What Can We Do vs. What Should We Do?

by Dallas Mount

brainstorming

In managing through the recent drought covering much of cow country, I hear a lot of discussion around questions like:  “How many cows ‘can’ we keep?”;  “How much hay do we have on hand?”; “How much hay can we afford to buy?”. These questions are not very helpful. They miss the larger point. In looking at a situation it is much more useful to ask “What should I do”, rather than “What can I do?”. When we put the known information on the table and get our team around it the conversation can change.  

For example, in making decisions around drought management, relevant information will include: 

  • What is the current condition of our grazing land?
  • What are these animals worth in today’s market?
  • What is the feed we have on hand worth today?
  • What will be our costs to get these animals to the next grazing season?
  • How does this fit with our mission/vision?
  • What is our projected gross margin for this coming year?

With this information on the table, the decision of what should we do will become clearer. Here is an example for discussion:  Little stockpile feed remains and cows will need to be on full feed from October through April using approximately 3.5 tons of hay. Hay is worth $250/ton so it will take $875 just in hay to get a cow till next spring, bred cows are worth $1,400 today, projected GM (Gross Margin) for these cows next year will be negative $200. Part of our stated vision is to run a profitable business that provides quality of life for owners.

First let me be clear, I’m not suggesting the above scenario is yours or that the decisions that are best for your ranch business are the same for this example business. I am suggesting that a deeper discussion should take place considering the facts.

If this ranch only considered “What can I do?” then the ranch likely has the capital position to buy feed (or feed hay on hand) to get to next spring. If this ranch asks “What should we do?” then there are a host of possibilities. There would have been even more possibilities if this discussion would have taken place in June. For this operation, by mid-June, it was already apparent that this was going to be an exceptionally dry season. However, here we are today. The only thing that matters now is what you do next.  

Even if drought isn’t your current challenge, asking “What should we do?” can lead to much better discussions than simply thinking about “What can we do?”. We tend to limit our thinking to the resources in front of us. How many acres do I have, how many head, how much cash in the bank, what is available in my area, rather than thinking outside of these immediate constraints. Get your team gathered up, agree on the facts at hand, ask good questions and take the time to listen. This is how better decisions are made.

6 Responses to “What Can We Do vs. What Should We Do?”

September 08, 2021 at 5:53 am, Lee Jones said:

I agreed with a lot of your principles but where did you come up with $1400 per cow? I looked at several western states in the drought area and maybe the very best ones were $1400+ but most averaged around $1000 and that was medium and large #1 (range was $710-1550) with many bringing less

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September 08, 2021 at 12:37 pm, Dallas Mount said:

Hi Lee. Good point. In today’s market $1,400 is too high. In fact every number I used in the example is wrong. The point isn’t what my numbers were, the point is what your numbers are.

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September 08, 2021 at 1:19 pm, Lee Jones said:

Dallas, if cows are $900 or less that means it will cost as much or more to carry her versus selling here. if you sell her and the feed you can replace later but if you feed her then have to sell you got little to show for it. tough decisions for sure and no guarantees

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September 08, 2021 at 9:49 am, S Flanagan said:

Ran GM in mid summer. With July calf prices (futures have come up) and July hay prices (drought panic buying has dropped) bigger cows were a U$S 700 loss for 2021-2022.

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September 08, 2021 at 12:40 pm, Derek Schwanebeck said:

I like “What can we do” vs “What should we do”
Reactive vs Proactive

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September 09, 2021 at 1:21 pm, Shanon Sims said:

I love the principle of being proactive! Could we make this even more effective by gathering the team up AFTER the decision has been implemented, and getting the new facts on the table? A WWW/WCBB exercise for decision making?

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