Straight Talk with NDFB

Best of Straight Talk: How mindset affects profitability

• Emmery Mehlhoff and Alisha Nord • Episode 2

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This Best of Straight Talk excerpt is from Season 7 and was released on October 18, 2023. It features Doug Ferguson, who owns a stocker/backgrounding operation in SE Nebraska and is the author of Doug's Market Intel. Doug teaches a cattle marketing school focused on helping people become Master Marketers in the cattle industry. 

He also writes a weekly blog about becoming a master cattle marketer. Check out the Mr Cattlemaster blog https://mrcattlemaster.com

Information on Sell/Buy Marketing Schools: https://mrcattlemaster.com/marketing-school/

Doug Ferguson, BEEF Magazine https://www.beefmagazine.com/author/doug-ferguson

Doug’s Market Intel, Farm Progress https://www.farmprogress.com/series/doug-s-market-intel

Find him on X:

https://x.com/mrcattlemaster

 Facebook:

https://www.facebook.com/p/Mr-CattleMaster-100068903720827/ . 

To listen to the full podcast, click here. 

Learn more about NDFB at ndfb.org.

Contact hosts Emmery Mehlhoff or Alisha Nord at emmery@ndfb.org


[Straight Talk theme]

[00:11] Emmery: Today we have Doug Ferguson on. How are you today, Doug?

[00:16] Doug: Good, Emmery. How are you?

[00:17] Emmery: Good. I have also my cohost Alisha here who grew up on a Angus ranch in Minnesota. So she's joining me. So why don't we just get started. Go ahead and introduce yourself, tell us a little bit about your background. And I believe you built a ranch from the ground up, is that right?

[00:34] Doug: I don't know if I'd necessarily call it a ranch maybe just quite yet. But yeah, I did start my cattle operation from scratch. I had a pretty conventional upbringing, just like any other kid, you know, grew up commercial cow calf, dry land, row crops, did the 4-H thing and everybody told me I needed to go to college. And college really wasn't a good fit for me. I did drop out.

I had a good traveling partner back when I used to ride bulls. And so when I quit riding bulls, his dad called me. They had a small feed yard up in northwest Iowa and he asked if I'd start buying cattle for him, which, you know, but yeah, that's, that's a pretty good gig. You get to sit there and spend somebody else's money, get paid a commission check, drink coffee and tell lies to the other cattle buyers, right?

One of their requirements was I had to read this marketing blog that was written by Ann Barnhart and that's how I kind of really fell into sell by marketing. I had been buying some cattle for myself before then, but it was the material that was in the sell by marketing that I learned is what allowed me to really start my operation from scratch and then blow that up into a full time occupation.

[01:52] Emmery: Just jump straight into what is Sell by Marketing.

[01:56] Doug: Sell by Marketing. If I was to give it the very short elevator speech, it is a real time cash flow reckoning and to kind of explain that maybe in a little better detail it's real time. So we're only dealing with today. So we look at the price relationships today and we compare different classes, different weights of cattle to each other and we figure out what we can sell and then buy back. And it is the buyback that is crucial because it's the replacement is what allows us to capture our profit. So this works really simple when I explain it that way like with stockers or a feedlot type situation, if you are in a closed herd cow calf operation, your buyback is the calf that the cow will give birth to next.

[02:50] Emmery: My husband Caleb went to your school. He came back and explained the sell by and price relationships and all that to me. But I really didn't get a grasp on it until he explained it similar to like a grocery store. So a grocery store has inventory and they sell, you know, like a jar of mayonnaise and then they make the money on the buyback. So when they buy back that jar of mayonnaise that they sold, that's when they make their profit.

[03:19] Doug: Yep. You capture your margin when you replace back in your inventory. It's interesting you bring up the grocery store. J.C. Penney did this years and years ago back when he started his stores. And Sam Walton actually worked for JCPenney for a while. And Walmart does the same thing today, only they don't call it Sell by Marketing. They call it like VMI for vendor management inventory. And so Walmart knows what they can sell the product for. So they tell their vendors, you're going to restock it at this price. You know, which is really kind of neat. You know, Walmart being as big as they are, they get to tell somebody, this is what you're going to sell it to us for. But as cattle people were price takers. We don't necessarily have that kind of leverage.

[04:08] Emmery: What are you looking at if you're producer and you're looking at possibly getting into the Sell by Marketing, what is the first thing that you need to know?

[04:17] Doug: My ridiculous answer to that would be first you need to go through a sell by marketing class and a good one. 

You're probably leaning more towards, like if I'm in an auction, what would I look for? The very first thing I will mention is it has to be something that you can handle. 

If you have a feed yard with highway guardrail fences, you know, those kind of fences typically tend to be a little higher off the ground. Bawling three-weights are not going to work for you. Crawl right under that fence and disappear into the neighbor's cornfield. If you have a neighbor with lusty libidinous bulls and he doesn't know how to fix a fence, you might want to run steers instead of heifers. So we got to take some of those things into consideration and want to be in stockers. 

Do you want to be in cow calf? And when it comes to the stocker deal, I really like to look for cattle that I can add value to. Which, you know, the first animal that pops into my mind would be feeder bulls. And it's kind of interesting here in southeast Nebraska, where I live, we used to not see very many feeder bulls and now we're seeing an increase of them. Seems almost like yearly. And I think that could be because producers are getting older, some of the younger guys have full time jobs. So just nobody's taking the time to, you know, put a Cheerio on them at birth or that kind of deal. 

And some of it's going to be cultural. I've been buying a lot of cattle out of Tennessee and we've been getting a lot of feeder bulls on those loads. But you know, if you go up into Dakotas, western Nebraska, if you have feeder bulls, you're probably a "lousy rancher" because that should have been taken care of at branding time. So that's going to be kind of more of a cultural and geographical thing. But you know, I look for things that I can add value to, even on the cows. I will look for breeding stock that I can add value to the quickest.

[06:18] Emmery: Can you go into a little more by what you mean by add value?

[06:22] Doug: So there's different ways we can add value and one would be monetary value. And that would be something as simple as, you know, castrating that feeder bull, buying the bawling calves that aren't weaned, weaning them, buying small groups, co- mingling, making load lot bunches on the breeding stock. It could be calving the cow, selling the pair, or buying wet bag cows that are open and rebreeding them. 

And then there's the value of gain, and that is if the market is paying us to put weight on. And the way we determine that is the value of the gain. What that weight gain is worth has to be higher than what it's costing us to feed the weight on.

[07:06] Alisha: So I'm going to ask a question, kind of bringing it down to a different level. Well, this is Alisha by the way, and thank you for joining us. So growing up I was on a row crop and had cattle and something very common when you come from that is you always hear, you know, you need to be on a diversified ranch to make money or you will only make a profit every three years out of 10 years in the cow calf operation. Do you believe it is possible to profit consistently every year in the cattle industry without having another side business to support that operation?

[07:41] Doug: Not only do I believe it, I live it. You unpacked a couple things there Alisha and I talk about this at great length in my schools, especially on the first day you mentioned a cow calf guy making a profit three years out of 10. 

And that's a statistic that we hear over and over and over and over again that eventually creeps into our subconscious mind through auto suggestion which is just repeating something to ourselves numerous times. And once that reaches our subconscious level, it's almost like it gets set as on autopilot. And then without us even thinking about it, we will actually try to hit that target. And what happens is people will self sabotage. 

Cattle producers should be making really good money just simply based off the inflationary value of the printers this year. And so then your accountant tells you, oh, you should go buy a deduction, you know, so then you go to the green paint store and buy a really fancy overpriced piece of equipment. And you know, next year that high priced piece of equipment has a really expensive breakdown. So you might show a small profit this year, but then while you fix that piece of grain paint next year, you're going to have a loss that self sabotage happens that easily. 

And the other thing you mentioned is I heard the word diversified in there and I was taught the same thing. You have to have the crops and the cattle. You make money on the cattle on the years you're not making money on the crops. And in the other years the opposite is true. And the reason I don't like that is there again it becomes a set target. You're planning on one of them failing. And when you plan on one of them failing, guess what? One's going to fail. The crops and the cattle should both be making money consistently every year. Otherwise why have one of them?

[09:41] Alisha: That's really great advice and a very interesting perspective because I do think that self-sabotage is very prevalent and it's something that you don't really think about until you sit and actually think about it. So, I was on your website or blog, and so that's where I saw the Law of Attraction and found that very interesting in how how you think mentally and the type of attitude you have can actually affect how you make decisions. Is there anything as far as like the Law of Attraction that you want to go into and how that correlates to marketing in general?

[10:20] Doug: Oh gosh, I could tell you stories for hours on that. But you know, listen, we hear a lot about attitude. Somebody's got a good attitude, bad attitude, but we never really get into what it is. And when this was explained to me from a mentor that I had, he explained that an attitude is a combination of your thoughts, your feelings and your actions. And you know, basically it's your thoughts that control your actions, your actions, or what gets you your results. So it all kind of starts with those thoughts. 

And I'll give you one example of self-sabotage. But I was in this bull riding winter series years ago, like seriously half a lifetime ago. And I was in first place in those standings and I'd ridden every bull in that pen from top to bottom. Everybody knows I'm going to walk into that finals and win that thing. But then on the Monday of the finals, I have this thought pops in my head and it said, "This would be really embarrassing if you screwed this up." Now, I'd only got bucked off one bull all winter, but I got bucked off the first two at the finals. And I really believe, looking back on it now, it was because I was entertaining that thought that, "Oh my gosh, this will be so embarrassing if you screw up." That became my dominant thought. That's what I was thinking about. That's what happened. That law of attraction, that law of self-sabotage can work that easily. And this law of attraction doesn't care if you're thinking and are trying to attract good things to yourself or negative things to yourself. It will deliver either one just as readily.

[11:59] Alisha: Do you have any advice for young adults that are just going to start off with college? And I know you said college wasn't your route and so if you have other thoughts and opinions on to give to young adults at, college isn't for them either. What is the most important thing to learn before going home to the ranch? Or knowledge seeking for those that they want to come back, but they know they need to gain some knowledge and experience. What kind of advice do you have for those?

[12:29] Doug: Wow, again, that's another one I could go on for hours. That's kind of a time period in your life where we're trying to figure things out, figure out who we are. For some people, college is probably the way to go. For some of us, like me, it was not. And so just being able to know and understand that about yourself is probably a big step. Now here's the thing, and I kind of share this with some of the middle school, high school age students that I get a chance to talk to in front of is find something that you're interested in and study that, learn a skill and get very good at it and then you can monetize that later. 

So I don't care if it's raising cattle, if it's welding, anything like that. I mean, there's so many things that people can do. 
Now you also mentioned going back to the family farm. I would be the fifth generation on our family's farm, but we have not crossed that bridge yet. And I'm in my mid-40s. If you think it's hard starting from scratch? Try farming with family. I mean, that's tough. That is very tough. 

One thing I would suggest to a young person is go get some work experience away from that family farm and do something on your own. And the reason I say that is because if you go back home too soon without accomplishing anything, you're going to be daddy's little boy or daddy's little girl, and you have no respect, and nobody will take you seriously. 

And the other thing is, you have to learn how to be able to make decisions, because I've seen so many of these family operations where the old monarch makes all the decisions until the day he's six feet under. And then you have adult children that are 50, 60 years old, never made a decision, and now they can't function without him. 

And the other one that I always got to throw in here, be careful who you marry. You know, find somebody that supports you whether you're a believer or not. The Bible warns about having a negative spouse. I couldn't imagine trying to do this job with all the pressure and the stress that comes along with it some days, and then have somebody nagging at you about it at the end of the day.

[14:49] Alisha: So I don't think my dad will listen to this podcast. So I'm going to go a little personal here. But. So my brother did go to college, but came immediately back to the family farm, and he's farming and ranching with my dad right now. And those words couldn't speak truer to me. And it's a struggle. I see their battles every day, the power struggle, and my dad making those decisions. And my brother, you know, he's created a family of his own and wanting to take over, but my dad is still the decision maker, and he is the one that makes those decisions. And it's very hard for my brother because there's definitely that power struggle. And my dad was kind of like, hey, if you want to do this, you need to come back. And so he did not go work for anybody else. He does not have any other job experience. My brother and I are close, and so we have those conversations of, "What do I do? I feel like I'm constantly fighting with dad over everything." Do you have any advice of how to overcome that or different ways to do things, to kind of mesh those differences? It's such a hard one, but that one hits home for me.

[16:06] Doug: I really wish I had something just some kind of an epiphany or something to share with you. But I don't. Once you've gone down that road, I mean, you're down that road. 

So about the only thing that really pops into my mind is, is there some way that you can create your own niche? You could do something and start something on your own, on the side that doesn't compete or interfere with that family operation and grow that. But man, I, I gotta tell you guys, I've sat in front of some of these classrooms and I see, you know, some of these father-son duos or you know, some of them come with their mom, the kid, just the, the math. They get it, they light up, that light bulb comes on, they have that breakthrough moment. They're sitting there, they're scratching numbers, they're on their phone, they're comparing what they have in their inventory at home to the local cattle market, "Oh, I could do these trades. We could make this money." And the old man's just sitting there, leaning back in his chair with these arms folded across his chest. And some days I'm just like, "Man, I'm glad I'm not in that car ride home." I just wish I had something to tell you guys. But that's about the best I can do is try to come up with something you can do on your own. And that's going to be another tough, like you said, two kids, then you're working full time. It's a lot.

[17:34] Alisha: Another question that I have, so lots of online bidding, buying going on, since they're talking about technology. So with this higher cattle market, do you see more scams being prevalent and a higher risk for buyers? With, with the market right now, it.

[17:52] Doug: Seems like we always hear about some kind of pyramid scheme or ghost scheme or something like that. It's not new, but as far as, what do I want to call it? The Rafter Brothers bidding you up online. I mean, they do that sitting in the sale barn. You know, I kind of gave a guy here at a local auction a hard time a couple years ago. He's bidding against the trash can. And all you got to do is turn around, look over your shoulder. You realize nobody was standing there. So I mean, there's different ways that those things take place and it's nothing new. 

I think one thing about technology and some of these scams is we hear about them a lot quicker and we hear about them in different parts of the country where before maybe we wouldn't have and probably one big thing about that is you gotta learn how to defend yourself. Sometimes that comes just from looking around and, you know, is there somebody over there bidding? And sometimes if there's a lot of Internet activity at a sale, I'll just stop bidding and say, "Okay, let's let the Internet buy one and see what number it goes on."

[18:57] Alisha: One other question that I have that I feel like is pretty relevant to our listeners. The difference between raising cattle and marketing cattle. I feel like a lot of ranchers, you know,  they're very good at their breeding program, feeding, taking care of the cattle, doing all of that. But then when it comes to marketing, again, coming into that subconscious that, "Well, I should just naturally be good at marketing because I raise cattle," when in reality raising cattle and marketing cattle to be profitable, I feel like, and maybe you have a different opinion, I feel like are two very different things. And so sometimes I wonder if, as cattle producers, we need to take a step back and say, "Okay, I'm good at raising the cattle, but I need to maybe go learn or take a class or go back to school for a little bit to learn how to actually market my cattle correctly."

[19:55] Doug: Oh, I think you hit the nail right on the head. You know, this, this cattle deal's what, like an $80 billion, $100 billion a year industry. And there is gobs of money, I mean, just piles and piles of money left on the table. Because when it comes to marketing, we have no idea what we're doing. Now, that doesn't mean that we're stupid. It just means we haven't taken the time to educate ourselves on how to do a good job marketing cattle. Just like you mentioned, the other things of animal husbandry, you know, I mean, we can start throwing range science in there. You know, I'm seeing a lot more on regenerative agriculture here lately. So that tells me people are investing in education to learn those things. But what good does it do you if you're doing all these great things at home on the ranch, and then you just load the cattle up, take them to town, drop them off the sale barn and say, "Here you go." I mean, really, that's what some of these people do. They just say, "Gosh, I hope this works out. I hope it's a good day." You know, there's a big difference between hoping and being confident. I mean, big difference. And, you know, I'm real big on this word awareness. And awareness is particular knowledge of a certain subject. So just raise your level of awareness and then you'll become more confident.

[21:17] Alisha: You also write articles for is it "Beef Magazine"? So how do people stay up to date with viewing that? Or is there a subscription? Or what's the best way to kind of stay up to date on what your weekly thoughts are?

[21:29] Doug: Yeah, I got a, they call it Doug's Market Intel. I think it's on Farm Progress's website. On "Beef Magazine's" website. You know, I'm not a big social media person, but a lot of people rely on that. So we do have a Mr. Cattle Master Facebook page and we'll link those on there every Friday once. "Beef Magazine" and Farm Progress update the link for that every week.

[21:52] Alisha: While we're wrapping up here, what are your one or two biggest tips or words of advice to give our viewers who are maybe struggling with anything and everything to do with just cattle marketing in general?

[22:05] Doug: I got to tell you, the first one is just you got to believe in yourself. You know, ranching will never be easy. Raising cattle will never be easy. There's always the numerous challenges that are out there, but it should be simple. And I think that's one big thing we get... we tend to over complicate things. But I spend so much time just trying to get people to believe in themselves and, you know, it kind of comes back to that self-image that self-sabotage those negative thoughts that, you know, are always bouncing around inside of our heads to, I don't mean to make this and reduce it all the way down to the ridiculous, but we had guys with an 8th grade education, you know, were able to build a business and provide for a family. Now we've got people with MBAs and PhDs corkscrewing operations into the ground. We got to learn the right things.

[22:59] Alisha: That's so true. And I think that's kind of a great place to wrap up and who's ever listening kind of wherever you're at in your operation to just kind of sit back and think that no matter what situation you are in or where you're at in your life life, that you can always make a change if you really want it. You can just make a change, whether it seems hard. But if you can get into that mental state of I want to be better, I want to change things, I want to be profitable, I want to learn that you can. And it's, you know, it's more in that mindset.

[23:31] Emmery: Awesome. Well, thanks again, Doug, for joining us today and for letting us run you over time here. Really appreciate it and your insights and no least one listener who's already signed up for your school. So I'm looking forward to hearing or is going to anyway. So I'm looking forward to hearing how that goes. And I really appreciate your time today.

[23:50] Doug: I appreciate it, guys. This was fun. Thank you.

[23:56] Emmery: You've been listening to Straight Talk with ndfb. To learn more about how to become a master marketer in the cattle industry, visit mrcattlemaster.com you can contact Alishad I at ndfb.org or email myself at emmery@ndfb.org.

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