Our Journey as Producers of Fleckvieh Simmental Cattle.

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The Importance of Feedback

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One of the benefits of selling cattle by auction is that our cattle get to be put on display to the general public for several days.  While our primary goal is to market the cattle we have brought to that particular sale, there is also the opportunity to paint a picture of our operation, and showcase what we do, not only to try and sell our cattle on that particular day, but also to attract future customers.  By showcasing our operation at an auction sale, we get substantially more visitors through our pens than those who pass through the farm gate – so it is not only a sales tool, but a method of marketing and increasing our exposure as well.

The question becomes, though, how do we evaluate whether we have been successful at any given sale?  Clearly, we can look at our sales results and determine the financial side of the equation (I tend to have both a ‘budgeted’ number and ‘goal’ for the amount of our sales proceeds), but focusing just on sales results, can obscure what a successful auction looks like. That is where constructive feedback has its place.

It may seem simplistic to state but, auctions sell to the higher bidder.  It takes at least two bidders to push a price higher.  Because of this, if two people are interested, an animal can sell for (far) more than expected.  If only one party is interested, that same animal could sell for significantly less than the maximum that person was willing to pay. So judging the success of a sales season by only considering results (or a consignor’s sale average) leaves a lot of insight on the table – specifically for us, when we market only a few animals per year.   Clearly, generating a return is important (says the banker), but if we can also get feedback on our program and vision, among other things, then we will be much farther ahead than if we just read the sale report.

In my opinion, constructive feedback is a combination of positive and negative.  In our society, we tend to extremes.  It is very common to focus solely on the positive, which does not help identify areas that need to improve.  To avoid the risk of offending, it is often easier to be vaguely positive and move on.  The opposite extreme is also very common, focusing solely on the negative.  We’ve all witnessed this, especially in comment threads on social media – comments whose purpose is to cut, anger or show how clever and witty the writer thinks they are.  However, neither extreme is overly helpful when the goal is to improve.

The best description of providing feedback that I have found is to be ‘candid while caring’.   Simply put, feedback can be blunt, honest and direct, but only once it has been established that the reason feedback is being provided, is because you care enough about their success that you want them to know your thoughts.  Delivery is also important.  Most people don’t object to being offered praise in public, but negative feedback or coaching should always be done in a private, one-on-one setting.  Nobody enjoys being singled out in front of their peers for anything negative, so typically advice is heeded a lot quicker if delivered in private.  The short of it is that we can all provide constructive feedback without flitting to either end of the spectrum – life isn’t all sunshine and rainbows.  But feedback can also be provided without being an ass.

We appreciate receiving constructive feedback from several sources – the Sales Management Team, our peers, social media, and from our own observations.

The easiest place to start is with Sales Management which, in our case, is Transcon.  As I mentioned in previous posts, I do seek out Jay and his team to get feedback both before and after each sale.  In any given season, Transcon gets to inspect a heck of a lot more animals (and programs) than I do.  They also have a great understanding of what type of cattle are in demand and, at the end of the day, they are paid on commission.  They have a rather vested interest in maximizing their returns from a sale.  They also need to be honest in their assessments of the cattle on offer because they would like all prospective order buyers to be happy with their purchases.  Because of these perspectives, Transcon can provide great input into everything from quality of catalog pictures to cattle condition.  (All without me having to comment on the sale order – which is another post to talk about!)

Peer feedback from fellow breeders can be a little trickier.  From my experience, there have been a lot of cases of feedback falling into the polite but not value adding ‘looks good’ category, or to the other extreme of ‘I have just what you need to move your herd forward’.  Since we are all selling genetics, there is a natural urge for self promotion, but if we can get beyond the bloodline component, there is so much more to discover.  Over the years, both of us have spent time observing and trying to learn from fellow consignors, and other breeders that we visit for a cattle tour.  We have noticed everything from tack boxes and hospitality areas, to the signage and swept floors around us.  The condition (and temperament) of cattle is also important to us.  As we are small breeders, we are cognizant that we will always be part of group of consignors.  The condition our cattle are in needs to align with the rest of the cattle at the sale.  When a sale is over, we consciously try to sit down and compare notes, identifying things that we might be able to do at future sales.

Another area we try to be hyper-aware of is attitude. Win or lose, we need to be relentlessly positive in public.  Our behaviour, and the image we are presenting, is very important.  If a sale doesn’t go as well as planned, our new buyers should not be aware of our disappointment.  It isn’t their fault, and we would like them to be totally stoked about their new purchase.  Attitude also goes for the night before, too.  We both enjoy a few drinks, but we really don’t want to be remembered as the consignor that got fall down drunk.  We might try not to make judgments about the behaviour of others, but we are very aware that there are others who are willing to judge our behaviour and attitude.

Marketing, and the use of Social Media, is another area to glean feedback.   There are many questions that need to be considered as we share information about our animals.  Are we sharing enough sale info, and are we sharing it in the correct place? Are we sharing to half a dozen different ‘groups’ that all have the same members and are becoming over saturated?  Are we differentiating between our personal and professional (farm) profiles?  Are we taking a few minutes to congratulate someone in person when they consistently publish content we really enjoy (‘I really enjoy the random FB pics you post about your farm’).  There are a lot of different areas for feedback – and probably just as many answers.   With social media it is also sometimes difficult to determine whether there is any ‘value’ to what is ‘shared’.  It is easy to count likes and read comments, but it is also helpful to receive verbal feedback or a private message to help improve the dissemination of information.

There is also a danger both at sales and with social media to only interact with people of shared interest.  In the scheme of things, we have a small herd of cattle that is highly specialized (100% fleck) and trending in a specific direction (polled).  If we limit our feedback loop only to people within that group, I think we would miss a lot of opportunities to improve.  Our quiet-wean process was derived from a visit to a purebred Simmental breeder (that didn’t have a fleck on the place).  A lot of the genomic work we do was built upon the performance testing we did with the purebred hogs we had while I was a kid.  Ensuring we are open to learning from a broad range of sources can only make us better over the long run.  A good cow is a good cow – the hide colour or breed really doesn’t matter.  Getting viewpoints from a diverse group of people is something we consciously try to do.

The final point I’d like to make about feedback is that, while it is importance to receive it, you don’t necessarily have to agree with it.  I think it is important to understand ‘why’ the person thinks the way they do, but everyone is entitled to a different opinion. If everybody thought the same way, life would be pretty boring! (And we would never need elections!)  When it comes to the purebred cattle business, everyone has their own eye for cattle, their own breeding goals and their own definition of success.  If everyone was the same, all of our cattle would look identical – and then how would we make them better?  Having the confidence to listen to others, and then to stick to your own vision, is also an important trait.

So when it comes to reflecting on a sale, we try to do more than simply assessing our high seller and average, and comparing it to where we have been previously.  We try to dig deeper than the numbers – solicit feedback – and aim to be better for next time.   There is so much knowledge and information that can be gleaned from talking with others.  Feedback which is more than ‘they look good’ or ‘yikes’, but thought provoking enough to show care while providing some insightful commentary.  We will all be better for it.

Until next time,

Dennis

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Red Deer Bull Sale Report (and a bunch of other bull sale season thoughts)

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It was a gorgeous spring day, with mild temperatures, lots of sunshine, and some really impressive bulls that brought a full house to the Westerner in Red Deer to watch 51 bulls sell on Thursday, March 21st.  After six weeks of punishing winter weather, it was great to see and sense the optimism that a taste of spring can bring to the agricultural community.

First in the ring were a pair of matching Virginia’s Duramax sons from Skywest Simmentals in Didsbury.  Soggy, low-set with impressive shape, these breeder quality bulls resulted in some very spirited bidding.  When the gavel fell, Lot 41 ‘ Skywest Fusion’ was selected by the master breeders of Maxwell Simmentals for $22,000 as the overall high seller.  Lot 42 ‘Skywest Fugitive’ is heading to Manitoba after being acquired by Northern Lights Simmentals for $18,000.  It was a great start to the sale – and set the tone for the balance of the afternoon.

Due to some weather related setbacks with our bull string, we only brought three of our six bull prospects to Red Deer.  All three of our Delmonte sons found great new homes with Dallas & Cindy Phillips of Eckville, AB (Dundee), Chris Young from Caroline, AB (Denver) and JNJ Simmentals  at Westlock, AB (Dakota).  It is always a treat to have new customers acquire their first APLX bull.

Overall the sale grossed just over $335,000 on 51 lots, for an average of $6,562.  We would also be amiss not to recognize Jay Good and the Transcon team for doing a tremendous job working the phones and managing the sale.

A few (or maybe a lot of) other thoughts on Red Deer 2019 and this years’ bull sale season:

  • I can’t say enough about how impressive the Skywest string of bulls was. They were penned right beside our bulls, and the amount of consistency in type through-out their seven bulls was remarkable.  Jolene and Riley Edwards & family have been building their Simmental operation for several years now, and it was very special to see them both lead off Red Deer 2019 (and top it) for their first time!  They are great people – so truly awesome to see their success.
  • One of the things I really appreciate about Transcon is the feedback. I do try to have a good honest conversation with Jay or one of his team both before and directly following the sale.  Honest feedback is just so important.   We might not always like what we are told, but it is important to hear the message and have a conversation for long enough to ensure we understand their reasons for thinking as they do.  I hope to expand on this topic in a further blog post.
  • Both the heifer bull and polled bull market were strong in 2019. There were clearly some eye-popping sales of polled bulls, but digging deeper into some of the sale reports, there was also a strong demand for heifer bulls – which may partly be caused by the current feed shortage in Central Alberta.  Heifers eat less, have more future earning potential and should be genetically superior to old cows, so when feed is short, it makes sense to leverage the opportunity to make the cow herd younger – you just need bulls to use on those heifers.
  • Our own shopping needs combined the two, and we were on the hunt for a polled heifer bull this spring. We were disappointed when a couple that we were interested in sold out of our price range.  Heifers bulls are so tough to budget for – they have a limited timeframe that they can be utilized on heifers before they get too big – and in order to stay around after that, they need to be ‘good enough’ to use on cows – so on our smaller numbers I find it difficult to determine a price point that works.
  • In hindsight though – if we are willing/planning to spend $10,000-$15,000 on an elite outcross heifer each fall (who will only give us one calf a year), maybe the budget for a heifer bull should be a little higher.
  • In our case, we ended up moving a different direction. As they say ‘when you are dealt a hand of lemons, make lemonade’, so when one of my favourite bulls in our own pen, APLX Wedge 6F, came up DD on his semen test, we decided to retain him to use on our heifers.  Being both a WowEffect son and from our popular ‘P line’, we can’t use him on every animal, but he should be a real neat addition to our bull battery.
  • I like having options. I joked that retaining Wedge was ‘Plan E’.  (Which is a modification of Plan D, where we AI all our heifers with no clean-up bull).  We did have a ’Plan F’, but (thankfully) no need for it this year.
  • I do think 2019 will reinforce the value of leveraging AI as a herd management tool. With the brutal February weather (which frankly all of Canada experienced), it will be interesting to see how many natural bred calves will be born next January, as I anticipate that despite all the extra care that has gone into them, that bulls simply won’t be as ready to go (but will recover over time – I guess it all depends whether that recovery period is 3 weeks or 6 weeks as to the amount of impact it has on next years’ breeding season).
  • AI takes time and management, but even if you pencil in the cost of semen and (in our case), having an AI breeding technician come to breed heifers (Thanks Donna!), you can sure breed a lot of animals for what you could walk a bull for.
  • I also like the diversity that AI can bring – it allows smaller herds like ours to sample of number of different or new/outcross bulls each spring. The drawback is that sample size is smaller, and it can be tough to draw a conclusion from a handful of calves.
  • I also think exclusivity (or outcross) in owning a bull outright has a value (in that customers would need to acquire those different genetics from one place), which you wouldn’t have with an AI bull.
  • a great example of this would be Starwest Pol Blueprint – two years after a number of his sons were high sellers, there have been both sons and grandsons be readily accepted in 2019 – which potentially leads to people looking for something different if they already have those genetics.  I would expect that thanks to the high selling nature of FGAF Radioactive 030E (and his semen!) and the ready availability of his sire may also lead to a spike in Guererro bull calves in next years’ bull sale season – especially as he ties nicely into the theme of polled and heifer bull.

Over the past nine years, it has been great to be part of the Red Deer Bull Sale and 2019 was certainly no exception.  Public auction is a great forum to get feedback on the program we are building at Applecross, and we were both humbled and honored with the number of compliments our pen of bulls received throughout the week-end, from both peers in the purebred industry and commercial cattlemen alike.  We strive to produce top quality cattle, and can at times be our own worst critic so it is wonderful to hear all the kind words. Not a year goes by that we don’t learn how to do things a little better for next year, and it is equally important to continue to receive tips and advice on how to make improvements to our program.   With the bull sale now in the rear-view mirror, and breeding season underway, we look forward to the challenge of developing more and different genetics for future years.

Until next time,

Dennis

2019 Red Deer Simmental Bull Sale: Our Most Versatile Bull String Yet

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We are pleased to present six herd bull prospects at Transcon’s 2019 Red Deer Simmental Bull Sale on Thursday, March 21st at 1:00pm at Westerner Park, Red Deer, Alberta. This is our ninth year at this event, and we are proud to be included in the strong offering that is always presented by this progressive group of breeders.

While all six of our bulls are polled, our 2019 offering will be our most versatile bull string yet – clearly showcasing our breeding philosophy.  We firmly believe that the future will bring an increased herd size on the same amount of available labour.  This means that with less labour available on a per cow basis, birth weights will come down to improve calving ease, and that gradually more and more horns will be bred off the cattle.  We have moved slowly to incorporate the polled gene into our herd, as our goal is to try and accomplish this while maintaining the strong performance and mothering ability the Simmental breed is known for.  While EPD’s have their limitations, we have noticed that most Fleckvieh genetics are typically either Top Percentile for calving and bottom percentile for growth, or vice-versa.  It has been our goal to move more to the middle and produce bulls who will calve out, that are more than just ‘heifer bulls’, and performance bulls that aren’t ‘hard calvers’.  In a word – versatile – bulls that can be utilized in a variety of situations, without representing the extremes of the breed.

Individual pages (short-cut links are located in the right-hand column) have been created for all six of our bulls on offer, and will provide a deeper look into each individual animal, including multi-generations of the cow families and sires that back them.  Maternal lines are very important to us, and we feel that behind every great bull is an outstanding cow family.

This year we are rather excited to debut of our first NUG Delmonte 81D sons.  We selected Delmonte from Maxwell’s as one of the high sellers in the 2017 Herdmaster Bull Sale, and have been really impressed by his first two calf crops.  His first three sons will sell in Red Deer in ‘Dundee’, ‘Denver’ and ‘Dakota’.  Dundee has the added advantage of being tested Homozygous polled.  We are confident that Delmonte’s combination of the popular Starwest Pol Blueprint and the South Holden Mira cow family will have a tremendous impact on our herd, and we are really excited to see what his progeny will bring to the industry.

2019 will also represent the last natural born FGAF WowEffect herd sire prospects.  The WowEffect sons have led our bull strings since 2016, with his sons all being highly consistent. Two WowEffect sons will be on offer in Red Deer – both with really cool, proven dams.  ‘Wildcard’ is out of our DLD Lady Western 48R cow (making him a maternal brother to APLX Envoy) and ‘Wedge’ is out of Applecross Piper (making him a maternal brother to Applecross Pippa).  Wedge also comes Homozygous polled.  Thick made, great hair coats, and a unique balance of performance and moderate birthweights have been a hallmark of WowEffect’s progeny.

Our final bull on offer is ‘Razor’, who is a neat combination of our APLX Rambo heifer bull and some old-school Fleckvieh genetics.  Radium, Viper, Arnold’s Image, Bronson, Seldom, Antonius and King Arthur should all combine to make a highly maternal heifer bull prospect.

We want to ensure our bulls will work for many years, so feet, legs and temperament are very important traits for us.  The bulls are housed in a 5 acre paddock to ensure lots of exercise, and have been developed on a ration of free-choice quality first cut hay, combined with a forage based pellet by Country Junction.  All six bulls are quiet and used to being around people. We like working and walking through docile cattle, and feel the herd bull should be no exception.

We also think it is worth mentioning that in order to provide exclusivity to the new owners, we do not retain a semen interest in our bulls.  We think there is value maintaining exclusivity – and use the same approach when we do our own bull shopping. We want the buyer to have the advantage in every way to succeed with a new bull purchase.

The 2019 Red Deer Simmental Bull Sale promises to be another exciting event. We look forward to a great day on March 21th at Westerner Park

‘Super Sunday’ / 2018 Fleckvieh Equation Sale Report

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A gorgeous mid-December day with mild temperatures and sunny skies created ideal weather for Transcon’s ‘Super Sunday’ on Sunday, December 16th.  This ‘Three in One’ Simmental Event featured the Red & Black / Fleckvieh Equation and SIBL Half the Herd Extravaganza. With the addition of the ‘half the herd’ event, there were an impressive 110 lots to sell, which averaged a robust $5,489.

In a shift from previous year’s sales, it was a string of really impressive red and black Simmentals that led off the sale – headlined with two impressive bred heifers from the renowned Skor program.  Lots 152 and 153 were very consistent in type, and it showed, as the gavel fell within $500 of each other.  Lot 152 brought $11,000 to Leewood Ranch, Manville, AB and Lot 153 is travelling to Manitoba has she sold for $11,500 to Dana & Megan Johns of Kenton.  The lead-off group of 7 breds was very strong and showcased the diversity of the consignors, with 5 consignors combining to average $9,000+.

The bull sale portion of Sunday’s sale continues to draw a lot of interest; with the most diverse offering of purebred and Fleckvieh Bulls on hand in 2018.  The high-selling bull was from the up and coming Red Top program, who presented ‘Red Top Fireball’ which sold for $15,500 to OK Farms. On the Fleckvieh side, three really expressive bulls from Starwest Farms showcased the diversity of their program.  New consigners, Brooks Simmentals from Turtleford, SK, had the high selling Fleck, with Lot 5 ‘Brooks Flex 53F’ selling for $9,500 to Janjie Inc, Lake Alma, SK. Based on the results, ‘Super Sunday’ continues to be a place astute cattlemen turn to evaluate breeder quality bulls.

Our lot 23 heifer, Applecross Hannah was selected to lead off the Fleckvieh portion of the Sale.  She was selected by Clearwater Simmentals / Chad & Shelley Smith of Olds, AB for $10,250.  Applecross Abigail ($3,250) will be changing provinces after being selected by Section 17 Livestock, the Rathegerber’s, at Mellville, SK. We are quite excited that Applecross Chelsea will be making her new home not too far from us in Didsbury – she was selected by Skywest Simmentals / Jolene & Riley Edwards for $5,750.  Applecross Blossom ($7,250) has already ‘bloomed’ for her new owners – Rich-Mc Simmentals / Myla & Jason Richards in Pilot Mound, MB. She arrived at her new home on Monday the 17th and delivered a set of twin heifers on December 23rd! Talk about an early Christmas gift!  We were quite pleased with how our four bred heifers represented our program – and look forward to hearing how the other three calve out in early January.

In addition to the above noted high-sellers, I thought we would share some additional thoughts on the 2018 Edition of Fleckvieh Equation:

  • The Wolfe Fleckvieh string never disappoints. Their three bred heifers on offer this year were all extremely well received.  We have been very happy with our purchase of Wolfe’s Dawn from last year’s sale, and the consistency of cattle that Shane & Shannon bring to Equation every year is truly remarkable.
  • The other program of note would be the continued evolution of Keet Simmentals / Brett & Naomi Keet. Brett has been firmly focused on polled Fleckvieh for the past number of years, and his dedication to this segment of the industry has really paid off with a diverse set of females on offer.
  • As Fleckvieh Equation / Red and Black is a consignment sale, every year brings a few new consignors to the group. Maybe it was the SIBL half the herd event, or the increasing number of breeders presenting both Flecks and purebreds, but there seemed to be a greater mingling of breeders, buyers and people throughout the barn than in previous years.  This was especially notable on Social Saturday night, and I think it is important to see this continue to evolve.  Simmental is the most diverse beef breed in the world, and it is important this is recognized as a strength and not as a competition.  It was great to see lots of visiting; helping hands with gates; in the wash rack and sharing tack through-out the weekend.
  • Overall, sale numbers increased year over year from 70 lots to 110. The significant increase, combined with a severe feed shortage in Central Alberta, resulted in significantly different market conditions in 2018.
  • That being said – quality cattle still sold. Across the three sales on ‘Super Sunday’ there were 10 head that averaged more than $10,000 vs. 16 in 2017

We would be remiss not to recognize the team at Transcon for doing a tremendous job working the phones and managing the sale – they are always a quality, professional sales management team.   Jay, Darren, Glen and Cody spent the weekend inspecting the cattle while consistently talking on their phones, making evaluations for prospective buyers. Over $115,000 was sold on order!

It was another great day to present Applecross cattle at auction, and we are honoured by the compliments we received on our cattle from all the bidders and buyers that took interest in our program.  With the first calves of the new calving season on the ground, we look forward to the balance of calving season, and another step in that ongoing effort to produce high-quality genetics that we can share with the industry.

Applecross Presents our 2018 Equation Females

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Our 2018 Equation Heifers posing earlier this fall. From left: Blossom, Abigail, Hannah and Chelsea

We are pleased to present four bred heifers at Transcon’s 2018 Fleckvieh Equation Sale at 1 pm on December 16th, at Westerner Park, Red Deer, Alberta.  After an eye-popping 2017 edition, we are proud to showcase the diversity of our program at this prestigious event.

Our 2018 sale string really showcases the genetics that form the core of our walking group.  Four different sires, and four different cow families, are represented, and showcase a mix of genetics we have developed alongside some of the ones we have sourced over the years. We have taken a slow approach to building our herd to ensure that multiple generation of cow families are present.  This way, the maternal lines can develop, and we can watch and compare as the younger generations work alongside their matriarchs.  The progeny from our ‘heifer’ bull APLX Rambo has made an impressive debut over the past 12 months, so he will again have a feature daughter in the form of Applecross Chelsea, who on the maternal side is also descended from our Dora Lee Christina cow family.  We will be offering a rare opportunity to acquire a polled FGAF WowEffect daughter in Applecross Hannah, as we lost her sire after breeding season last year.  Not to be outshone by their running mates, we are also offering Applecross Abigail who represents progeny from the JD CDN Amethyst cow family, as well as Applecross Blossom, who is certainly not lacking in the eye-appeal department.  All four heifers are solid coloured with moderate frames, yet tons of volume – exactly the types of females we think will turn into awesome cows.

Individual pages (short-cut links are on the right), have been created for each of ‘Abigail’, ‘Blossom’, ‘Hannah’ and ‘Chelsea’.  We preg-checked in mid September and the vet feels that all four are safe to their AI breeding or early exposure.  The Heifers are also vaccinated with ViraShield Gold and Covexin Plus. They will be treated with Scour-Guard prior to sale day.  On the individual pages, we have also pictured their sires, dams and siblings.  Maternal lies are very important to us, and we feel that behind each outstanding female, is an outstanding cow family.  Please let us know if you would like any additional information on any of our animals.

The 2018 Fleckvieh Equation promises to be another exciting event.  We look forward to a great day on December 16th at Westerner Park.

Summer Nights, Cow Tours, and…conversations about Cash Flow?

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One of the joys of breeding purebred cattle is the summer evening pasture tour.  August is the perfect time of year to see the cows and make an honest assessment of the work they are doing with their calf.   The weather starts to cool off in the evenings, but there is still light to see.   For the cows themselves, udders and feet can be inspected.  Body score can be assessed – are the cows putting it all (or too much/too little) into their milk?  And then there is the calf at side.  Do they follow the dam more? Or is it the sire?  Are the heifers starting to turn into miniature versions of their moms? Are the bull calves developing the swagger that future herd bull prospects tend to get this time of year?  Is there a creep feeder in sight? Or is it all milk and grass?   Not questions to judge.  Rather questions to evaluate, mentally tally, and provide context for future breeding decisions. But it starts with that tour – and it is a gorgeous time of year to be out walking cattle.

It was on one of these evening tours with friends that the topic of farm finances came up. Considering my off-farm occupation happens to be a banker, this topic wasn’t exactly a surprise.  It probably also wasn’t that surprising that I wasn’t part of the conversation.   As my friend and I were walking the herd, discussing cows, calves, bred heifers and pedigrees, our wives were discussing some of the challenges of farm finances.

The discussion concerned budgeting and cash flow.  Our friends had considered every possible expense when they wrote their budget for the year, but they hadn’t considered that the cash flow would be so lumpy.  Farm revenue varies greatly with the season; cattle are only sold a couple of times a year, and there are months (and months) without any farm revenue at all.  Their overall budget was still good but, as a result of cash flow not being very evenly spaced during the year, they were going to make some different business decisions than what they had originally planned.

When Jeanne relayed the conversation to me later on that evening, it got me thinking (even while on vacation) about farm finance, and all the different variables farmers need to consider when making decisions about their operation.  In my more than 20 years as a farm finance professional (aka an ‘Ag banker’), I have been able to experience, tour and get to know a lot of amazing farm families.  I have learned a lot about both good and bad situations that have helped shape our own financial progress.  While I could talk about finances for hours, in the interest of keeping this post at least somewhat concise (for me), I will attempt to limit my thoughts to the Cash Flow of a purebred beef operation, and save some related topics (Budgeting, Working Capital, Contingency Planning) for another time.

Managing cash flow is one of the biggest financial challenges for cow-calf operations.  As a purebred breeder, we receive the vast majority of our revenue in three fashions:  from cull animal sales at weaning, from heifer sales, and from bull sales.   In our case, for all three of those areas, we sell by auction; which essentially means we receive three Cheques a year:  one in September for our post-weaning cull cows and calves, one in January (after late December’s female Equation Sale), and one in March after the Red Deer Bull Sale.  Those three cheques need to be sufficient to cover not only our direct sale expenses, but also our expenses in the other nine months of the year when we don’t have any farm income.   Because of this, we have to be dedicated to our cash flow and budget, and plan accordingly – specifically when we are looking to acquire genetics.  After a sale that exceeds expectations, it is  very easy to get distracted and bid ’just a few more times’ when that ‘donor-quality’ outcross replacement heifer or a new herd bull that would be a ‘total game changer’ strolls through the ring.  But as I value the trust Jeanne and I have with our finances, I always try very hard to stick to budget parameters so that there are as few surprises as possible.  Communicating about the buying decision, and linking it back to the budget and impact to cash flow, makes every one more comfortable about the upcoming months with no cash flow coming in.  (and while our couch is comfy – not exactly somewhere that I want to spend my nights!)

Cash flow is especially important when trying to grow the operation organically from within.  As mentioned in previous posts, I tend to be rather ‘barn blind’, and as such, I really like our group of 25 heifer calves this year.  I would love to retain the vast majority of them but, even if we did have the capacity to develop them all, that decision would have a massive impact on our farm cash flow.

For each (quality) heifer calf, we have four realistic options:
We can sell her as a cull heifer through the auction mart for $1,000 this September
Or, we could sell her as a purebred open heifer this December for $3,000
Or, we could sell her as a bred heifer next December (2019) for $5,000
Or, we could retain her into our herd, generate zero cash from her, and then go through the exact same decision making process starting in September 2020 with her first calf.

The prices I have used are fairly arbitrary (and can clearly be substantially lower in a down market), but regardless of price the concept is the same.  It only makes sense that a ‘sale’ heifer in December should be worth more than a cull in September.  And if you carry a heifer an additional year to sell as a bred, your costs (for feed, pasture, breeding etc.) are going to be higher, and so you ‘need’ to get paid more in order to (at least) break even. It is these first three options that are different methods of being able to turn what you have produced into ‘cash’.

The greatest challenge is the fourth option – that heifer that is retained to expand the herd.  She doesn’t turn into cash until she is culled – hopefully many years in the future. She will also generate zero positive cash flow for the next 24 months, and will only incur costs.  If both the costs and the lack of income are not planned for, then cash flow will be considerably tighter than what was originally expected.  And 24 months is a long time! So when planning for expansion – it is important to remember that awesome replacement heifer(s) takes a long time to generate any income.

For cattlemen looking to expand, the retention decision and its impact on cash flow is only multiplied.  Even for a small operation like ours, making the decision to retain 10 of our 25 heifer calves to increase the size of our cow herd can impact our gross revenue (when utilizing the above illustration) by $10,000, $30,000 or $50,000 over the next two years. Obviously this isn’t a net number, as there are a lot of costs to selling cattle in auction sales, but being aware of the cash flow impact of retaining additional heifers to grow the operation has to be accounted for.  From an accrued accounting perspective, the increased herd will show up as more animals held in inventory (thus the farm will still have generated ‘income’; since it ‘created’ those 10 replacement heifers), but since they are being retained and not being sold for cash, the actual cash in the bank account will not reflect the actual value generated by the farm over that time period.   This is why, during growth phases, farms often feel ‘tight’ as those heifer are eating hay, getting AI’d and increasing  pasture stocking rates – all costs that will be higher when there are more animals owned – but not yet generating cash flow.

For buyers, I think part of the reason bred heifers have become so popular to purchase is that they are a year closer to actually generating cash flow.  Open heifers have that extra year, when they need to be bred, fed and then calved, whereas bred heifers only need to be calved out – and are a year closer to generating a return.  It is always nice if you can ‘clip the coupon’ of a bred heifer and sell the calf for enough to recoup the majority, if not all, of your investment.  This actually happened to us when were purchased Virginia’s Ms. Zillow as a bred heifer back in 2013 – she promptly gave us a bull calf that we sold for more than what we paid for her.  It can also be a (relatively) inexpensive way to luck into your new herd bull.  When we selected BEE Vendetta 243Z at Equation in 2014, she was bred Radium, and her subsequent calf turned into APLX Rambo, our current senior heifer bull who has done quite well for us.   There certainly are situations when acquiring that bred heifer pays immediate dividends!

I also know of buyers that prefer purchasing open heifers.  My dad has long maintained that it didn’t make sense for him to source a bred heifer in the west from a fall saleThere are a lot of expectations put on a bred heifer if she needs to be transported 3000kms to Ontario, calve out a month later and then breed back in a timely fashion! Selecting open heifers, when they have a year to adjust and can be bred to match his own breeding goals, has always been his preferred approach – even if it takes them longer to generate a return.  From a sellers perspective, I would also suggest that during periods of high demand (or rapid change in an industry), open heifers have at times sold for a premium over bred heifers.  If I recall correctly, this was the case during the height of Fleckvieh Fest in the mid-90’s, and also occurred in the dairy sector once the Genomics craze created upheaval.  Getting new genetics to market earlier (and potentially allowing buyers to multiply them quicker), meant quicker returns.

I can’t call myself a banker and not talk about debt as an option to assist with cash flow.  The challenge I find with debt, isn’t so much the borrowing of it, but that it has to be paid back.  The cow-calf sector is historically low-return, highly cyclical, and dependant on variables outside of a farmers’ control.  So while borrowing money might be an immediate solution, that commitment to a payment for the next number of years may make cash flow that much tighter in the future.  This year is a great example – cattle prices have remained strong, but with most of Alberta in drought conditions, winter feed is scarce and expensive, and the cows will be coming home much sooner than originally expected.  Adding a payment to the equation, would just add that much more stress (and potentially force more of those ‘retained’ animals to market early).  With borrowing money, there are exceptions to every rule (my team would suggest my favourite answer to questions is ‘it depends’)!  There may be situations like a dispersal/ability to purchase a package privately where it makes sense for genetic reasons to take on debt in order to make a substantial investment – but always remember that there is a future payment coming that needs to be built into ongoing cash flow.

The last point I want to mention about cash flow, is that since the industry has such low returns, it makes communication that much more important.  It is extremely rare that 100% of operational revenue is generated solely from the cow herd.  The majority of cow-calf operations are supplemented by non farm income (like in our case, where both of us work off farm), or they have another farming enterprise (generally crops) that helps make farm cash flow at least a little less lumpy.  Here in Alberta, surface revenue cheques from oil/gas well leases also tend to be timely!  It is still important to evaluate the cash flow impact of an expansion decision though – and have that conversation with all the key stakeholders in the farm.  Communication is so important in farm businesses, and it is essential that everyone is on the same page when the operation is evolving.  No one likes surprises involving finances – and communicating when one line of business (or off-farm job) may need to help support the cattle business is helpful for everyone.  No one wants to have to worry about how groceries may get put on the table, simply because the impact of an expansion plan wasn’t fully thought through or clearly communicated.

That is one of the downsides of the purebred cattle business.  Purebred cattle aren’t ‘liquid assets’ that can be sold quickly for what they are worth.  In theory, the animals retained as breeding stock have genetic potential that should make them worth more than a typical commercial animal.  It is always an option to run them to the auction mart – but once weaning has passed and additional costs are incurred; those costs are not recouped from liquidating the animals at the weekly sale.  Selling them tends to need to be planned, so they can be marketed appropriately, interest obtained and a fair return received.  A private treaty sale could happen unexpectedly, but even with that option it is essential to ensure the touring farmer doesn’t think there is desperation for a sale.   It takes time to orderly market purebred cattle for what they are worth – and time might be in short supply during a cash flow crunch.

In our friend’s case, they recognized an upcoming challenge early and were able to start the conversation with each other as to what impact and direction they would need to take – all before even talking to a banker!  It has long been my experience that given time, space and communication, seemingly complex (or difficult) decisions can get made with all parties being satisfied.  It really is that simple.  Plan.  Communicate.  Revisit.  Recognize that things will never turn out exactly as you originally intended .  Be willing to adapt.  But most of all – enjoy.  This is a great time of year to be a cattle breeder.  So let’s enjoy our summer nights – and fill them up with cow tours, great friends and awesome conversation.

Until next time,

Dennis

An Origin Story: 20 Years of Polled Fleckvieh

Vendetta & Dundee

Setting the Scene:  March 1998.  Seated around my parent’s kitchen table at Dora Lee, we were finishing up another wonderful home cooked meal of “meat and potatoes and such”; savouring the last crumbs of mom’s incredible fresh baked pie.  Directly below the Simmental bell hanging in the window, on one corner of the table, was where all of the key reference material for cattle discussions was located: the 1998 calving sheet, (hand printed on a yellow file folder, listing all of the cows and their calves, with descriptions and name suggestions), our semen inventory listing from United Breeders (the twice a day AI service in Ontario – available for beef cattle! It sounds pretty weird when described to an Albertan), the February Simmental Country, and the Alta and Semex Beef Sire directories.  The conversation had flitted all around cattle during the meal, and now everyone was settling in for a deeper discussion.

Jeanne and I, married almost a year by then, were up visiting the farm for the week-end.  We always looked forward to escaping the confines of our one-bedroom apartment in Brantford, where my first-job-out-of-school as an AG banker had taken us.  While I was learning the ropes at the bank, Jeanne was making the 200km round trip daily commute from Brantford to the University of Western Ontario in London to finish her teaching degree.  We were still young, still getting into the rhythm of our fresh, new partnership.  But I suspect our kitchen table was similar to a lot of farm tables across the country – once the meal finished, the chairs would be pushed back (tea would be poured), and opportunity of having everyone together would be leveraged to engage in conversation that shaped the future of our farm.

We didn’t realize it at the time, but the discussion that day turned out to be a momentous one – should we try and incorporate the polled gene into the Dora Lee cow herd? 

The spring of 1998 rounded out a 12 month run of success for Dora Lee that suggested an incredibly promising future.  Our first ever ‘AI bull’ Dora Lee One was working for CIAQ and had developed into a 4-star trait-leader.  The summer of 1997 had led Mom & Dad to PEI for the Canadian Simmental AGM, where they discovered RH Patricia working for Robblee’s.  They promptly arranged to purchase her calf at side, and lease Patricia for a flush – the flush that would turn into Dora Lee Native Son.  September’s Fleckvieh Forum sale saw an awesome open heifer by the name of Dora Lee Franchesca selected by Master Breeder Barry Labatte.  In November, the legendary Bob Gordon stopped in for a visit and selected Dora Lee Jake on behalf of Alta Genetics.  All in all, a very transformative 12 months!

So the question and debate really became one of why?  If we were just starting to enjoy some success – why should we shift our focus to polled?  Why not keep to the path that we were on? 

The answer to our query was found in the questions that were starting to be asked by our customers.  Beef herds in Ontario (and Quebec, where Dora Lee One was working) are generally smaller and often had to be supplemented by off-farm income.  As a result, we were starting to get requests for both moderate birth weight and polled bulls; both of which would make management of the calving process significantly easier.   Neither of these traits was present in the Fleckvieh of the day!  In fact, the BW/Calving Ease issue was probably the biggest concern we had with Dora Lee One – he had a ton of performance, and his daughters had lots of milk, but we were getting feedback that calving was an issue – so this was an area we thought we needed to focus on.  Our goal thus became both –  to leverage our highly maternal herd to not only take horns off, but also use moderate bulls that would ensure additional calving ease.

Dad has always been adamant that, as a purebred breeder, we need to see where the industry is going and move there first.  This would ensure we had cattle that were in demand when commercial interest caught up.  Trying to project the future is always a daunting task (right Oilers fans?), but the alternative – multiplying popular genetics today with the hope that they will still be popular tomorrow – didn’t seem to be a successful approach either.

That day, we decided to flush Dora Lee Fraline (dam of Franchesca) to Eisenherz, the ‘new’ polled bull being offered by Alta Genetics (if I recall correctly, our other option at the time was ‘Holburg’, and Eisenherz seemed to be the ‘least-bad’ option).  We hoped that we would get a polled heifer calf that we could start building a polled program around.  We knew this wasn’t going to be an easy journey, but thought that given time, and multiple generations of offspring, the challenge of successfully integrating the polled gene into our program was one we could accomplish.

And thus, our polled journey began:
In 1999 Dora Lee Electra (Fraline x Eisenhurz) was born.
In 2002 Dora Lee Elexis was born (Electra x Dora Lee Jake)
In 2004 Dora Lee Evangaline was born (Elexis x Sim Roc C&B Western)
And in 2005 Dora Lee Eclipse was born (Elexis x Smithbilt Molson)

In 2006, Jeanne and I moved to Alberta, to follow our own dream of Applecross Cattle.

In 2008, we convinced Mom & Dad to allow us to pick 4 cornerstone females to build and establish our own herd around.   One of the females to travel west?  Dora Lee Evangaline.

And the rest, as they say, is history.

There have been stops and starts along the way.  We were extremely fortunate to be able to move from Fraline to Eclipse in just seven years, while adding two generations of proven horned genetics to his pedigree.    Eclipse was a tremendous step forward for us.  Having access via AI to a privately owned polled bull we were comfortable using, allowed us to multiply genetics much more rapidly throughout the herd.  Eclipse also had the added bonus of being a great heifer bull, which meant more places that we could use him.  He also gave an early homozygous son – Dora Lee’s Equinox – who possessed a little more power, but was guaranteed to take the horns off.   We were very lucky to have been able to utilize both of these bulls so early in our polled journey.

We have also been constantly reminded that this is the cattle genetic business, and stuff happens – even a 50-50 chance at polled offspring is not that conducive to expanding and diversifying a nascent polled division.  At Applecross, our first 8 Eclipse progeny were all horned.  Only 2 of our first 12 Equinox calves were heifers – which delayed herd building but did yield us Envoy (who has left his mark at Lone Stone) and Escalade (who we utilized as a heifer bull for a number of years and have progeny walking here).   It is sometimes very difficult to be patient!

As it is known to do, the industry also swung on a pendulum.   The first polled Fleckviehs that were marketed simply didn’t have the quality and performance required to stand beside their horned contemporaries. (I seem to recall a phrase ‘if you take the horns off, you take the butt off too’).  Once burnt, both purebred and commercial breeders shied away from polled cattle and a perception grew that having polled genetics in a pedigree make it weaker.  Phrases like “100% horned pedigree” or “polled – with 97% horned pedigree” – popped into the vernacular of Fleckvieh Enthusiasts.  (I would also suggest that I have seen some pretty mediocre 100% horned cattle over the years, but that is a conversation for another day).  Even the compliments came with a qualification: “looks pretty good…for polled”.  Over time though, as the polled genetic pool continues to widen and get more diverse, there has been a significant amount of progress made.  Quality and consistency has improved, and once again (anecdotally at least) we are seeing an increased interest from both commercial and purebred cattlemen in polled genetics.

For 2018, almost half of the females we bred at Applecross this spring are polled (and the walking herd at Dora Lee is now more than 90% polled).  So, while we are well along in our journey, there is still plenty of work to be done.  We still source outcross horned genetics to continue to widen our polled gene pool, and we are still breeding horned cows to horned bulls.  I am a firm believer in the concept of being ‘barn blind’ and just because a calf comes out with a polled head, doesn’t mean it will be good.  We absolutely have to keep checks and balances in place to ensure the quality is there to compete in our marketplace.  Single trait selection has never been a winning strategy in developing cattle, so we continually remind ourselves that this journey will be a very slow process.  It sure is nice when we don’t have to dehorn a calf though!

As I reflect on a decision made 20 years ago, it has been a pretty cool trip that will have plenty of twist and turns (and great scenery) still yet to come.  I am extremely fortunate to share my passion for genetic improvement with my parents – and that those discussions about cattle have continued – they have just shifted from the kitchen table to a weekly Thursday night phone call.  13 years after he was born, I am still utilizing Eclipse on heifers – which may be as much a statement about the bull, as it is about the challenges in finding bulls that meet all of our heifer bull criteria.  Dora Lee Evangaline was a cow I always struggled with, and never thought I was able to breed her to her potential (The silent heats didn’t help either!).  But in hindsight, she has 6 progeny still working here, and she shows up in the pedigree in two of our recent high sellers (Applecross Pippa and APLX Rocky), so maybe my perception during her stay here doesn’t match reality now that she is gone.  This is the cattle genetic business.  Stuff happens, both good and bad.  But the challenge is worth it – to reflect back – and see progress.  It keeps us going; and makes us strive to be better.

Until next time,

Dennis