know about it and what YOU can do that will make the business successful.  How much experience do you have, how much knowledge do you have about what you want to do?  It will be your knowledge that will allow this to work not all of the things that makes it difficult.

Most people think that to get into ranching they need lots of money and a place where they can make lots of money. It is usually wise to start with what you can afford and build on that. There are all kinds of opportunities to start small and work at whatever until the ranch operation is big enough to support you and what you would like to do.

The best way to answer your question is to say “Think positive, understand that the negative things are just something to learn how to overcome, then think big, with actions that are small.

Eunice’s 2-cents worth: Along this line, here is part of a letter that we just received from Grahame Rees,  the “R” in KLR Marketing who is teaching Bud’s marketing concepts in Australia.

“. . . . started with 4 head, borrowed $10,000.  18 months later has turned over 200 this year and paid back her $10,000.

. . . . started with 10 head 12 months ago no money down and has 100 head.
Plus to expand she applied to her agent to borrow $100,000 to expand.  He told her the money is interest free as she is making him more commission than he can bear.

. . .  told me he does not know of a beef breeder in Queensland that made money last year.”

Did you notice that both of these are women?  Do you suppose there is a difference in how young men and young women look at “Starting a Business?”

First thing, if no animals were killed for food what would happen to them? They would not just cease to exist and they would keep on increasing in numbers. Look at the wild horse herds that are being “protected.” There are some real problems and they are not living an idyllic and problem free life. Most ranch horses live a better and happier life.

This is not really about animals it is just something I saw that was in response to people eating animals and how cruel it was.

“Oh, have you seen how they treat carrots that are grown on these farms?
They are grown in dirty farm lots, yes real dirty, no shade or any kind of protection. They are force fed fertilizer (this could even be animal waste) that makes them grow even if they don’t like it. Then, just when they reach their teens, they are ripped out, not allowed to have a full and enjoyable life, and left to die in old wooden crates (not even new ones). Their fine root system slowly shrinks as they scream for water, but no one hears as they have no mouth and the sounds are muted, but their suffering is still there. Therefore, I will be their voice.

You Barbarians! “

After many years of studying animals it is my belief that their emotions have a lot to do with their health and performance, good or bad. The last 20 years of working with and trying to teach people I’m now starting to believe that the emotions of the people working with animals may have more to do with the animal’s health and performance (good or bad) than the emotion of the animals. In most situations it is the emotions of the people that determines the emotions of the animals that they work.

Animals that we own and work are not naturally anything, they are what we train, teach or cause them to be. Animals or at least most animals can adjust to different situations quite quickly. They do have trouble adjusting to some emotional behaviors by the people working them, especially if this emotion keeps changing or is always negative. Animals are very perceptive and are very aware of changing or negative emotion in the people around them. When I was young most of the farmers in our area had some milk cows. If a stranger just walked into the milking barn during milking many of the cows would give less milk or at least hold up their milk and make them harder to milk. If the stranger was upset or a negative person the cows would sometimes get agitated and be hard to milk. This caused most farmers to keep strangers out of their milking barns just as a way to stop this problem.

Today, with most things done with machines or people in a hurry there is very little chance for the animals to adjust to anything that is consistent or close to the same each day. If animals are left alone they would live a very simple life. When we own them their life and the way they live is determined by us and there is very little that will be simple when people are involved. If we keep animals confused and upset all the time there will be health and performance problems.

The livestock industry keeps thinking that all of the problems can be cured with more drugs, machines and technology.  Like most things that cause a problem, these problems can’t be stopped with more of what causes it. While the industry will not change and be concerned about the emotion of the animals, the individuals who want to can be concerned and eliminate many of the health and performance problems.

 Learn to like all of your animals every minute of every day.  Any animals that you can’t like, get rid of them as soon as possible. The animals are virtually never the start of any problem,  the people who own or work them start the problem and then perpetuate it by being upset because the problem is there.

Enjoy your animals all the time and like what happens, good or bad (fix the bad then enjoy the good) or work with machines that are not as concerned about your emotions. You may notice that I stated that machines are not AS concerned, but even the machine will work better for the person that likes them MOST of the time.

This quote was on a business card given to us by a man who is planning on attending our Cheyenne Stockmanship School in May.  Since I have often heard Bud telling people much the same thing, I thought it would be a worthwhile posting in “Bud’s Musings.”

What brought this on was  reading an article on the DTN (Minding Ag’s Business). Its title was “Buckle Your Seat Belts For 2010.” I’ll include some parts of the article so we can understand the thinking of people who are doing the writing. It starts out with “As the recession spreads through farm country, profits seem to be vaporizing. At these commodity prices, very few operations in either crops or livestock can project profits.” 

Then it goes on to explain how hard it will be to get credit or credit extensions. Then the solution that is given is to “Unlock the cash in your land as today’s interest rates will be the lowest in your lifetime.”  Why do we  think the solution to a problem is more of what caused the problem?  If there is no profit to be seen, why borrow on the land and possibly lose your land?

Then it said to “Love the lender you have as we are in the middle of the worst recession in 80 years.” The person writing this must be very young or my math is wrong because 80 years would take us back to 1929. My memory goes back to 1936 and this is not a business recession it is a mental recession or knowledge recession.  Right now, anyone who is doing business with livestock like it should or can be done will have no trouble at all.  Because people have been able to borrow money and grow faster and bigger than they have the ability to operate their business does not mean the business is in recession, it only means they are trying to operate beyond their ability. When people try to do something that is beyond their ability bad things tend to happen, and when bad things happen it is always something else that is to blame.

From a business stand point, there was not a year from 1929 to now that had any more potential for success in the livestock business than there is right now. Why would someone say this is the worst in 80 years? Could it be that because things have been so good that it was possible to stay in business without the proper knowledge and just borrow our way into this knowledge mess that we want to call a business recession?  The businesses that are really having trouble are the banks that loaned money to the wrong people and the people that borrowed the money. This is just poor business practices not a business recession and will not hurt the people that do use good business practices.

While never is a long time, never try to borrow yourself out of a mess that was caused by borrowing.  Sell down and start small, learn from the mistakes and build a business that is sound and recession proof.

A knowledge recession will hurt lots of people and that will not be changed.  For the person with the right knowledge it offers lots of opportunities. Use good business practices all the time, don’t follow the people who are making money while doing things wrong. Their time will come and it will not be so good for them.  For the people who build their businesses on sound practices and knowledge these times are full of opportunities.

It is always bad when businesses have problems but now, instead of realizing what actually caused the problem, there is the desire to blame someone else. Later in the article this is what they wrote.  “Dairy farmers nationwide are coping with historically low milk prices after a 36 percent drop in the past year to the lowest level in three decades. In 2007 and part of 2008, dairy farmers enjoyed high milk prices as a booming global economy boosted demand for milk around the world. Dairy farmers expanded their herds to cash in. Then, with the onset of the recession, demand for milk weakened and dairy farmers were left with an oversupply of milk, which depressed prices.”

Why do people think they have to expand to cash in on a higher price?  If the industry expands there will be over production at some point. Why not just sell the milk that you have, make a nice profit while the prices are high and save some money for the drop in price that is coming?

Most of this expansion,  was probably done with borrowed money, that makes the problem even worse. The thing that makes these problems so bad is that “someone else” must always be to blame. Nobody wants to take responsibility for their actions.  It is in their mind that something else caused the problem.

If you want to have a profitable business it is you that makes it profitable, or that makes it unprofitable, not some other things.

What can we learn from this?  When prices are going up is not always a good time to expand.  When prices are going up is a good time to save money.  

When should we expand?  When prices are low and we are profitable.  When we have saved enough income from the profitable business to pay for the expansion without borrowing money to do it.  Let the business that makes a profit when prices are down, pay for the expansion, then a drop in prices will not hurt.

“Someone else” does not make you go into business or make you expand the business, that is your choice.  A business should pay for any debt that was incurred to start the business and provide any money needed to expand.  If not, should you really expand?

When you have something that is not working well, figure some way to solve the problem or eliminate it. It does no good to just complain and keep doing what doesn’t work. Many times the negative things are just different and only a problem if we don’t change what we are doing.